In todays fast moving world as a business you simply cannot ignore the call of the online consumer – whether you are selling a service or a product seldom is the case that your business could not benefit from an online presence.

Accepting Payments Online

Sometimes it may be just that – a presence, just letting your customers know that you are in fact on line, perhaps to promote your brand in general, or even offer some information to your customers and potential customers.

But in reality, its quite likely that you could actually accept transactions from your customers whilst they are visiting you online. You might be a services provider such as an accountant, and you find you can offer customers online payment as a much easier alternative to paying you in person or via post, you may be selling a product that you can easily ship to customers nationally or even internationally.

Regardless of what type of transaction you are planning to carry out with your customers, unless you are completely outsourcing the entire process (for example you may be using Ebay to handle product listings, sales and payments) then you will need some form of payment gateway.

Understanding the concept of an Online Payment Gateway

As said above, if you are outsourcing your entire sales process, then you may not come in to contact with the payment gateway or any of its logistics – but of course there will still be a payment gateway involved in the process of your goods and services being sold, you just wont come into contact with it.

If you are selling directly – via your website perhaps, then you will need a payment gateway, and you will have some involvement with its setup and management.

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You can think of a payment gateway as being the online equivalent of a chip and pin payment system that you would traditionally use when accepting credit and debit card payments at a physical location (such as in a shop).

Those credit/debit card machines are acting as a physical payment gateway – they broker the connection between the retail customer and, ultimately, the bank – they are thus responsible for checking the form of payment, making sure the funds are available and then bookmarking those funds for allocation to the sellers account; quite an important role when you think about it.

So back to our online store front – when a customer comes to our store (virtually of course) we still need to accept payments from them, and thus we still need that broker – although now its a little more complex still – we are brokering between the consumer (sitting in front of their computer, in their house), the virtual storefront (typically a website) and then still ultimately the bank.

So an online payment gateway will do just that – it will act as middle man between those parties, accept credentials from the consumer, check those details, confirm funds are available, ear mark them for the seller and then confirm all of this to the seller – normally by interacting with their website or back end store system.

Different types of Online payment gateways

There are quite a few different types of online payment gateways, the key difference between them is typically the way that they do all of this processing and whether its done on your website, or on their website.

Paypal offer a payment gateway for example, and they have both options – you can integrate their system directly into your website, have it working seamlessly with your own commerce portal and thus have a very high level of control over the process – equally this in term means that you have a very high level of responsibility – you need to make sure you are capturing and storing customer details correctly, and you also need to make sure that you are interpreting the various response codes form the online payment gateway (paypal) correctly – otherwise you might release the item and then later find out the payment actually wasn’t successful.

As an alternative, paypal also offer a hosted payment gateway – you simply display a website form on your store front where the user can fill in a minimal amount of details, click on submit and then be taken to the paypal website to finish the bulk of the transaction process – the advantages of this are obvious – ease of implementation would be a big one, as well as being safe in the knowledge that paypal are directly handling most of the transaction process, data security, pre payment checks and so on, but equally you have much less control over the transaction.

In addition to the above options, you can also have an online payment gateway set up directly with your high street bank – once again they will normally provide an API (Application programming interface) that you can configure your store front to connect and liase with, and often they will offer a hosted version as well, taking care of the process for you.

Things to look for in a payment gateway provider

Some of the main things to look for in an online payment gateway provider are:

  • Costs – is there a setup cost? What is the per transaction cost? are there monthly costs or minimums in addition?
  • Ease of implementation – How easy will it be to implement, is it compatible with your store front, do you have to pay for implementation?
  • Compliance – What are the compliance issues, what are you responsible for? Do you need to adhere to certain regulations?
  • Trustworthiness – are they a well known provider, will it compliment your brand and make your customers feel safe shopping with you?

Top 5 online payment gateways in the UK

There are many online payment gateway providers operating in the UK and around the world, normally its best to use a well known payment gateway, partly because you will feel safer having them handle your transactions, but also because your customers are likely to feel more at ease shopping with you, knowing the payment provider.

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We have listed the top 5 online payment gateway providers for your convenience (not in any particular order):

  1. Paypal – Very well known, easy setup and reasonable rates
  2. SagePay – Very well known, great if you are already using Sage to manage your accounts (For integration purposes)
  3. Go Cardless – Great for accepting Direct Debit Payments
  4. Stripe – Very easy to integrate, great customer service
  5. Amazon checkout – Very well known and trusted online