Guide to Online Payment Systems

This is a guide for UK business owners to taking online payments.

Accepting Credit and Debit Cards

Credit cards and debit cards are currently the most popular ways to pay online in the UK.

In 2010 we spent £54 billion in 717 million online card payments. Of those, 52% were made on credit cards and 48% on debit cards. This accounted for more than 80% of UK online spending.

[Data from the UK Cards Association Annual Report 2012]

To accept credit card and debit card payments you need two things:

Alternatively, some services provide both these services together so you don't need to apply for your own merchant account. These are known as 3rd-party payment providers or bureaux services. They include PayPal and Google Checkout.

Payment Gateway and Merchant Account Fees

You'll typically pay:

  • monthly fees of £20 to £40
  • per-transaction fees of 1% to 2.5% of each transaction amount, plus around 10p
  • there is sometimes a setup fee, too

Online Card Security

If you're going to accept credit and debit card payments, you need to make sure the card details are handled in a secure way.

The simplest approach is to use a solution where customers enter their payment details into a special secure page hosted for you by your payment services provider.

Alternative Payment Systems

As well as credit card and debit card payment systems, there are a variety of alternative payment systems. These include:

  • PayPal
  • Google Wallet
  • in-app purchases via mobile devices
  • Direct Debit (e.g. using a service such as GoCardless)