Are you wondering why Shopify requires proof of business weeks or months after you’ve been using the eCommerce platform? Getting an email from Shopify that requests for legal documents could be a shocker when you’ve been selling dropshipping products for some time now. Yet, verification is a general process that many payment gateways do to validate the identity and eligibility of a merchant applying for their service.
If you are using Shopify’s built-in credit card processor, Shopify Payments, in accepting customer payments, Shopify will do an initial review your account. This is to determine if your given information is authentic and if allowing you to use the service will not be risky for them. Once you agree to the Payments Terms of Service you are bound to comply with the specified terms and conditions on the duration of use. For you to know what agreement you are entering into, make sure that you have read and understood the content of the Terms of Service. In case of doubt, you can always consult a lawyer for accurate interpretation.
Under B.3 Verification and Underwriting of the Shopify Payments Terms of Service states that,
“To verify your identity, we will require additional information including your business EIN or Tax ID, social security number, and date of birth. We may also ask for additional information to help verify your identity and assess your business risk including business invoices, reseller authorization or distributor information, a driver’s license or other government issued identification, or a business license. We may ask you for financial statements. We may request your permission to do a physical inspection at your place of business and to examine books and records that pertain to your compliance with this Agreement.”
If Shopify asks you to provide any of the documents that are specified in their Terms of Service as proof of business, you have to comply within five (5) days. Non-compliance may result in the suspension or termination of your Service Account. Shopify has your authorization to get information about you from third party entities and identification services and to share it with their payment processors that will also assess your eligibility. You will be notified by Shopify if you’re approved to use the Service or not when they’re done with the verification process.
Yet, review of your account does not end there. There may come a time that Shopify will ask you to provide the information again in the future if there’s a reason for them to conduct a re-validation of your business. When you have taken care of all the legalities before starting your dropshipping business, presenting them for Shopify review will not be a problem. However, if you don’t have yet a business license and other applicable permits and licenses required by your government, you may not able to submit the requirements to Shopify on the specified deadline. Shopify can then suspend or terminate your account for non-compliance. Learn the importance of getting a business license and other legal documents before launching your store in this post.
Do you need to use Shopify Payments?
No. Although it’s already integrated into your admin panel, you can choose to disable Shopify Payments and choose another payment gateway. Yet, before you do that, you have to weigh first the pros and cons of using Shopify Payments for your dropshipping store.
You don’t have to pay Shopify transaction fees.
You might pay lower processing fees than other major processors.
Easy to connect with Shopify Payments because it is already integrated into the admin panel.
Provide automatic responses containing the customer, order, and shipping details during chargeback disputes.
Lessen fraudulent transactions by activating the card verification and address verification system on checkout.
The funds are withheld for a long time due to pending disputes, excessive chargebacks or refunds, or suspicious activity.
Some types of businesses are barred from using Shopify Payments.
Shopify Payments is available only in the following countries:
- Hong Kong SAR China
- The Netherlands
- New Zealand
- Puerto Rico
- United Kingdom
- United States
Shopify requires proof of business and other legal documents to establish your identity and eligibility. This can be during the initial review of your account or whenever there’s a reason to validate it. By reading thoroughly the Terms of Service of Shopify and Shopify Payments before signing up, you’ll know what to expect from using the platform and its services.
If you’re not certain if you could qualify for Shopify Payments you can reach out to Shopify support for clarification. Just remember that for any agreement you want to enter into always read thoroughly the content and make sure you understand everything before signing up. When in doubt, always seek legal advice. This way you’ll be confident that you are running your dropshipping business legitimately and is aware of your rights for any agreement that you entered into.
DISCLAIMER: The above content is for informational purposes only and should not be taken as professional legal advice. Always consult an attorney regarding your specific legal situation.