Table of contents
For UK businesses, the digital marketplace is growing at an incredible pace, making it essential to have fast, reliable, and convenient ways of taking digital payments. This in-depth guide offers a comprehensive look at the various methods, technologies, and tools available, including leading payment services that help you accept online payments smoothly and efficiently.
Understanding the UK's Digital Payment Ecosystem
For any UK business, navigating the world of digital payments can feel complex. A single customer transaction involves a sophisticated infrastructure of interconnected players and technologies, all with distinct roles. But by understanding this ecosystem, you can make smarter decisions that impact your bottom line.
To help you make sense of it all, we will:
- Look at popular payment methods that UK consumers use, from traditional cards to modern digital wallets.
- Dive into the payment acceptance tools you need, like payment gateways and POS systems, to securely accept payments online.
- Examine the role of specialised payment services and clarify the mechanics of how you can accept payments on your website.
Ultimately, understanding these foundational elements will help you choose the right setup to meet your business needs, control costs, and deliver a seamless experience for your customers.
Popular payment methods in the UK
QR code payments
A QR code presents a payment request or payment route for the customer to scan with a smartphone. The customer reviews the amount and recipient, then authorises through the supported bank or wallet flow. Contactless card payments use NFC technology, while QR code payments use the displayed code. Some Pay by Bank providers let you create QR codes for in-person or remote payments without a card terminal.
Payment links
Payment links, or 'Pay by Link,' have become a popular payment method in the UK. They allow you to accept payments online by sending a secure payment link via email, SMS, or social media. This method improves customer convenience and helps to recover payments for invoices or phone orders.
Credit and debit cards
For many UK customers, credit and debit cards remain the most widely used payment method. Reputable payment services like PayPal, Stripe, and Square allow you to set up a card payment facility and accept card payments securely, both in-store and online.
Digital wallets
Digital wallets are one of the fastest-growing payment methods for quick, secure electronic transactions via a mobile device. They use cutting-edge technologies like Near Field Communication (NFC) for in-store payments and can be integrated into your eCommerce site. They store a tokenised version of card details, which enhances security by not sharing the actual card number with merchants.
Popular digital wallets
Apple Pay: Known for its security and convenience on Apple devices, Apple Pay secures transactions with tokenisation and biometric authentication (Face ID or Touch ID). You can integrate Apple Pay into your website via your payment gateway or accept payments in-store using a contactless terminal or 'Tap to Pay on iPhone'.
Google Pay: A popular choice for Android users, Google Pay interfaces with a variety of services to provide a consistent payment experience across devices. UK merchants can accept Google Pay via contactless terminals in-store and through supported payment gateways for online transactions.
Samsung Pay: This mobile wallet works with a wide range of payment terminals that accept contactless payments via NFC technology. Note: The MST feature is not available in the UK.
Open Banking and Pay by Bank apps
Pay by Bank uses Open Banking to let customers authorise account-to-account payments with their bank. This route can avoid card-network percentage fees. Provider pricing, payment status, settlement and access to funds vary, so check each separately. This cards versus Pay by Bank comparison explains the main cost and workflow differences.
Tap to Pay on iPhone
With Tap to Pay on iPhone, you can accept contactless payments directly on an iPhone with no additional hardware needed. This feature supports contactless card and digital wallet payments, simplifying in-person transactions for mobile vendors and smaller establishments.
Bank transfers
A bank transfer is a safe method of moving funds between bank accounts. While online instant bank payments are growing in popularity, traditional methods like BACS and CHAPS are still used.
BACS: A low-cost, 3-day payment service, typically used for payroll and large batch payments.
CHAPS: A same-day, high-value transfer service, generally reserved for urgent, high-cost transactions due to higher fees.
Buy now, pay later (BNPL)
This innovative method allows customers to buy now and pay later in instalments. Payment services like Klarna and Clearpay have driven its acceptance, particularly among younger generations. Offering BNPL can help to increase conversion rates and improve average order value.
Cryptocurrencies
While not mainstream, cryptocurrencies are gaining momentum as a new-age payment method. Powered by blockchain and utilising cryptography, they offer a decentralised way to accept online payments. Many payment processors now support cryptocurrency payments, often converting the crypto to fiat currency instantly to mitigate price volatility.
Payment acceptance tools
Point-of-sale (POS) systems
POS systems are integrated platforms comprising hardware, software and payment services that enable you to accept payments for both online and in-person sales. They further assist in inventory management, sales tracking, and consumer data analytics.
For in-person transactions, Square and SumUp offer POS systems for retailers with payment hardware and software. Businesses comparing a mobile POS app should check which payment methods and operational features each system supports. Wonderful One is a merchant app for creating Pay by Bank requests and presenting payment links or QR codes.
Payment gateways
A payment gateway carries payment details and status messages between a checkout and the services that authorise or process the chosen method. Card gateways may support websites, apps and point-of-sale systems. Pay by Bank providers use a different account-to-account route.
When you compare payment gateways, check the supported methods, integration, complete fee structure, payment status reporting and settlement terms. Wonderful's service in this comparison is Pay by Bank.
How to accept payments on your website: Your step-by-step guide
Ready to turn your website into a revenue engine? Accepting online payments might seem complex, but it's a straightforward process once you understand the key components. This guide demystifies the options, from eCommerce platforms and payment gateways to merchant accounts. You'll get a clear, step-by-step plan for setting up and testing your system with confidence.
The essential components
Let's first understand the different components that enable you to accept payments on your website:
- eCommerce platforms: Solutions like Woo, Shopify and Magento enable merchants to create, manage, and operate online stores. They offer various payment integration options, giving you the flexibility to choose what works best for your business.
- Payment gateways: These are the secure technology solutions that manage digital transactions. They act as a bridge between your customer's payment method and your bank, safely transmitting encrypted data and relaying the approval or denial back to your website. Popular examples include Worldpay, Square, PayPal, and Stripe.
- Merchant accounts: Card acceptance uses a merchant-account arrangement to receive funds through the card-processing chain. Some payment aggregators use one aggregated merchant account for multiple businesses. A payment initiation service provider, or PISP, initiates an account-to-account payment instruction. The PISP role and the card merchant-account arrangement are separate.
Choosing a gateway: What to look for
Choosing the right payment gateway is a crucial step. Here are some key considerations that will guide you to the right choice for your venture:
- Security: If you are accepting card payments, ensure the gateway is PCI DSS compliant and provides robust fraud detection and encryption to protect your customers' data.
- Fees: Go beyond the headline rate. Evaluate the total cost, including transaction fees, monthly fees and any additional expenses. Card gateways may charge a percentage, a fixed fee or both. Pay by Bank providers use different pricing structures, so compare the current published price with your expected volume and workflow.
- Integration: Check that the gateway integrates seamlessly with your website or e-commerce platform. Stripe is popular for its wide-ranging compatibility, making integration straightforward for a variety of applications.
- User experience: A seamless checkout process is vital to prevent cart abandonment. The checkout should be simple, intuitive, and secure for your customers.
Setting up your account
Once you've made your choice, the account setup process is typically straightforward.
- Register: Start by registering for an account on the payment gateway's website.
- Verify: Submit company documents for verification to establish your business's identity and integrity.
- Link your bank account: Connect your business bank account to the gateway to enable fund transfers.
- Personalise: Customise the payment user interface to match your brand, ensuring a seamless experience for your customers.
Integrating and testing your payments
- Integration: Most gateways offer plugins (like those for WooCommerce or Shopify) for easy integration. They also provide a customisable API and Software Development Kits (SDKs) for more complex, bespoke integrations.
- Test-run: Before going live, conduct test transactions to ensure a smooth, error-free checkout. This includes checking the transaction flow, confirming end-to-end encryption for sensitive data, and verifying the overall user experience.
- Monitor: Once launched, review payment statuses, settlement records and exceptions using the information supplied by your provider. Keep your integration and operational checks current.
Keep each payment stage distinct. A customer can authenticate and authorise before the provider reports initiation or completion. Settlement, account credit and access to funds can follow on different timelines.
Accepting a variety of payment methods
Following this procedure enables you to accept a variety of payment methods, including major credit cards, Pay by Bank (via Open Banking), bank transfers, and BNPL (Buy Now, Pay Later) options. This ensures your online store meets customer expectations and secures more conversions.
No merchant account? Here's how to accept online payments
Don't want the hassle of a traditional merchant account? For most UK businesses, it’s no longer a problem. This section explains how payment services like PayPal, Stripe, and Square enable you to accept online payments without one. We cover the benefits, drawbacks, and key considerations to help you make an informed choice.
How to accept online payments without a merchant account
Payment services like PayPal, Stripe, and Square enable businesses to accept card payments and other methods without a traditional merchant account. Instead of requiring you to set up your own account with a bank, these services use a single, aggregated merchant account to process transactions for multiple businesses, simplifying the process.
Benefits of using a payment aggregator
- Quicker setup: An online application may be quicker than arranging a dedicated merchant account. Provider onboarding and verification checks still apply, and approval timing varies.
- Lower upfront costs: You don't need a dedicated merchant account, which often comes with setup fees and monthly charges, resulting in lower initial expenditure.
- Simpler management: The payment service handles much of the technical and compliance work for you, freeing up your time to focus on running your business.
Drawbacks to consider
- Higher transaction fees in the long run: While upfront costs are lower, aggregated accounts typically come with higher per-transaction fees, which can become costly for high-volume businesses.
- Less control: You may have less flexibility over the payment process and data compared to having your own dedicated merchant account.
- Risk of funds held: Payment services can sometimes hold funds for longer periods, especially for new accounts or transactions flagged as higher risk.
Choosing the right payment service
Selecting a reliable payment service is essential for any business. They act as intermediaries, enabling seamless acceptance of payments from various methods, including cards, digital wallets, and bank transfers. They also offer features like transaction routing, fraud detection, and analytics. When choosing payment services consider the following:
- Transaction fees and the overall cost.
- Supported payment methods.
- Ease of integration.
- The quality of their customer support.
Understanding how to accept online payments without a traditional merchant account gives you flexibility, but it's just the first step. With so many options available in the UK, how do you know which one is right for you? In the next section, we’ll dive into 6 of the best payment services for UK businesses, exploring their features, pricing, and key benefits to help you make an informed decision.
A closer look at the 6 best UK payment services
With many online payment solutions available in the UK, selecting the right one can be tough. This section cuts through the noise, providing a focused review of six leading payment services. We'll explore their features, pricing, and ideal use cases to help you find the perfect partner to accept payments online for your business.
1. Wonderful: The UK's Open Banking specialist
Wonderful provides Pay by Bank for UK businesses. Its small-business payment routes include payment links, QR codes, a WooCommerce plugin, a Xero integration and an API.
Wonderful One app: Create payment links and QR codes for customers to authorise with their bank, then follow the payment status in the merchant app.
WooCommerce payment plugin: Add a Pay by Bank checkout to a WooCommerce store.
Pricing: Check Wonderful's current plans and pricing for the monthly allowance, per-payment rate, settlement wording and included integrations.
Payment API: The Wonderful One API supports custom Pay by Bank integrations.
2. Razorpay: Global reach for international transactions
While originating in India, Razorpay is a robust payment service offering extensive features for UK businesses with a global customer base. It stands out for its wide range of payment method support and intuitive dashboard.
Diverse functionality: Supports various payment methods, including cards, digital wallets, and local options.
Customisable API: Provides extensive APIs for building custom payment solutions.
Analytical insights: Comprehensive reporting helps you monitor payment performance and optimise processes.
3. PayPal: The trusted and adaptable giant
As one of the most trusted names in the industry, PayPal offers a widely recognised payment service that helps merchants accept online payments. Its strong brand reputation can enhance customer confidence and improve conversion rates.
Strong reputation: Trusted by millions of consumers worldwide.
Versatility: Integrates with most e-commerce sites via a free-to-install plugin, allowing you to accept payments online in various ways.
4. Stripe: The developer's powerhouse
Often the preferred choice for developers, Stripe is a powerful payment service with a highly adaptable API. For businesses with a global presence, its broad support for payment methods and currencies is a major advantage.
Customisable: Extremely flexible, with full API back-end support for custom integrations.
Global reach: Supports over 135 currencies, making it ideal for international e-commerce.
Comprehensive features: Includes a wide range of tools for billing, subscription management, and advanced fraud prevention.
5. Square: The all-in-one, unified solution
For UK merchants looking for a seamless, all-in-one solution, Square provides comprehensive, easy-to-use services for both online and in-person transactions.
Simple setup: The setup and operation are straightforward, particularly for small businesses.
Unified integration: Offers a comprehensive POS solution that integrates digital and in-person transactions, enhancing the user experience (UX).
Additional Services: Provides extra features like inventory tracking, employee management, and invoicing, all from one platform.
6. myPOS: The instant settlement specialist
myPOS offers a comprehensive payment solution that works for both online and in-person sales. Its primary benefit for UK businesses is fast access to funds, with instant settlement to your myPOS e-money account.
Instant access: Funds are accessible in your myPOS account instantly, aiding cash flow.
In-person support: It supports in-person transactions with a range of terminals and the 'myPOS Glass' mobile app.
Multi-currency accounts: Useful for businesses that handle international transactions.
Choose the payment route that fits your business
Compare the routes your customers can use, the complete cost, the integration work, the payment statuses you can see and the settlement record you receive. These details shape checkout, support and reconciliation.
Review current provider terms before you decide. Wonderful offers Pay by Bank, while card processors and wallet providers cover different payment methods and operating needs. Choose the setup that gives your business clear costs, reliable status information and a workable route from customer authorisation to funds you can use.
Common FAQs about accepting online payments
What is the safest way to accept payments online?
Choose a provider whose identity, role and permissions you can verify. For card payments, check your PCI DSS responsibilities and the provider's security and fraud controls. For Pay by Bank, check the provider's regulatory status, customer authentication, payment status reporting, settlement terms and support. Wonderful provides Pay by Bank; PayPal, Stripe and Square offer different mixes of payment services.
When starting a new business, how do you accept online payments?
Start with the payment routes your customers need. Card acceptance usually requires a gateway or checkout provider and a merchant-account arrangement, which may be aggregated. Pay by Bank requires a provider that can initiate account-to-account payments. Complete the provider's onboarding checks, integrate and test the chosen route, then reconcile payment status and settlement records.
How can you accept payments using QR codes?
Create a supported payment request in your provider's app or dashboard, then display its QR code at checkout or on an invoice. The customer scans the code, reviews the amount and recipient, and authorises through the supported bank or wallet flow. Confirm the provider's reported payment status and reconcile the payment before treating it as complete.
How do you link your bank account to accept online payments?
Follow the verified onboarding flow for your chosen provider. The exact bank connection, account checks and settlement route depend on the service and payment method. Confirm the destination account and complete every required verification step before accepting live payments.