How to take payments online

What payment options are there?

Firstly, it’s useful to understand the different ways you can take (and customers can make) payments.

One method is bank transfer, but it’s likely some customers and clients won’t be comfortable sending money this way.

Another method is Direct Debit, where clients and customers can set up a recurring payment. Direct Debits usually get taken monthly, which makes them good for things like subscriptions. But if you’re selling one-off products or services, you’ll probably want to take card payments using an online payment system.

A newer payment option you could add to your website is the ability for customers to buy now, pay later with a service like Klarna or Clearpay.

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.

If you don’t have the ability to take payments on your website yet, some services give you a link or invoice that you can send customers so they can make the payment.

What are online payment systems?

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.

Are online payment systems secure?

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

After a customer purchases 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 PCI (Payment Card Industry) 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.

What online payment systems could I use for my business?

Worldpay

Worldpay 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 within 24 hours. The fees are 2.75 per cent plus 20p per transaction, or you can pay monthly. There are no setup fees.

Worldpay says you can become PCI-compliant for £29.99 a year and it has a risk management tool that tells you about suspicious activity.

PayPal

PayPal is one of the most well-known online payment systems. Paypal’s option for small businesses is called Web Payments Standard and you can add payment buttons to your website by copying code.

There aren’t any set-up or monthly fees, but you pay fees by the transaction – these are 2.9 per cent plus 30p per 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).

PayPal has other payment systems, including PayPal Checkout (if you already have an online checkout system) and Web Payments Pro for medium-sized businesses. You'll need a PayPal business account for these features.

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 2.5 per cent per transaction.

You can integrate other apps with Square, including Wix (for building your website) and Xero (for linking sales with your accounting).

There is no monthly fee for the Square Online Store and you pay 2.5 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.

Stripe

Stripe bills itself as a complete payment platform and it has lots of customisable options if you’re a techie. 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 1.4 per cent plus 20p per transaction for EU cards – for non-EU cards it’s 2.9 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.

Sage Pay

Sage is another well-known name in business software – Sage Pay is its payment gateway for businesses that want to get set up online.

Sage Pay can help you set up a merchant account and make sure you’re compliant.

Sage Pay doesn’t charge by the transaction. Instead, it has flat fees of £27 a month for its Flex offering. With that you get 350 transactions a month, fraud screening tools and 24/7 support.

You could also try Sage Pay’s e-invoicing software, which lets you send invoices with a ‘pay now’ button. It costs £5 a month (for payments of £1000 or less a month), with transaction fees of 2.2 per cent for credit cards and 1.2 per cent for debit cards. You can integrate it with Sage’s other business cloud software, including Sage Accounts.

Online payment systems: what to do next?

This article is a guide, and the right online payment system will depend on your business’s specific needs. We hope we’ve given you a headstart for your own research and that you’re able to get set up quickly.

Read more:

• Best free software and tools for small businesses and the self-employed to try
• Coronavirus support for small businesses and the self-employed

Let us know below if you’d like to know more about online payment systems and whether there are any topics you’d like us to cover further.