TLDR: Don't even have Stripe as an option for Shopify users or we'll boot you. Also backpay since Jan 2019.
"At Shopify, it is critical to maintain high trust and integrity within the Shopify App Store, so merchants have a reliable place to find solutions to grow their business.
During a routine investigation, Partner Governance identified your app [our app] as offering external billing for Shopify merchants and not using the Billing API for all payments.
[a couple of images of our cart]
As you are aware, all paid apps are required to use our Billing API, as noted in our Partner Program Agreement (Section 3.2 Payments, Point 5) unless express permission is granted by Shopify.
Payment information should not be obtained from the merchant directly and all charges should be processed through the billing API.
We require that you make the required changes as soon as possible to ensure all future payments are handled through our billing API. This would include redirecting any current merchants to select their plan and re-approve the new subscription through the Billing API and ensuring that all new merchants are billed through the API.
Shopify has also recently rolled out an annual subscription feature on the Billing API that makes the yearly subscription event easier on the API.
Additionally, we will require a report of the merchants who have been billed outside of the Billing API and retroactive revenue share payment for any/all qualifying 20% revenue dated January 2019 - Present.
Once the report has been reviewed, we will reach out with next steps on how to submit the transfer of funds to Shopify via wire transfer."
Pretty ironic too when you've got Shopify's CEO tweeting about the unfair 30% cut Apple wants: https://twitter.com/tobi/status/1362411841943711744
> Pretty ironic too when you've got Shopify's CEO tweeting about the unfair 30% cut Apple wants: https://twitter.com/tobi/status/1362411841943711744
That's pretty hypocritical
If you are the party that always criticize something, nobody will believe that you are doing it. So, if you plan on doing something, you accuse our largest opositor of doing it, loudly and repeatedly.
Trust No One.
That's pretty accurate, though. 80% of people are too distracted or lack the intellectual rigor to put two and two together, or even care about doing so.
If they don't believe the inbound flow is worth it, then just selling direct to customers should make sense.
In comparison to Apple, phone user : Shopify merchant :: app developer : this SaaS business. If I as a consumer think that Apple policies are too stringent, I can pay money to buy an Android phone. But the cost to me as a merchant of switching from Shopify to a custom site where I can choose who connects over API, once my business is underway and has built a brand identity, is absolutely prohibitive.
App approval processes are app approval processes, plain and simple. And if you make revenue share a precondition of using your APIs, you don't have open APIs.
I’m just curious, by which metric?
It's pretty hypocrital but still... Sort of hypocrital
Since these apps are mostly marketing (upsells, abandoned cart reminders, upgrades etc), they drive sellers' revenue = they literally bring more profits for Shopify, or am I missing something?
I agree with the case being different to Apple. And not sure why it is hypocritical. Not to mention Shopify holds no clear monopoly over e-commerce. Unless people want to argue the Shopify has a monopoly on Shopify App Store.
You have to argue your way through an army of outsourced supporters who are equipped with nothing but the public Shopify docs, until you get to a real employee who concludes it with a "sorry, but we can't help".
Some of my issues:
1. If you're not American, you will be forced to hand over 3% of your 80% revenue cut to PayPal. (Unless your MRR cut is >$30k)
2. Sometimes Shopify just kills features, which merchants and partners rely on. Sure, we get a notice that the API will change - but how does that help, when there is no alternative way to achieve the removed functionality? I was lucky enough to get through to someone who knew someone at the dev team, but the response was once again "sorry, you're not a priority".
- Seamless integration with the merchant billing system. I.e. free trial(s) are credit card up-front automatically, with zero friction for the user.
- "Free" marketing in the App Store.
- Access to paid advertising in the App Store.
Good partner support is just not one of them :)
This is revshare of what the shopify partner bills the shopify store owner.
It's identical to apple charging developers a revshare of payments billed through the app store.
Not saying it's good here, just clarifying that it's not card processing fees, it's platform fees + billing fees.
As of now, the app pays for the mortgage, car payment and then some so I can't complain too much I guess.
That's wild considering they're headquarters is in Ottawa, Canada.
Offtopic: They are a large Rails shop and apparently are on a hiring binge this year.
It sounds like developers don't really own their app/code, own in the sense of you build, maintain and support it. Working in an organization with support outsourced makes me think they are getting large enough that bureaucracy is growing.
You'd think being an org with lots of engineering they would understand that API support for devs building things on their platform is kinda important and maybe shouldn't be lumped into general support. There are reasons why devs pick Stripe.
How much of a revenue bonus would be enough incentive to install a specific shopify/plugin/minor-UI-tweaks addition to your store ?
3%? 10% 1%? Lets assume I can convince you we dont share your data or harm your business.
- App Charges get added to clients bills, you're not getting paid right away (60+ days in some cases) vs getting paid instantly
- If someone doesn't pay their Shopify bill, tough shit you're not getting paid
- Got fraudulent accounts billing via Shopify? They can use your app then never pay anything - fun
- Want to do refunds? Too bad there's no way to do it via the API you have to manually email Shopify then they apply an App Credit (not even a refund) for the customer, then you email them back
- Uninstalling the Shopify App cancels billing, so you lose complete control of your normal downgrade process
- Payments come via PayPal bi monthly :(
There's plenty more, but you're basically losing all the upside of Stripe in exchange for the App Store promotion of your app.
Hint: poor conversion rate because merchants need to enter their CC details, and low volume. 20% on Shopify is a steal IMO.
[1] https://shopify.dev/docs/admin-api/rest/reference/orders/ref...
Also, I have no idea how that API works, because I, like grandparent, always email support when there is a refund request.
Why is this not a simple button in the partner admin page?
To me it sounds like this App developer is trying to have their cake and eat it too. FWIW - I am typically on the small developer side of things but this seems like a case of a bad actor trying to couch it in other complaints...
I take your point - and its probably true. BUT when I use what is essentially a glorified website builder to build a site they don't get to tell me who i can put my money through or dictate anything about how i run my business beyond hosting and the builder.
The reality is that it is even more reasons for a business to not build a business that is dependant upon another in this way.
In this case the third party developer was circumventing the user agreement clearly for their own personal gain and potentially putting customer/merchant data at risk, or at the very minimum not willing to pay the terms that they agreed too. At least thats my perspective.
In terms of glorified website builder - the level of sophistication on these multi channel e-commerce and IRL platforms, inventory management, taxes etc is actually quite daunting to manage.
Actually, they do if it is in the contract.
The problem with Apple's 30% cut is they are a gatekeeper any business operating on the iPhone and they are using this market power in a oligopolistic fashion (the other player being Google) to engage in rentseeking behavior. There are no alternatives to the Apple app store when it comes to iOS by Apple's design, so they are stifling competition.
In contrast, there are plenty of competitors to Shopify AND Shopify is not using some forced barrier to entry to prevent competition. For example, Amazon being the place of discovery for goods means that Amazon's network effect of being the marketplace where everyone goes to look for any good gives them market power and is a barrier to entry. In contrast, Shopify is not about a marketplace. Each store appears as its own website from the consumers' perspective. Thus, a business can switch to a different e-commerce platform and not be hurt by some market power derived situation.
Thus, it is totally legitimate for Shopify to make such a demand of all customers must use their billing. Their business model is give away X for free (e-commerce website tech) and make money on billing. So long as they aren't engaged in some monopolistic/oligopolistic practice, then they can structure their terms however they please because it isn't causing a market failure and enabling rentseeking.
In the Apple and Google case, 30% would be totally fine if there were alternative app stores, a low barrier to entry to finding those app stores, or the ability to find and install applications from anywhere (again with an easy discovery mechanism for finding those apps).
The counter often made to not allowing other app stores on iOS or installing apps from anywhere is the security risk and potential harm to the consumer. While valid, I think this is disingenuous by Apple. There could be ways to enforce comparable security standards in a more open (not totally open), but more open ecosystem.
Here are some contrived examples: - Properly limited OS APIs to prevent overly broad usage by any app. For example, the move from asking for generic location access to having to specifically ask for background location access vs only while the app is in use. - Then to manage signing permissions, Apple could grant other app stores a new kind signing permissions coupled with a contractual requirement to ensure apps abide by certain security standards (which Apple claims they abide by). This could have stiff penalties, paid by the other app store to a consumer fund similarly to how in an ideal world data breaches should have financial consequences and consumer renumeration.
EDIT: Upon inspection, I realize this 20% by Shopify is for their app marketplace. In that regard, it is more similar to the Amazon example I gave above. I still don't think this is as problematic or comparable to iOS App store as there are tons of alternatives to Shopify and their market power is more limited. Nonetheless, their behavior here is more problematic as it is one of exercising market power to undermine competition in a space that they are becoming increasingly dominant. Thus, it could approach the Amazon situation soon enough. That being said, neither their app marketplace or Amazon's marketplace are anywhere near the true monopolistic behavior that is Apple and Google with their app store pricing. Amazon, for example, is a website where I can easily search different e-commerce websites. There is a much lower switching cost to Amazon on a per purchase basis (I recently bought directly from Home Depot for a bunch of things instead of Amazon). There are no alternatives to the iOS app store if you have an iPhone.
Basically if you want Shopify App Store customers, you have to give 20% to Shopify, but you still have option of acquiring users yourself through your site without app store.
Is it fair? Maybe not, but that's a deal. Apple users on the other hand don't have option of installing apps without app store, so comparison is not valid.
Do you have any references on there being an exception for apps not installed through the store ? I would be very interested.
I would be much more bothered by the 20% cut if there was no other way to target these customers.
Also, I just bought an audiobook last night on my iphone through the browser, and presumably apple didn’t get a cut. I think Shopify’s cut and apple’s cut are fair analogies here.
On a different note, I wouldn't recommend building an app that is strongly integrated into the Shopify platform due to a myriad of reasons.
Shopify App store will not give you enough exposure to grow your customer base naturally, you will have to invest in your distribution channel anyways, but now you are tied to a 20% commission since your app is public.
App store ranking system is heavily tuned towards the rate of installations your app has, which means products that offer free, or very cheap pricing plans are getting to the front page. If you offer free or very cheap pricing you will get inundated with customer support requests. The biggest chunk of Shopify customers, have very little understanding how to run an e-commerce store. Handling these requests will be a nightmare. This also means that the Shopify App store is not used anymore by stores that are running on Professional or Shopify Plus platforms, since it is full of apps that are borderline scam, and they can't find valuable services by a simple search.
Shopify understands this as well, that's why they've created Shopify Plus Certified App Store https://www.shopify.com/plus/partners/technology, which is essentially a curated Shopify App store targeting customers who are not afraid of paying money for valuable services. Getting there is not easy since the certification process is not transparent (we've applied but not heard anything from Shopify since then).
Also, Shopify integrates new features into its platform every year getting into more and more verticals. This essentially means that if you build an app that provides important e-commerce functionality, Shopify will probably release the same feature integrated natively into their platform.
All in all, don't bet on the Shopify App Store distribution channel, it is just not worth it.
In your particular case, if I understand correctly, Shopify wants you to bill customers for App store purchases through their platform. I don't think that's wrong - most marketplaces expect a cut of the revenue you make off their platform.
> The Shopify integration is just used for discovery (via their app store), login, installation, email integration, and of course billing.
So Shopify is responsible for generating 100% of your revenue, correct? If you are opposed to a 20% cut of that on principle, how else do you expect them to make money?
Or maybe I don't understand how exactly you use Stripe in connection to Shopify. Can you tell us more about what your app does and how you use Stripe?
OP is not "paying for a platform" on Shopify -- they are not a customer of Shopify running a store. OP is a Shopify partner offering a service to Shopify's clients, through Shopify's own web site, and is expected to pay Shopify a cut of their profits in exchange for being featured this way. This is a standard practice for this type of partnership.
It's the walled path you and other merchants paved, but nothing is stopping you right now from making your own store on a personal site I think? If you need one let me know how I can help you.
Right now it only works for digital downloads but I'm planning to build out shipping and local pickup options for physical goods.
Currently in beta but my wife is using the platform in production here: https://shop.printableprompts.com
The only payment processor at this time is stripe.
My thought is to allow people to bring their own domain, Stripe API keys, PayPal, and S3 bucket or digital Ocean spaces (for files, attachments, thumbnails, preview files, and products.
I want to disrupt and keep pricing very competitive for small shops (potentially even a free entry-level plan)
Hope this helps you feel less trapped.
Click the "New Shop" button to try the beta.
There are other solutions for digital products that take lower commissions, for example FastSpring (would not recommend) or MyCommerce (no experience).
They are probably not as sleek as Shopify, but their rates are around 5-9% (depending on how big average orders are), and they handle VAT and invoicing so you don't end up having to pay a lot of back taxes when the authorities audit your business.
They are built for selling software, but work just as well for ebooks etc.
I don't give tax advice but in the United States each state handles sales tax and economic/physical nexus on digital goods differently.
All of these are on my radar for MakePostSell and all online sellers should educate themselves on the rules for their region.
Having looked into it recently, the current pricing for online merchants is just excessive. Unless you are selling an item with a ridiculous margin, it is hard to keep up. And it isn't just Shopify and companies of the same type. Online marketplaces are about as bad in terms of trying to capture bigger slice of the pie.
I will keep watching your project.
They now absorb the commission into their pricing. Once you disable your standalone Stripe integration, it disappears and they only way to get it back is to cry to support.
And now your stepping on their transaction profits which are substantial, considering the amounts they process.
It is also a big piece of the verification process for the App Store. So maybe you added Stripe later and now they found it?
Did you have a written waiver that you could charge another way? That is required at least since ~2015.
As a result, I'll advise clients to use Shopify for a POC perhaps but then to put money aside to build their own system when they gain some traction. And I'm starting to wonder if there's a market for someone to build the Android equivalent of Shopify because this pisses me off royally. Especially when non-US customers pay the same fees but have less features for some unknown reason.
They need to start paying attention to core web vitals stat.
https://www.shopify.com/partners/terms#section-c2-2
> Unless otherwise indicated in this Agreement or agreed to by Shopify in writing, under the App Plan, an App Developer is entitled to eighty percent (80%) of the total revenues from the sale of, subscription to or charges relating to the Public Application, with Shopify being entitled to the remaining twenty percent (20%).
https://www.shopify.com/legal/api-terms
> “Public Application” means an Application that accesses the Shopify API via an API Client and that is made available to Merchants either via a URL or through the Shopify App Store, and that is not a Custom Application.
> “Private Application” means an Application that accesses the Shopify API via Private API Credentials and is made available to a single Merchant.
With that being said, I don't see a problem in requiring their users to use a specific PSP that makes more business sense for them. But yes, like other have pointed out, it's way up there on the hypocrisy chart to do this while complaining about Apple. Apple's 30% cut is not unfair, neither is theirs.
If you're serious about your ecom and you're in it for the long run, it's worth it to pay for a custom solution. Control your code and your customers data.
Ok, ok I get it, it's not a physical product but still people get paid to work on it and develop it, and there are income taxes and all that, but really 20-30%?!?!
If you sell a product chances are your profit margin is 20-30% and that it's good, but here in software we have to do a cut for 20-30%, well again 10% it's not going to buy all the fancy tech and spaces in expensive parts of the world.
Apple charges commission for your paid application regardless of distribution form because there is only one and you have to use it, the AppStore. Shopify has an optional distribution platform for apps which they charge a fee for. You can distribute your app on your own and avoid the fee.
If your application 1. uses the Shopify API and 2. is sold to more than one Shopify customer, then Shopify takes 20% of your revenue. Presence on the optional distribution platform is not necessary.
But in an eco-system driven platform I don't think having a choice matters in the end.
If users are trained that the best place to install apps is through the app store and there's a huge marketing effort put in place by the app store that you can only trust apps from that store, etc., etc. then it almost doesn't matter if there's an alternative because users immediately associate non-app store apps as being very bad and should be avoided at all costs.
I don't use Shopify currently but I imagine the work flow for adding a new app to your store starts with you searching the app store for whatever type of app you want because it's built into the platform. Then you start narrowing down results based on demo videos, features and reviews until you find something you're happy with.
Going outside of the app store doesn't even come up because most app types probably have dozens of decent choices on the app store. Even if you decided to Google around most of the top hits will be apps from the app store because Shopify's SEO is very likely going to be better than yours.
The only way someone will discover and use your app outside of the app store is you have already have a massive following and trust that you're not a bad actor looking to do something shady by avoiding the app store (because this is what users are trained to think) and your app is leaps and bounds better than anything that exists on the app store so that users are willing to take the risk to go with your non-official app. That doesn't seem like it would happen very often.
Does anyone have a wildly successful Shopify app that's not on the app store?
To me this feels like an illusion of choice because yes technically you have the option but realistically the outcome is the same as having no option.
If I had to set up payments for each extension and go through gathering invoices and documents it would be devastating.
So as long as I understand the author I also understand why Shopify wants the billing API to be used.
Also easy pay = more users ...
If the world is ever dominated by aliens it won't be due to their superior firepower, but because some human accepted their EULA/ T&C without reading.
The subscription apps on the App Store are suited for physical goods (coffee beans, etc) rather than digital (membership, gift subscription, saas, etc.) which is what is driving the subscription economy.
So building a digital membership platform on Shopify makes no sense, unless you consider sending shoes as a subscription to someone on a regular basis a 'digital membership'.
If your business has grown you could evaluate to move off the shopify platform. And figure out best way to handle this fine/charge.
Holy cow.
I don't understand why any business would willingly do that other than business ignorance or technical laziness.
shopify is a platform that monetizes selling things. no company would allow the kind of freedom you seek. if that's what you want, build your own website and use stripe. it's not that hard.
You choosed their platform, and you agreed with that, so why do you complain now?
EDIT:
Title should be renamed to: "Shopify asks users to comply with contract they signed when joining the platform"
Salesforce uses a similar model
Anyhow: For larger shops, self-host and find a good payment gateway. SaaS that takes a percentage will bleed you dry.
If that's too much, the business has bigger problems that certainly won't be solved by self-hosting or maintaining their own homegrown backend.
In the case of Amazon you own nothing so as a merchant you are thrown into a marketplace where Amazon controls everything and Amazon can take your best products and then make knock offs of them and undercut your sales. Totally different companies - not in the same ball park (Amazon is way bigger then Shopify, don't fall for the false narrative)
Shopify charge a monthly fee for their online ecommmerce stores, and they don't take a 20% cut for that.
OP clicked "I have read and agree" on the TOS when signing up and they are now complaining that the fees are unreasonable?!
You chose to sell your app on their marketplace and agreed to their TOS and pricing. They provide you with access to their marketplace and you agree to pay them 20%. Were you aware that these are the terms and broke them anyway?
It's like an Uber diver who will start charging cash without going through the Uber app to avoid paying Uber. Or maybe start a McDonald's franchise and hide all the profits. Not to mention paying taxes to the government...
Apple controls the iOS platform, so it's a different case. Shopify does not prevent you from selling on your own website and taking 100% of the profits.
