March 27, 2020

If you’re a drop-shipper, you may find yourself running into issues with your payment processor.

Shopify’s risk department loves to send out the good ol’, “we don’t support your business model…” email.

PayPal will more than likely hit you with a 25%, 180-day rolling reserve the moment you start to scale your business as an insurance policy on their end.

And Stripe openly states on their policy pages that dropshipping is too risky a business model for them to support, and they may shut down your account without any warning.

Not to worry though — there are actually hundreds of other payment processors you can sign up for that are dropshipping-friendly.

In this article, we’ll briefly go over the process of signing up for a payment processor, what documentation you’ll need to provide, as well as what types of initial rates and limitations may be put in place. Finally, we’ll also provide you with a comprehensive list of over 150 payment processors that you can check out.

So, let’s get to it!

So, what does the process look like?

The application process is specific to each payment processor; however, they all generally have the same steps.

#1: Contact the payment processor

The first thing you need to do is actually get ahold of the payment processor. Most will have a phone number you can call, a customer support email, or contact us form on their website. Just look around — usually, they’ll have a link on their homepage that will get you started.

#2: Submit Required Documentation

After someone from the payment processor team gets back to you, they may have an initial set of questions to help determine if they will be a good fit for you, and vice-versa. They might ask you questions like:

  • What type of business do you run?
  • Do you have any inventory?
  • What is your average shipping time?
  • Do you have a history with any other payment processors?
  • Why do you want to use our payment processing portal?
  • How much do you generate in monthly sales?
  • Which countries do you sell your goods to?
  • Where does your business operate from?

Sometimes, they might first send you to an online application form before asking any of the above questions. If so, this is generally to verify your identity. They may ask for the following:

  • A picture of a valid ID
  • Bank letter if you just made your account; otherwise, bank statements going back several months
  • Processing statements from any previous payment processors (if applicable)
  • URL to your website

The types of questions you get and documentation you must provide will vary based on the processor, the types of products you sell, and where you are located.

#3: The Offer

If your processor has no further follow-up questions and determines you qualify for their services, you will then likely be given an offer.

The type of offer you get may vary greatly, and you need to think about whether or not the rates and conditions are acceptable for your business.

Usually, for your first month or so of processing payments, they will place certain restrictions on your account. We’ve found that you may expect the following:

  • 5-15% rolling-reserve
  • Monthly payment processing limit based on the # of sales or dollar amount
  • Higher processing fees (5%+)

These limitations will usually be modified or lifted after your first month or two of processing payments, assuming you maintain a healthy chargeback rate that they will specify.

Don’t feel like you have to settle for a particular processor; there are plenty of options available, and if the offer you receive is too restrictive, we strongly recommend looking for other options.

PaymentCloud offered one of our businesses a no-rolling-reserve offer right off the bat, with a monthly limit and some higher processing fees. On the other hand, PayCertify gave us a significantly lower processing rate per transaction, a monthly limit, but also a 10% rolling reserve.

#4: Filling Out More Forms!

If you’re sick of forms at this point, don’t worry — you’re almost there. Assuming you accepted your offer, there will be some more paperwork to get through.

Your payment processor will need to set you up with a payment gateway service and merchant account. We’re not going to dwell too much on the details here; your payment processor representative will walk you through the entire process, with specific instructions on what to do. Admittedly, this is tedious; but well worth it in the end.

Make sure to keep track of these various portals; usually, you won’t be able to perform various tasks like offer refunds and respond to chargebacks from portal.

For example: With PaymentCloud, you will have one portal to respond to chargebacks, and another to deal with transactions and refunds.

#5: Connecting Shopify With Your New Processor

Having filled out all the forms, it’s time to connect your new processor. In order to do so, you will need to generate an API key with your Payment Gateway, if you haven’t already. This is usually found somewhere in your Account Settings — if you aren’t sure, ask your account manager.

If you’re using Authorize.net, you can find this section within your Account Settings page, in the ‘Security Settings’ subsection.

Authorize.net – api credential creation

Once you generate your API keys, you’ll need to change your payment provider settings within Shopify.

To do so, navigate to the payment providers page.

payment provider settings – shopify

Next, scroll down to the ‘Third Party Payment Providers’ section.

Third-party payment providers – shopify

Finally, go ahead and choose your third-party payment gateway provider from the list.

Then, enter the API keys you just generated. You will at this point want to perform a test transaction to make sure your processor is correctly configured. Some payment processors & gateways make this a requirement before you can accept live transactions.

For this step, simply follow the instructions provided by your gateway. After you’ve done so, everything should be up and running.

BUT WAIT: There’s actually one more important thing you need to take care of. Unlike Stripe/Shopify Payments, third-party payment processors generally have a set of filters in place to determine if a payment should be accepted. Their purpose is to prevent fraud from taking place, which ultimately is to your benefit.

And by default, for most processors, they will be set to reject almost all payments. So, if you don’t go in and change these settings, almost all of your payments will be automatically rejected.

Luckily, it’s an easy fix and should be in your payment gateway settings. For Authorize.net, you can find this under your account settings.

Authorize.net – fraud settings

Then, navigate to “Fraud Detection Suite“, and click on “Enhanced Address Verification Service (AVS) Handling Filter“.

You’ll get a screen that looks something like this:

authorize.net – enhanced fraud suite filters

Ultimately, you will need to pick an action for the fraud filter to take based upon what information is provided by the customer. If you are particularly concerned about the transactions that will take place, you can select “Authorize and Hold for Review” which will allow you to monitor your transactions before your Payment Gateway processes them.

After you make your changes, you should be good to go!

List Of Processors

As promised, here is a list of 150 different payment processors that you can apply for. Each processor will have different terms and conditions, and some may only accept businesses based in certain countries