How to accept payments online: Your guide for UK businesses

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

Contactless QR Pay

With QR Pay, you can accept payments via contactless transactions by simply displaying a QR code. Customers scan the code with their smartphone, enter the amount, and confirm the transaction. QR code payments speed up the checkout process, are cost-effective (no hardware needed), and are particularly useful for remote or socially distanced transactions. Many open banking providers offer low-cost QR payment solutions.

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 app

Open Banking-powered pay by bank app is an excellent method for accepting online payments. Customers can directly transfer funds from their bank account to yours, bypassing intermediaries like card networks. This can significantly reduce transaction fees, accelerate settlement, and enhance security.

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 are popular POS systems for retailers, offering integrated hardware and software solutions for hassle-free point-of-sale transactions. For businesses that need a mobile POS app, Wonderful provides its 'One' app, which enables instant bank payments at the point of sale.

Payment gateways

Payment gateways are systems that facilitate digital payments by securely authorising transactions for merchants, retailers, and physical stores. By integrating with eCommerce sites, mobile applications, and point-of-sale systems, these tools allow businesses to accept online payments through various methods with ease.

With payment gateway providers such as Wonderful, PayPal, Venmo, and Revolut, merchants can accept payments for both online and in-person sales in real-time.

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: These are specific bank accounts for businesses that enable the acceptance of card and other digital payments. They temporarily hold funds before transferring them to your business bank account. However, many PISPs include a built-in merchant account, so a separate one isn't always necessary.

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. Some gateways charge a per-transaction percentage and a fixed fee, while innovative solutions like Open Banking (offered by Wonderful) can significantly reduce these costs.
  
• 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.

1. Register: Start by registering for an account on the payment gateway's website.
   
2. Verify: Submit company documents for verification to establish your business's identity and integrity.
   
3. Link your bank account: Connect your business bank account to the gateway to enable fund transfers.
   
4. 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, consistently review your transaction statistics for any potential issues or fraudulent activity. Staying informed about new features and updates from your payment service provider will help you stay ahead of the curve.

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: The process of getting started is typically much faster and less complex, with easy online applications and instant approval.
  
• 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

A leading innovator in the UK payment industry, Wonderful offers a modern, cost-effective alternative to traditional card processing. Powered by open banking, their suite of payment systems for small businesses seamlessly integrates with e-commerce websites, accounting software, and your point-of-sale.

One App: Generate tap-to-pay links and QR codes via this budget-friendly mobile app. It processes transactions instantly over a secure network, with real-time settlement directly into your bank account.

WooCommerce payment plugin: Accept online payments on your WooCommerce store with a hassle-free checkout experience.

Pricing: The 'Plus' plan, starting at £19.99 for 2,000 monthly transactions, offers significant cost savings by removing percentage-based fees.

Payment API: Their developer-friendly API enables custom integrations with unique apps.

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.

Buyer protection: Offers robust consumer protection policies, which can mitigate merchant risk and enhance customer confidence.

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.

Final thoughts: Moving forward with confidence

By understanding the importance and implementation of robust payment solutions, your business can provide excellent payment experiences, achieve significant savings on processing fees, and optimise revenue generation.

To make an informed decision, assess which payment services best align with your business needs. Revisit options like Wonderful, Stripe, Square, and PayPal to compare their features, pricing, and how well they fit your business model.
Ultimately, choosing the right solution gives you confidence. It’s an investment that enhances efficiency, improves customer satisfaction, and sets your business up for sustainable growth in the digital marketplace.

Common FAQs about accepting online payments

What is the safest way to accept payments online?

Trusted PISP's like Wonderful, PayPal, Stripe, etc. are compliant and use modern technologies to provide robust data protection. You should verify their encryption mechanisms, fraud detection capabilities, and regulatory compliance before engaging with them.

When starting a new business, how do you accept online payments?

Setup a payment gateway, create a merchant account, integrate a variety of payment methods, such as digital wallets and credit and debit cards, and guarantee secure transactions through the usage of SSL certificates and PCI compliance.

How can you accept payments using QR codes?

Use PayPal or Wonderful's QR Pay to accept payments. After creating a business account, create a QR code on the website. Display the code visibly at your POS or on your invoices. Customers will scan the code using the camera on their smartphone or with an app. The customer then types in the amount to pay and pays via his mobile payment application.

How do you link your bank account to accept online payments?

Link your bank account through your payment platform’s settings to start accepting online payments. Enter your account details and complete verification, either via instant login or test deposits, to receive payouts directly to your bank.

Photo by Firmbee.com on Unsplash