Online payment methods – a guide for small businesses

Digital payment options include:

• bank transfers
• credit card
• debit card
• Direct Debit
• Bacs
• buy now, pay later
• cryptocurrency

If you’re a service-based business then you might choose to take payments by bank transfer, although it’s likely some customers and clients won’t be comfortable sending money this way. You’d usually do this by issuing an invoice.

Meanwhile, subscription-based businesses or those that take regular payments from customers could choose to collect money through Bacs payments or Direct Debit.

And if you sell one-off products or services then you’ll probably want to take card payments using an online payment system. Buy now, pay later services have also become popular with the existence of third-party apps like Klarna and Clearpay.

How to accept credit card payments online

To accept debit or credit card payments online, you’ll either need to create a merchant account and set up a payment gateway yourself, or you can use one of the digital payment systems we mention below.

Credit and debit card payments are a great option for retail shops, hospitality businesses (for example if you use a restaurant booking system), and fitness providers. Bear in mind though, that processing card payments comes with a fee to you as the business owner.

You can also choose to add payment apps like Apple Pay and Google Pay to give even more choice and flexibility to your customers.

Wondering how to take card payments in person? We have separate guides on the best card readers and POS systems.

When accepting credit card payments, it’s worth making sure you understand how chargebacks work too.

What is an online payment system?

An online payment system is usually made up of different elements, including payment processors and payment gateways. It’s useful to understand the terminology:

• payment gateway – this is a secure gateway that sends online payments to the payment processor
• payment processor – this deals with the actual transaction between payment cards and the acquiring banks
• merchant bank – funds are deposited into a merchant bank before going into your business bank account

Sometimes all of these come as one package. For example, you can get all-in-one online payment systems that have everything you need to start taking payments online. Even if an online payment system isn’t all-in-one, most offer support to help you get set up quickly.

Online payment systems often give you the ability to take card payments in different ways. For example, if you already have an online presence, you can integrate most payment services into your business website.

Top online payment systems for businesses

Read more about the different online payment systems below.

Online payment system	Fees
Worldpay	£25 a month plus 0.99 transaction fee
PayPal	1.2 per cent plus 30p transaction fee
Square	1.4 per cent transation fee plus 25p processing fee
GoCardless	1 per cent plus 20p
Stripe	1.5 per cent plus 20p for each transaction
Opayo (Sage Pay)	Prices and fees upon enquiry

Worldpay

Worldpay (from FIS Global) claims it’s the UK’s biggest payment provider. Worldpay has a Pay by link feature that you can use through its business manager tool, which lets you send a secure payment link to your customers over email. This is useful if you don’t already have a website and online shopping cart.

You can also integrate Worldpay with your website and start taking payments quickly and easily. The monthly gateway fees start at £25 with a 0.99 per cent transaction fee. There’s also a pay as you go gateway plan where you pay 1.99 per cent for each transaction. There are no setup fees for either plan.

Worldpay can also help you become PCI DSS-compliant with their SaferPayments programme (a mandatory requirement for taking card payments).

PayPal

PayPal is one of the most well-known online payment systems. PayPal’s option for small businesses is called PayPal Checkout and it’s easy to add payment buttons to your website. You’ll just need to create a PayPal business account.

This system lets you take payments from credit and debit cards, as well as PayPal. You can also integrate PayPal Checkout with shopping carts like Shopify.

There aren’t any set-up or monthly fees, but you pay fees by the transaction – these are 1.2 per cent plus 30p for each transaction.

Your customer gets taken to a payment page hosted by PayPal to complete the transaction, before getting returned to your website. You don’t need to worry about PCI compliance as PayPal handles the payment (you just need to complete a self-assessment questionnaire).

Square

Square could be a good option if you want an all-in-one package. You can even build a website for free, if you haven’t got one already. There’s no monthly fee, but you pay 1.4 per cent for each transaction plus a 25p processing fee (UK cards).

You can integrate other apps with Square, including Wix (for building your website), Xero (for linking sales with your accounting), and Instagram and Facebook (if you sell on social media).

There’s no monthly fee for the Square Online Store and you pay 1.4 per cent per transaction, with different features and lower fees available on their paid plans.

Square also has point-of-sale systems you can use in-store, and an invoice app you can use to create invoices and send them to customers, letting them pay their bill online.

Square accepts a range of payment methods, including alternative methods like Square Pay, Apple Pay, Google Pay, and Clearpay.

GoCardless

With GoCardless payment solutions you can manage on-off credit and debit card transactions and recurring payments for things like subscriptions and invoicing.

GoCardless can also be integrated with other programmes, including popular bookkeeping apps and accounting software.

You can start with a 90-day free trial (no transaction fees), and after that pricings start at 1 per cent plus 20p. There’s also Advanced and Pro plans available with enhanced features and fraud protection.

Processing fees range from 0.5 per cent and five per cent for each transaction.

Stripe

Stripe is a complete payment platform with customisable options and payment methods. Stripe was originally built with developers in mind – so there’s lots of documentation to help you get up and running.

You need to have your own website and shopping cart first, but from there it’s quick to integrate Stripe. All of this means that Stripe might be a good option if you want to start building your own customised payment system.

The fees are 1.5 per cent plus 20p for each transaction with a UK card – for EU cards it’s 2.5 per cent plus 20p.

You can also use Stripe to create invoices and send them over email, including a secure link to a Stripe-generated payment page.

Opayo (Sage Pay)

Opayo (previously Sage Pay) is another well-known name in business software offering an all-in-one payment gateway and payments solution.

You can build a customisable payment page for your website and offer customers a wide range of options, including Pay By Link and Virtual Terminal. You can also integrate with leading shopping carts (like Shopify).

There are different pricing plans depending on what you need for your business.

Importance of secure payment systems

The reason online payment systems exist is to make it quick and easy for you to sell your products or services – and to give both your business and your customers security.

After a customer buys something on your website using their card details, those details are encrypted and then processed through the payment gateway, payment processor, and merchant bank.

Online payments need to be SSL (Secure Socket Layer) encrypted to be Payment Card Industry Data Security Standard (PCI DSS) compliant – but online payment systems often have their own SSL certificate. And if you’ve created your online store using a builder like Wix, Squarespace or Shopify, you should be able to get SSL certified through your provider.

It’s important to make sure you’re staying safe online and watch out for online scams. Our guide has more on how to prevent cyber attacks – something that’s a risk for any business, not just big players.

Do you have any tips for setting up an online payment system for small businesses? Let us know in the comments.

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