Shopify’s role is to enable more entrepreneurship. We work on behalf of millions of merchants to make sure that they benefit from the best converting checkout and payments product. We work closely with our financial partners to make sure that our merchants get the best possible payment outcomes. Shopify Payments provides the highest authorization rates compared to any other processor on our platform. Most of the time, the system is invisible. A buyer pays, the merchant fulfills, the payout lands. We maintain this high performing system by surgically identifying and acting against those who break the trust this system is built on. Here’s why we act, when we act, and what the data shows.
How we act to protect Shopify merchants
Every transaction on Shopify Payments goes through a complex set of models designed to prevent fraud before, during, and after the transaction. Shop Pay gives us a rich history of the buyer that not only drives conversion, but also reduces fraud. This is why merchants on Shopify Payments see higher authorization rates than the next best payment provider on Shopify.
But when store owners engage in illegitimate practices, they break the system of trust that enables us to provide strong payment performance for all merchants. When buyers have to dispute a transaction from a merchant because they never shipped a product or the product was different from what was promised,the buyer’s trust degrades in all independent businesses on Shopify. The consequences of a small number of merchants having a lot of disputes and chargebacks make other merchants on our platform look less trustworthy to banks and card networks.
We often hear: "My chargeback rate is only X… why is Shopify acting on my store?"
Chargeback rate is one signal of many. Shopify looks at fabricated reviews, products that never ship, deceptive subscription defaults, manufactured social proof, the history of the business and store owner across our platform, as well as hundreds of other signals. These systems evolve every day to deal with new patterns of deception that harm buyers and erode trust. We act on the full picture, including these signals.
What we built
As our merchant risk detection models have gotten more precise, we have gotten better at one of the hardest problems in payments: distinguishing a fast-growing legitimate business from a deceptive one, and acting accordingly.
The data supports this: 99.9% of merchants active on Shopify have never experienced a wrongful termination or rejection. When we act, it’s based on clear signals of deceptive practices.
We do not get it right every single time. When we get it wrong, we learn and improve. Actions on legitimate merchants—payout holds or reserves—are down 60% year-over-year, and wrongful terminations are down 80% year-over-year. There is a defined escalation path, and we have invested in making it faster, more transparent, and more self-serve. It's even more critical for our risk teams to get it right for the merchants building strong businesses than it is to take action on the ones who are not.
The businesses that thrive on Shopify
The merchants whose businesses grow with Shopify run businesses that buyers come back to. Their authorization rates stay high because banks trust their transactions. Their chargebacks stay low because their customers get what they expect. Payouts move seamlessly because nothing signals risk.
In practice, these businesses demonstrate the following:
- Listings that match what arrives in the box
- Shipping promises that hold up
- Subscriptions a customer can understand and cancel without a fight
- Reliable fulfillment
- Support that responds when something goes wrong
- A storefront that represents a real business
- Clear communication when something changes
Our risk systems, payouts, dispute tools, and merchant protections are calibrated to prevent friction for businesses that uphold these practices.
Enabling more entrepreneurs
Shopify is an entrepreneurship company. We are here to support and enable entrepreneurs around the world and will keep investing in tools that enable merchants to grow their business. We will also keep working to improve the trust between merchants and buyers that enables the entire Shopify ecosystem to thrive.
Learn more about acceptable business practices and risk evaluation for Shopify Payments.
