Shop Pay vs PayPal
In 2025, offering a seamless and secure checkout experience isn’t optional—it’s essential.
With mobile-first buyers and global shoppers flooding eCommerce, your payment gateway isn’t just a backend tool. It’s a revenue driver. Among the top contenders for Shopify stores are Shop Pay and PayPal—two heavyweights in online payments.
But which one is better for your store?
In this comparison guide, we’ll break down the key differences, pros and cons, and help you decide which option—or combination—will help your store convert better, faster, and smarter.
Whether you're a DTC brand looking to build trust or a Shopify agency optimizing checkout for clients, this guide is your go-to. We’ll also highlight how tools like Checkout Wizard and Giftkart by Skai Lama can elevate your post-purchase experience, regardless of your chosen payment method.
What Are Shop Pay and PayPal?
Shop Pay Overview
Shop Pay, formerly known as Shopify Pay, is a lightning-fast checkout solution built into the Shopify ecosystem. It allows customers to securely store shipping and billing info, making future checkouts nearly instant with a single tap.
Key Features:
- One-click checkout across all stores using Shop Pay
- Supports installment payments (Shop Pay Installments)
- Order tracking via the Shop app
- Eco-friendly deliveries via carbon offsetting
It’s designed to reduce friction at checkout—something that directly improves conversion rates. If you’re using Skai Lama’s Checkout Wizard, you can even layer upsells, post-purchase surveys, and discounts on top of Shop Pay to maximize every transaction.
PayPal Overview
PayPal is one of the oldest and most trusted third-party payment processors in the game. It’s widely recognized globally, and over 430 million users actively use it to send and receive payments.
Key Features:
- Global acceptance across currencies
- No need to enter card details—just login and pay
- Buyer protection and dispute resolution
- Options for PayPal Credit and “Pay in 4”
PayPal is also compatible with Shopify and can be used alongside Shop Pay. However, it redirects customers to an external page during checkout, which might increase drop-offs if not optimized properly.
Key Differences Between Shop Pay and PayPal
Choosing between Shop Pay and PayPal isn’t about which is better overall—it’s about what works best for your store’s needs. Here’s a breakdown of the most important differences you should know:
1. Checkout Experience
✅ Shop Pay offers a frictionless, one-click checkout process that retains customer information for future purchases. This leads to faster checkout times and higher conversion rates—especially on mobile. According to Shopify, stores using Shop Pay see up to 1.72x higher conversion on mobile compared to regular checkout.
⏳ PayPal, on the other hand, redirects users to its own portal to complete the payment. While it’s still fast and familiar to millions of users, this redirection can lead to some checkout friction and potential cart abandonment.
💡 Pro Tip: Want to enhance either checkout experience? Use Checkout Wizard by Skai Lama to add custom upsells, free shipping bars, and personalized content without slowing down the process.
2. Integration with Shopify
🧩 Shop Pay is native to Shopify. That means:
- No extra setup
- Optimized for Shopify themes
- Direct access to Shopify analytics
⚙️ PayPal, while easily integrable, is still a third-party solution. You’ll need to configure settings and potentially troubleshoot compatibility with certain apps.
3. Transaction Fees
💸 Let’s talk money:
- Shop Pay (via Shopify Payments): Fees start at 2.9% + 30¢ per transaction, depending on your Shopify plan.
- PayPal: Standard rate is 2.9% + 30¢, plus currency conversion fees and potential cross-border surcharges.
While the base rates may look similar, PayPal often ends up being more expensive for international or high-volume stores due to its additional layers of fees.
4. Payout Schedule
📅 Shop Pay via Shopify Payments typically offers faster payouts—as quick as the next business day for eligible stores.
🕐 PayPal payouts range from 1–3 business days, but instant transfers are possible for a fee.
If cash flow is critical for your business, Shop Pay may give you a slight edge here.
5. Installment Payments
🛍️ Shop Pay Installments let customers break up payments into 4 interest-free installments or monthly plans (up to 12 months). This can significantly improve AOV.
🪙 PayPal offers similar “Pay in 4” and “PayPal Credit” options, which are widely used and trusted. However, they may have stricter approval criteria in some regions.
💡 Tip: Combine Shop Pay Installments with Easy Bundles by Skai Lama to offer smart product bundles that make “buy more, pay later” a seamless reality.
6. Buyer Protection and Security
🔐 Shop Pay uses Shopify’s PCI-compliant infrastructure, AES encryption, and built-in fraud analysis. However, its buyer protection isn’t as detailed or aggressive as PayPal’s.
🛡️ PayPal has long been known for its robust buyer protection policies, helping customers resolve disputes and claim refunds if something goes wrong.
7. Trust and Adoption
🌍 PayPal has global recognition and trust. Some customers even prefer PayPal for the peace of mind it brings.
🚀 Shop Pay is quickly growing, especially in the U.S. Shopify reported 150M+ active users in 2024. While it might not have the same global reach as PayPal yet, it dominates in Shopify-native stores.
Pros and Cons of Shop Pay and PayPal
✅ Shop Pay Pros
- Blazing Fast Checkout
One-click checkout drastically reduces cart abandonment—especially on mobile. - Built-In for Shopify
No extra setup, seamless integration, and direct access to analytics. - Installments Drive Conversions
With Shop Pay Installments, customers can split payments—great for boosting AOV. - Improved Customer Retention
Info is saved across all Shopify stores, creating frictionless repeat purchases. - Eco-Friendly
Shop Pay offsets carbon emissions on deliveries—bonus points with eco-conscious shoppers. - Optimized for Upselling
Combine it with Checkout Wizard or Kite by Skai Lama to serve smart discounts and personalized offers at checkout.
❌ Shop Pay Cons
- Shopify-Only
Not available if you're using WooCommerce, Magento, or other platforms. - Limited Customization
You can’t fully brand the checkout page like with some third-party tools. - Installments = Extra Fees
Merchants may pay additional fees when offering split payments.
✅ PayPal Pros
- Global Trust
Customers know and trust PayPal, making it ideal for international sales. - Buyer Protection
Comprehensive dispute resolution process builds buyer confidence. - Multi-Platform Support
Use it on Shopify, WooCommerce, Etsy, and more. - Supports More Payment Types
Credit cards, debit cards, linked bank accounts, even crypto in some markets. - Great for One-Time Purchases
Especially when customers don’t want to share card details directly.
❌ PayPal Cons
- Redirect-Based Checkout
Takes users off your site, adding friction and potential drop-off points. - Higher Fees for Some Transactions
Cross-border and currency conversion fees can eat into margins. - Disputes Can Be Draining
While buyer protection is robust, some merchants report challenges dealing with chargebacks. - Branding Control is Limited
You’re sending your customer to PayPal’s environment, not yours.
💡 Pro Tip: If you're targeting both international shoppers and loyal returning customers, consider offering both. Let customers choose—and use tools like Giftkart by Skai Lama to issue cashback rewards or store credit depending on the method they choose.
Can You Use Shop Pay and PayPal Together?
Absolutely—and you should.
In fact, combining Shop Pay and PayPal gives your store the flexibility to cater to different buyer personas in one seamless checkout experience.
Why Offering Both Makes Sense
🛒 Returning Customers
These shoppers want speed and ease. Shop Pay’s one-click checkout removes friction, boosting conversions—especially on mobile.
🌍 First-Time or International Shoppers
Many prefer PayPal for the trust and buyer protection it offers. It’s especially helpful if you’re selling in regions where PayPal is the standard.
💡 Insight: According to a Baymard study, 17% of U.S. shoppers abandon cart if their preferred payment method isn’t offered. Don’t lose a sale because of limited options.
Best Practices for Using Both on Shopify
- Enable Both Options in Shopify Payments Settings
Shopify makes it easy to offer Shop Pay and PayPal simultaneously. You can also include other methods like Apple Pay or Amazon Pay if relevant to your audience. - Position Smartly in Checkout
Use Checkout Wizard by Skai Lama to prioritize Shop Pay for faster conversion, while still giving visibility to PayPal as an option. - Use Post-Purchase Surveys
With Byte (Skai Lama’s product recommender quiz tool), you can ask users why they chose a certain payment method—and personalize their next experience accordingly. - Offer Incentives Based on Payment Method
Want more customers using Shop Pay to avoid higher PayPal fees? Use Giftkart to issue bonus store credit when customers check out using Shop Pay.
🛍️ Ideal Setup Scenarios
Who Wins for Different Use Cases?
Choosing between Shop Pay and PayPal comes down to your audience, products, and checkout strategy. Here’s a breakdown by store type:
🛍️ New Shopify Store (Budget-Conscious)
Best Choice: Shop Pay
- No additional third-party fees
- Built-in with Shopify
- Ideal if you’re using other Skai Lama tools like Kite for free gift campaigns or GiftLab for a customized gifting experience
🌍 International Store
Best Choice: PayPal
- Supports 100+ currencies
- Recognized and trusted globally
- Reduces risk of cart abandonment due to unfamiliar payment gateways
🔁 Subscription-Based or Repeat Purchases
Best Choice: Shop Pay
- Saved customer info enables 1-click repurchases
- Combine with Checkout Wizard to include dynamic subscription upsells
- Use Byte to recommend subscription-friendly products post-purchase
💸 High AOV or Bundled Products
Best Choice: Shop Pay + Installments
- Let customers break payments into manageable chunks
- Pair with Easy Bundles to encourage larger cart sizes
- Add post-checkout cashback via Giftkart
🧾 B2B Stores or Invoice-Heavy Workflow
Best Choice: PayPal
- Offers invoicing and recurring billing features
- Great for buyers who prefer account-based or deferred payments
🧠 Final Verdict: Shop Pay vs PayPal
If you're a Shopify-exclusive store focused on conversion optimization and speed, Shop Pay should be your default. It’s native, fast, and flexible—especially when paired with Skai Lama apps like Checkout Wizard, Kite, and Giftkart.
However, PayPal is still a must-have, particularly for international or first-time customers. It builds trust and can help you close sales you might otherwise lose.
👉 Pro Tip: Use both, but lead with Shop Pay in your checkout flow. Then use post-purchase analytics (via Byte) to understand which segments prefer PayPal and optimize your strategy accordingly.
.svg)
.svg)
.svg)
.svg)
.svg)
.svg)
