⚠ Platform Lock-In Alert

Shopify Payments is uniquely tied to your Shopify store. Unlike standalone processors, payment issues can affect your entire business:

Payment termination may trigger store suspension
Using other processors costs 0.5%-2% extra per transaction
No payment portability - you can't take your processing history elsewhere
Chargebacks can impact both payment and store standing

Score Breakdown by Category

How Shopify Payments terms rate across our six evaluation categories, weighted by real-world impact.

💰 Fund & Account Control (25%) 30/100

Why this score: Shopify Payments scores poorly due to: (1) indefinite fund holds with no maximum duration specified in Section 4.3; (2) unlimited reserve requirements at Shopify's sole discretion (Section 4.5); (3) no appeal process for fund holds or account decisions.

Industry comparison: Square: 60/100 (180-day max, 30% reserves) | Stripe: 35/100 (indefinite, 100% reserves) | PayPal: 28/100 (180-day holds) | Category avg: 38/100

⚖ Dispute Resolution (20%) 35/100

Why this score: Shopify mandates binding arbitration with class action waiver (Section 18 of main ToS). The 2024 Ontario class action dismissal confirmed these clauses are enforceable. Unlike Square, Shopify offers no formal appeal process for payment decisions. Chargeback fees are $15 per dispute, and you pay even if you win (Section 6).

Industry comparison: Square: 55/100 (30-day appeals, $10 fees) | Stripe: 40/100 (arbitration, no appeals) | PayPal: 35/100 (limited appeals) | Category avg: 41/100

🛡 Liability & Indemnification (20%) 45/100

Why this score: Shopify has a double indemnification structure: you must indemnify both Shopify (main ToS Section 15) AND Stripe as the payment processor (Stripe Connected Account Agreement). Liability is capped at fees paid in the prior 3 months (Section 14), which can be minimal for new merchants. The broad indemnity covers "any third-party claims related to your use."

Industry comparison: Square: 65/100 (narrow indemnity, 12-month cap) | Stripe: 45/100 (broad indemnity) | PayPal: 40/100 (broadest indemnity) | Category avg: 49/100

👁 Transparency & Notice (15%) 50/100

Why this score: Shopify provides only 7 days notice for ToS changes (Section 21), compared to 30 days at Square. The third-party processor penalty fees (0.5%-2%) are disclosed but buried in pricing pages, not the main ToS. Reserve requirement criteria are not specified—Shopify can impose reserves "in an amount we determine is necessary" (Section 4.5).

Industry comparison: Square: 75/100 (30-day notice, clear criteria) | Stripe: 55/100 (change-at-will pricing) | PayPal: 45/100 (15-day notice) | Category avg: 56/100

🔒 Data & Privacy Rights (10%) 42/100

Why this score: Shopify explicitly states processing history is non-portable: "Transaction data and processing history are Shopify Confidential Information" (Section 8). You cannot export your payment track record to negotiate rates elsewhere. Customer data export is available but payment-specific data is restricted. Privacy policy is CCPA/GDPR compliant.

Industry comparison: Square: 70/100 (dashboard export tool) | Stripe: 60/100 (API export available) | PayPal: 50/100 (limited export) | Category avg: 56/100

🚪 Exit Rights (10%) 25/100

Why this score: This is Shopify's worst category due to platform lock-in: (1) Payment termination can cascade to your entire Shopify store (Section 9); (2) Using alternative processors costs 0.5%-2% extra per transaction; (3) Processing history cannot be transferred; (4) No maximum fund hold duration post-termination. The FTC is investigating whether this constitutes anticompetitive tying.

Industry comparison: Square: 65/100 (no ETF, 180-day max hold) | Stripe: 50/100 (standalone, indefinite holds) | PayPal: 35/100 (180-day post-closure) | Category avg: 44/100

Compare With Other Processors

Stripe

Square

PayPal

Version History

Jan 2026

Initial review published

Oct 2025

Reserve requirement expanded

Jun 2025

Third-party processor fees updated

⚠ Gotcha Clauses I Check First

These provisions create unique risks for Shopify merchants. The platform integration that makes Shopify convenient also creates dangerous dependencies.

Double-Termination Risk

High Risk

Shopify Payments issues can trigger suspension of your entire Shopify store, not just payment processing. One problem becomes two problems.

"Shopify may suspend or terminate your access to Shopify Payments and/or your Shopify account if you breach these Payment Terms." Shopify Payments Terms, Section 9

Third-Party Processor Penalty

High Risk

If you use any payment processor other than Shopify Payments, Shopify charges an additional 0.5%-2% per transaction on top of that processor's fees.

"If you do not use Shopify Payments...Shopify will charge transaction fees...ranging from 0.5% to 2.0% per transaction." Shopify Terms of Service, Pricing Section

Fund Holds Without Time Limit

High Risk

Shopify can hold your funds indefinitely for "risk" or "compliance" reasons with no maximum hold period specified in the terms.

"We may delay, suspend, or hold Payouts...for as long as we determine necessary to protect against risk of loss." Shopify Payments Terms, Section 4.3

Reserve Requirements

High Risk

Shopify can require you to maintain a reserve account at their discretion. The amount is determined solely by Shopify with no stated limits.

"We may require you to establish and maintain a reserve...in an amount we determine is necessary." Shopify Payments Terms, Section 4.5

Mandatory Arbitration

High Risk

All disputes must go through binding arbitration. You cannot sue Shopify in court or join class actions, even for issues affecting thousands of merchants.

"Any Dispute...will be resolved exclusively through final and binding arbitration...you waive any right to participate in a class action." Shopify Terms of Service, Section 18

Chargeback Liability + Fees

High Risk

You're responsible for the full chargeback amount plus a $15 fee per chargeback, even if the chargeback is fraudulent or you win the dispute.

"You are responsible for all Chargebacks...including the Chargeback amount and any associated fees, regardless of the reason for or outcome of the Chargeback." Shopify Payments Terms, Section 6

No Processing History Portability

Medium Risk

Your payment processing history stays with Shopify. If you leave, you can't transfer your track record to negotiate better rates elsewhere.

"Transaction data and processing history are Shopify Confidential Information and may not be exported or transferred." Shopify Payments Terms, Section 8

Stripe Backend = Double Terms

Medium Risk

Shopify Payments uses Stripe's infrastructure. You're bound by both Shopify's terms AND Stripe's Connected Account Agreement, doubling compliance obligations.

"Shopify Payments is provided through Stripe...you agree to be bound by the Stripe Connected Account Agreement." Shopify Payments Terms, Section 1

Analysis

"Shopify Payments represents a classic platform lock-in strategy. The integration convenience comes at the cost of dependency—your payment processing and your entire store are tied together, and Shopify penalizes you for using alternatives.

The double-termination risk is particularly concerning. I've worked with merchants who had payment issues—sometimes through no fault of their own—and found their entire Shopify store suspended. That's not just lost payment processing; that's lost inventory management, order history, customer data access, and business continuity.

If you're processing significant volume on Shopify, consider: (1) maintaining a backup processor relationship even if it costs extra, (2) regularly exporting customer and order data, and (3) having a migration plan ready. The convenience of integration isn't worth the catastrophic risk of losing everything at once.

For merchants processing over $50K/month, I typically recommend evaluating whether the Shopify ecosystem makes sense versus a headless commerce setup with more payment processor flexibility."

Shopify Payments Terms of Service Review

⚠ Platform Lock-In Alert

Score Breakdown by Category

Compare With Other Processors

⚠ Shopify Holding Your Funds?

Version History

⚠ Gotcha Clauses I Check First

Double-Termination Risk

Third-Party Processor Penalty

Fund Holds Without Time Limit

Reserve Requirements

Mandatory Arbitration

Chargeback Liability + Fees

No Processing History Portability

Stripe Backend = Double Terms

Analysis

Relevant Legal Cases

FTC Inquiry: Platform Payment Integration (2025)

EU Digital Markets Act - Shopify Compliance (2026)

Need Help With Shopify Payments?

Schedule a Consultation

Shopify Payments Terms of Service Review

⚠ Platform Lock-In Alert

Score Breakdown by Category

Compare With Other Processors

⚠ Shopify Holding Your Funds?

Version History

Related Resources

⚠ Gotcha Clauses I Check First

Double-Termination Risk

Third-Party Processor Penalty

Fund Holds Without Time Limit

Reserve Requirements

Mandatory Arbitration

Chargeback Liability + Fees

No Processing History Portability

Stripe Backend = Double Terms

Analysis

Relevant Legal Cases

FTC Inquiry: Platform Payment Integration (2025)

EU Digital Markets Act - Shopify Compliance (2026)

Need Help With Shopify Payments?

Schedule a Consultation