As an e-commerce business owner, you should be where your shoppers are, which is moving online at a rapid pace. Other than branding and marketing, these technologically savvy consumers are well acquainted with the Internet and convenient payment gateways and demand nothing less than a seamless e-commerce transaction.
In fact, 7 out of 10 customers abandoned their purchases due to checkout difficulties, as revealed by a survey conducted by Adyen, Half of the surveyed respondents cancelled at least one purchase online as their preferred mode of payment is not being offered in the past six months, eventually resulting in a loss of £212bn due to abandoned sales annually.
If you’re here, you’re probably thinking about how to improve your business operations to keep growing faster. Well, one way is to outsource routine and administrative tasks like accounting for companies in the UK. We also specialise in automating your accounting with a human touch. Otherwise, do read on to find out how you can make payments easy for your online customers.
What Is An e-Commerce Payment Gateway?
Instead of physically paying at the point-of-sale terminal at a retail store, think of a payment gateway as a fast and secure means for your customers to pay online. The payment gateway makes use of front-end technology to authenticate and authorize payment between your e-commerce site and your customers. Valid modes of payments include credit cards, debit cards and other forms of payment.
Before you choose your online payment gateway, consider whether you would prefer to use your own merchant account or utilise a payment gateway account through a third-party merchant.
What Is A Merchant Account?
A merchant account is a bank account which temporarily holds the funds from online or card payments before transmitting the amount to your nominated business bank account.
What Is A Third-Party Merchant?
A third-party merchant are companies that accept and receive credit card and debit card payments on behalf of your company.Third-party merchants also offer competitive rates and can be especially useful for your small business if resources are limited.
Should I Set Up a Merchant Account Or Go For A Third-Party Merchant?
|Merchant Account||Third-Party Merchant|
|Pros||Transactions are made easy||Does not require merchant’s approval|
|Merchant remains in control||Most third-party merchants are well-known (i.e. PayPal)|
|Merchant’s name is reflected on transaction||Third-party’s name is reflected on transaction|
|Fraud protection||Disputes are handled by both third-party and merchant|
|Cons||Costs more to implement||Higher transaction fees|
|Sometimes comes with hidden charges||Requires research on third-party merchants as some have bad reputation|
As e-commerce grows at a rapid rate, more and more brands are choosing to use third-party merchants over merchant accounts to handle their online payments.
Top 10 Payment Gateway to Consider
This trustworthy global payment gateway should be a familiar name by now and is supported by the most popular e-commerce platforms. With an intuitive and flexible online payment system, PayPal is easy to navigate even for first-timers, start-ups, and small businesses. With nearly 400 million worldwide active accounts, this global leader accepts a variety of credit cards and debit cards, along with seller protection, 24/7 fraud monitoring and even two-factor authentication. The two common options include PayPal Standard and PayPal Express.
PayPal Standard is your usual checkout process that requires your customers to key in their information on your online store before they get redirected to PayPal for their credit card payment. PayPal Express speeds up the checkout process by allowing shoppers to simply login with their existing PayPal account, eliminating the need for shoppers to key in their shipping or billing information.
PayPal is a great option for those thinking of international expansion since it supports 25 currencies and is available in over 200 countries. However, its variable transaction fees will favour those with ambitious sales, who can benefit from low fees of 1.75% to 1% with a monthly volume of £1,500 to £15,000 to cash in. On the flipside, PayPal’s transaction fees are not as ideal for smaller players, with 2.75% imposed for monthly sales below £1,500.
Trusted by big companies including Facebook, Airbnb, Netflix, Spotify, Microsoft, and the like, Adyen provides an out-of-the-box payment solution that allows you to receive every payment made to your business through one sole platform. Moreover, you will also be equipped with tools to track results and manage risk. With over 250 modes of payment and 150 global currencies accepted, Adyen allows merchants to analyse transaction data to learn more about shopper patterns and behaviour.
Ayden offers 24/7 in-house support with no setup fee and could be a good choice for new business owners.
Adyen prides itself as the payment platform of choice for many of the world’s top companies, with its modern end-to-end infrastructure that accepts MasterCard, Visa, and shoppers' globally preferred payment methods directly. Transaction fees vary, and the full list of pricing can be found on their website.
If you are looking for a full-service payment provider that includes your merchant account and payment gateway, Stripe is probably your best bet. Known for its user-friendly dashboard, simplicity, and ability to create a customised payment system, Stripe is popular among merchants in the UK, the US, as well as other Western countries.
Well received by big names including ASOS, booking.com, and Deliveroo, Stripe is also supportive of businesses of all scales, providing the option of a full website integration or a hosted payments page.
Additionally, Stripe charges a reasonable transaction fee of 1.4% on each European Union (EU) card charge or 2.9% on each non-EU card charge, plus a £0.20 fixed transaction fee. Depending on your business needs, Stripe provides both one-time payment and recurring payment options, and can even support more complex billing models.
As the UK's most popular payment processing gateway, Worldpay offers flexible plans for small and medium-sized businesses and processes half the volume of all payments happening in the UK. This flexible payment processing service offers competitive rates at as low as £19 a month for a basic Gateway Standard account, plus 2.75% for credit cards, or 0.75% for debit cards. WorldPay supports recurring billings, as well as a range of credit cards and debit cards at a transaction fee of 2.75% on the total amount of sale, plus £0.20 fixed transaction fee.
Braintree is owned by the PayPal family but operates as an independent entity. While PayPal aggregates accounts, Braintree provides individual merchant accounts to sellers on behalf of banks they are partnered with. Tech-savvy business owners, startups and programmers may be drawn to Braintree's highly customisable interface, although this requires you to acquire a code to integrate Braintree.
Similar to Stripe, Braintree provides both one-time and recurring payment options, at no additional cost on top of its standard pricing. Transaction fees are 1.9%, plus a £0.20 fixed transaction fee and an additional 1% for transactions from cards issued outside of the EU, while chargeback fees are £20.
Acquired by Verifone in 2020, 2Checkout is PayPal and Stripe's direct competitor, known for its fuss-free pricing plans and lower transaction fees compared to PayPal, although currency conversions and chargebacks are more pricey.
With no monthly fees and setup fees, 2Checkout could be a good fit if you are thinking of going international. It can be integrated with over 100 shopping carts and supports recurring billing for businesses with subscription models. Moreover, it accepts payments in 87 currencies and offers a range of payment gateway languages. Transaction fees for transactions in the UK are 2.4%, plus £0.30 fixed transaction fee. For transactions accepted from outside the UK, fees are at a hefty 5%. Currency conversion to sterling incurs an average of 2 to 3%fee above the daily bank exchange rate.
As the UK's only company that provides a "white label" payment gateway, this payment system lets you take in card payments through your website by providing a real-time virtual terminal to allow you to accept payments via mail or phone.
No matter which bank is responsible for handling your card payments, you can still rely on Cardstream as a payment gateway. This is because Cardstream is free-standing from acquiring banks and payment companies that process card payments. This allows you to set up a fully branded payment gateway page. Monthly fees start from £18 a month, while transaction fees will incur £9.9 in addition to other fees after 350 transactions.
Every month, Opayo processes millions of payments for more than 50,000 businesses. With no hidden charges and reliable service, merchants can receive payments in as fast as 2 days, quicker than the 7 days industry average processing time. With 24/7 phone support and other services such as payroll and accounting for a comprehensive package, Sage Pay’s pricing options are high but well worth the investment. Transaction fees are from £25 for 350 monthly transactions, £45 for 500 token purchases monthly. There is also bespoke pricing for corporate packages with over 3,000 transactions per month.
If you are looking to have your online store up and running in the shortest time possible, Square could be a good option since it is partnered with website builders including Weebly and Wix. Compared to PayPal, it is a lot cheaper with a variety of free features. For a low volume of face-to-face payments, transaction fees are kept low.
Square charges a 2.5% transaction fee and provides you with the option to pay for extra features, including a custom domain and ad removal, which start from £9 per month.
This all-in-one payment solution bundles its payment gateway together with a merchant account. If you have global shoppers, Checkout.com accepts payment in 159 countries.
What sets Checkout.com apart from the rest is its distinctive pricing structure of charges 0.25% transaction fee plus £0.20 for EU cards and 2.9% transaction fee plus £0.20 for non-European cards, instead of the usual 2.9% plus £0.20 transaction fees. Sellers who qualify for its Enterprise plan can also enjoy discount rates. Furthermore, you can pay Checkout.com on a monthly basis without contracts, eliminating any concerns about early termination fees.
Need help? Outsource your Bookkeeping and Accounting
We know how challenging it can be to run an online business, but we are here to help.
If you need to focus on the core business at hand and find yourself searching for tips on how to do bookkeeping for your e-commerce business, consider letting experienced professionals in the UK, which Osome can offer. We convert statements from e-commerce platforms into books, provide accounting services, tax filings, and profitability reports, so you don’t have to do it yourself. We know how to read docs from any platform, consolidate numbers for each SKU, product group, and market, and show you where your money comes from.