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Online Payment Methods in the UK: A Guide for Business Owners

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Are you losing sales because you don’t offer the right online payment methods? As a UK business owner, having straightforward and secure checkout experiences should be a priority. 

Recent research by Statista found that debit cards and online payment services like PayPal are the most popular ways UK shoppers pay online. However, with so many options, finding the best online payment solution for your business can get confusing.

Don’t worry, we have the answers for you! Let’s break down your e-commerce payment choices for 2024 in this simple guide…

Popular online payment methods in the UK

First up, how exactly are businesses accepting online payments?

We’re lucky to have many ways to make and take payments here in the UK. But like most things, they vary in speed, security, cost and capabilities. However, what works like a dream for one business type might be a nightmare for another, so do your research! 

Credit and debit cards: The most widely used payment method accepted by most online businesses.

Pay by bank (or instant bank pay): Uses the Faster Payments Service to offer instant transfers between UK bank accounts. Atoa is your number one choice here!

Digital or mobile wallets: Services like Apple Pay store a user’s payment details, which makes online checkout quick and convenient. Increasingly popular in the UK!

PayPal: An established system that allows customers to pay using their email address and password. Buyer and seller protection features add to its popularity.

Direct debit: Best used to collect recurring payments from a customer’s bank account with their authorisation.

Payment gateways: They can provide online payments and integrations with your shopping cart or website. Popular ones in the UK include Stripe, Worldpay, and Adyen.

Manual bank transfers: This can be a low-cost way of receiving funds, though transaction times may be slower. Instant bank payment is a much wiser option.

Buy now, pay later (BNPL): Services like Klarna offer flexible payment options that can attract new customers.

Comparing online payment solutions

Payment methodFeaturesFeesPayoutProsCons
Debit or credit cardsWidely accepted1.5% – 3% per transactionUp to 3 business daysFamiliar to a majority of customersFees and waiting times are higher than other methods
Pay by banking using AtoaNear instant funds using the Faster Payments Service0.6% per transactionInstant Secure payments made in the customer’s bank appRequires a smartphone with a UK bank app so not every customer can use it
Digital or mobile walletsFast and convenient checkoutProcessing fees similar to card paymentsInstantSecure, simplifies the checkout processStill growing in adoption
PayPalBuyer/seller protection, easy for customers, international recognition2.9% + £0.30Instant Widely trusted, no card details needed for purchasesFees can add up, occasional customer disputes
Payment gatewaysFlexible and customisable payment options with lots of featuresVaries by provider, often % based + per transactionUp to 3 business daysScalable with support for multiple payment methodsComplex to set up without tech experience

Finding the best online payment method for your business

Choosing the ideal online payment method for your business means understanding your needs. Here’s a breakdown of popular options and what to consider:

The scoop on “free” online payments

It’s tempting to see the word “free” and think you’re getting a good deal. However, most “free” payment methods come with hidden costs in the form of processing fees. These are charged on each transaction, which can quickly eat into your profits.

  • PayPal: PayPal often touts fee-free transactions, but they charge high processing fees. However, they may waive initial setup costs, particularly for simpler payment solutions. This can be a game-changer if you need to get something up and running quickly.
  • Freemium payment gateways: Some payment providers offer basic plans with no upfront charges. The catch is that these plans typically have limited features. As your business expands and your needs evolve, their fees often increase substantially.

Always look beyond setup when choosing an online payment solution. I’ve listed some of the numbers that are worth crunching below.

  • Transaction volume: How many transactions do you expect to process?
  • Feature needs: Do you require recurring billing, invoicing, etc.?
  • Long-term growth: How might your business needs change over time?

💡 By looking at the big picture, you can select a payment method that may have some initial costs but offers better value as your business grows.

Looking for a quick setup and low fees?

We may be biased, but Atoa and PayPal are the best choices for getting a fast online payment solution up and running. Plus, Atoa is ideal for new and existing businesses. Here’s why…

  • PayPal: Widely recognised and easy-to-use option, but watch out for those fees!
  • Atoa: If you’re looking for transparent pricing with some of the lowest fees available, Atoa is a strong contender. It’s perfect if you need a fast and flexible solution that can be used on the go. It is available for e-commerce payments on WordPress sites using a WooCommerce plugin.
  • Cross-border payments: If you need to accept cross-border transactions, we recommend trying Adyen. 

Using payment links as online payment methods

Other factors to consider

If you’ve reached the point of choosing a provider, it’s time to ask yourself a few final questions and map out your next steps…

  • Transaction fees: Carefully compare fees across different providers with attention to monthly minimums and chargeback costs.
  • Integration: How easily does the solution integrate with your existing website or e-commerce platform?
  • Security: Ensure the provider adheres to UK regulations and prioritises data security. Check if the provider is FCA-approved.
  • Customer support: Do they have you covered if issues arise?

💡The best choice for your business will always depend on your sales model, transaction volume, and customer preferences.

Final thoughts

It might be wise to offer multiple online payment options for different customer preferences. The best solution for your UK business depends on its needs. Regularly evaluating your payment methods as your business grows is wise. However, if you choose a fair provider like Atoa, your business can get access to the support and flexibility it needs. Low fees and instant payment are just the start, so why don’t you drop us a line?

FAQs

How safe are online payments?

Reputable payment gateways use encryption and fraud detection to protect your customers’ information. Make sure the methods you choose are compliant with UK payment regulations. Educate yourself and your customers about safe online practices, like using strong passwords and 2FA.

How much do online business payments cost?

Online payment fees might get complicated. Each payment method, whether it’s PayPal or a payment gateway, has its unique way of charging you. They may take a percentage of each sale, charge a flat fee per transaction, or earn money through setup or service fees. Compare the pricing plans of different providers carefully alongside the volume of transactions your business accepts.

Which payment methods are most popular with customers?

It doesn’t matter about any customer, it’s about what your customers like. For example, if you mainly serve younger customers, they might be more comfortable with digital wallets or BNPL options. Also, it’s important to have options that customers without tech can easily use. Offering a few popular choices – like cards, PayPal, and maybe one digital wallet – usually covers a lot of ground.

How quickly will my business receive its money?

How fast you get paid depends on the payment method. Some, like paying by bank, can be instant. Others might take a couple of business days. Consider how quickly you need the money in your account when deciding which options to offer. Also, pay attention to “settlement time,” which is how long it takes from a payment to go through to when it’s actually in your bank account and ready to be used.

What happens if there’s a problem accepting payment?

Unfortunately, sometimes things don’t go as planned. Cards can get declined, or customers might even dispute a charge, so choose a provider with good customer support. You need to know how they handle disputes and that they’ll be ready to help if problems crop up. 

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