Payments, shipping and sales tax: the basics for new online stores
How to set up payment processing, choose a shipping strategy, set free-shipping thresholds and handle sales tax, VAT and GST for a new online store.
Payments, shipping and tax are the “plumbing” of your store. Customers notice them only when something goes wrong, but problems here directly cost sales and can create legal headaches. Here’s how to get the fundamentals right.
Payments
Payment processors
A payment processor (or gateway) securely accepts card payments and deposits the money into your bank account, minus a fee, usually a percentage of each transaction plus a small fixed amount. Most hosted platforms include a built-in processor; others let you connect providers such as Stripe or PayPal.
When choosing, compare:
- the percentage and fixed fee per transaction
- payout speed (how quickly funds reach your bank)
- supported countries and currencies
- whether your platform charges an extra fee for using a third-party processor
Model the impact with the fee calculator.
Offer the payment methods your customers use
Digital wallets (Apple Pay, Google Pay, PayPal and others) let shoppers check out in a tap, which matters on mobile. Some markets rely on local methods; for example, UPI in India, Interac in Canada or iDEAL in the Netherlands. Buy-now-pay-later options can raise conversion for higher-priced items, but they come with their own fees.
Security and fraud
Use your platform’s built-in checkout or a reputable provider, so card data never touches your own servers. Review flagged orders before shipping, especially high-value orders with mismatched billing and shipping addresses.
Shipping
Choose a shipping pricing strategy
- Real-time carrier rates: customers pay exactly what shipping costs. Accurate, but rates can surprise people at checkout.
- Flat rate: one simple price per order or per region. Easy to understand; you average out the costs.
- Free shipping: the most attractive to buyers, but you pay, so build it into prices or margins.
- Free over a threshold: free shipping above a basket value. It encourages larger orders and is often set somewhat above your current average order value.
Whatever you choose, show shipping costs early, on product pages and in the cart. Unexpected costs at checkout are one of the most common reasons shoppers abandon carts.
Packaging and delivery
- Weigh and measure your packed products. Carriers price on weight and size, so oversized boxes cost you money.
- Decide on delivery speeds and communicate realistic estimates.
- Send tracking numbers automatically.
- Set clear processing times (how long before an order ships).
International shipping
Selling abroad opens new markets but adds customs forms, duties and longer delivery. Make clear who pays duties and taxes, since surprise charges on delivery lead to refused parcels. Start with a few countries and expand.
Fulfilment options
Ship it yourself at first; it teaches you a lot. As volume grows, a third-party logistics provider (3PL) can store, pack and ship for you.
Sales tax, VAT and GST
Tax rules depend on where you’re based, where your customers are and what you sell. This is general information, not tax advice. Check with your local tax authority or an accountant.
Key concepts:
- Registration thresholds. Many jurisdictions require you to register and collect tax once your sales into that region pass a threshold.
- Destination-based rules. Some regions (for example, many US states and the EU’s VAT system for online sales) tax based on the customer’s location.
- Product categories. Some goods are taxed at different rates or are exempt.
- Digital products often have their own rules, including in the EU and UK.
Most ecommerce platforms can calculate and display tax at checkout once you configure your registrations. Set this up before launch, and keep good records from day one.
Pre-launch test
Before you announce your store:
- Place a real order on your phone with a real card.
- Check the shipping charge and tax are correct for your main region.
- Confirm the order and shipping emails look right.
- Refund the test order.
The full set of checks is in the launch checklist.
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This guide is general information, not legal, tax or financial advice. Platform features and pricing change, so check the provider's official pages before deciding. See our Disclaimer and editorial policy.