If you’re thinking about ecommerce and building your own online store in Hong Kong using Shopify, you’re going to eventually ask about collecting payments online. In recent years, new payment options such as Apple Pay and Alipay have made shopping easier. Online shoppers today expect convenient and frictionless payments as a must-have for a great online customer experience.
In our experience, we sometimes see clients put off thinking about payments until they are ready to launch their store. We caution against that because even though Shopify has a lot of payment gateway options, we recommend that you start researching different Shopify payment options early and set up your merchant account so that accepting payments doesn’t become the bottleneck for launch as you get close to rolling out your Shopify store.
In this post, we will discuss different payment gateway options for Shopify Hong Kong merchants and some of the considerations for selecting a payment gateway.
As of 2018, Shopify Payments is available in Hong Kong as well as many other markets such as United States, Puerto Rico, Canada, the United Kingdom, Ireland, Australia, New Zealand, and Singapore.
Shopify Payments is the platform’s own payment processing service that does not incur additional transaction fees. In addition, Shopify Payments now has an integration with a multicurrency feature announced at Shopify’s Unite 2018 conference.
Shopify has a list of supported Hong Kong payment gateways, including Paypal and Stripe which we will discuss below. For merchants selling to mainland Chinese shoppers, Alipay Global and AsiaPay are possible payment gateway options as well.
The reality is that payment gateway solutions is a fragmented market due to factors such as needing to support localized payment options, currency and exchanges and banking regulations. Choose a payment gateway that is:
We recommend reaching out to payment gateway vendors early to understand:
Now, let’s discuss factors to compare between payment gateway options that may affect your business.
Payment Gateway Fees
The obvious bottom line for many merchants is to look for the best rates. As such, merchants will have to do calculations to compare between any differences in fee structures amongst different payment gateways. For example, Paypal has a tiered pricing model while Stripe generally has a flat fee structure for businesses. Payment gateways may also charge differently for local versus cross-border transactions. Estimate your sales volume, payments across currencies and contact payment vendors to see what their rates are for your business type and if they may have any special offers.
Cross-border or Multi-Currency Rates
For companies looking to do cross border ecommerce, foreign currency transaction fees will also be an important factor. For example, if you have you have a Hong Kong bank account and take US dollars when selling to the US, you’ll want to think about how money ultimately flows back into your Hong Kong bank account and what are all of the accompanying transaction fees. For example, some vendors like Stripe may allow you to withdraw the US dollars into your Hong Kong account without converting to HKD, while Paypal may require you convert your USD into HKD first before depositing in your local Hong Kong bank (which may incur exchange rate costs).
Fees, while obviously important, shouldn’t be the only consideration factor. Evaluating how the payment solution integrates into your Shopify store and the shopper’s checkout flow is critical as checkout usability can affect shopper purchasing and cart abandonment. Think about how important on-site vs off-site checkout is to your shopper base. We refer to on-site payments as allowing users to pay directly within your online store, while off-site payments means a redirection to the payment gateway’s page (e.g., redirecting to the Paypal or AsiaPay site for final payment).
We recommend that merchants find out how the checkout flow works for different payment gateways in the early stages of your store building project.
Sometimes choosing a payment gateway may also depend on the payment methods that your target shoppers prefer. For example, merchants selling to customers from mainland China will want to factor in options such as Alipay or WeChat Pay while those selling to tech savvy shoppers may want to consider supporting options such as Apple Pay.
Another reason we encourage merchants to speak to payment gateway representatives is because the representative can explain details of what merchant protections are offered, how disputes are handled, and any other payment handling procedures that merchants should be aware of. In the ecommerce industry, depending on what you are selling and who you are selling to, you may run into shopper chargebacks or fraud. Understanding how your payment vendor will handle these cases helps mitigate potential risks.
Your Specific Requirements
What special requirements might an online business have? Some examples include the authorization period, which is the number of days a merchant can have to receive the balance once a shopper’s payment is authorized.
This isn’t an exhaustive list of payment gateway options supported by Shopify in Hong Kong, but simply a few common ones that we’ve been asked about from our clients.
Founded in 1999, PayPal is one of the global leaders in online payment processing and according to Datanyze, has over 80% online market share in Hong Kong in a sample of 800+ domains.
Paypal has a tiered fee structure based on sales volume that starts at HK$2.35 plus a % of the invoiced amount. Note that Hong Kong transactions and cross-border transactions have different fees. Paypal does not charge for withdrawal from their platform to your local bank account (such as US Dollars to a US bank account or HK Dollars to a Hong Kong account), but it does charge if the currency differs from the receiving account.
When merchants set up a Shopify store, Shopify creates a Paypal Express Checkout account automatically with the email address used for the Shopify store. Merchants with existing Paypal accounts will receive PayPal payments right away. Merchants can also test the Paypal integration on a trial Shopify account once they have launched the store (which means it is viewable to the public).
Stripe is a payment gateway from the US that has built a large customer base in recent years. Stripe has integrated with large ecommerce platforms, like Shopify, BigCommerce, and Magento. Stripe officially launched in Hong Kong in 2017 and powers payment gateways for many venture-backed startups in the region, such as Klook and Tink Labs.
When using Stripe, Shopify merchants can create a checkout flow where the shopper does not need to leave the online store to complete payment.
Stripe starts at a flat fee of 3.4% + HK$2.35 per transaction. In addition, Stripe for Enterprise offers account management, volume discounts, migration assistance and dedicated support.
AsiaPay was founded in 2000 and is used by many local Hong Kong based companies. Some of the clients listed on their website include household names as Cathay Pacific and HKTVmall. They support diverse payment options such as China Unionpay, Alipay, PPS, and WeChat Pay.
AsiaPay, which has presences in Singapore, London, China and other countries and has multi-currency support. Merchants will have to contact the company directly ask for rates and setup support.
If you plan to cater to online shoppers from Mainland China, consider using Alipay Global, which can be integrated into Shopify stores. Alipay has already been adopted by international companies such as Macy’s, Bloomingdales, Air Asia, and Cathay Dragon. Note that with Alipay Global, a customer pays in RMB, but merchants get paid in USD, HKD or one of the platform’s 12 supported currencies.
The platform also has a demo for cross-border online payments. Alipay Global takes a percentage fee of the total transaction volume per month. Applicants will need to apply for an account and submit business documents to Alipay Global.
Online payments is a crucial part of the ecommerce experience. The payment gateway that you choose can help encourage sales by providing your target customers with their choice payment options. Consider shopper needs, your specific business requirements and the rates and fees offered by different vendors based on your sales volume and target markets (factoring in currency exchanges and surcharges).
Finally, ensure that your payment gateway is easy to integrate into your online store. By giving yourself time to research payment options in parallel with your online store development, you can ensure timely store launch.
Wave Commerce is a BigCommerce and Shopify partner and may receive affiliate revenue from merchant subscriptions to these platforms.
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