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What are the best ways to take payments online?

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20233 min read

No matter what kind of business you run, it’s useful to be able to take payments online. Online payments are often the fastest, most convenient and most secure way to get paid. The main online payment methods are card payments, digital wallets and bank payments. Here is a straightforward guide to working out which of these are right for you and your business.

How to take payments online

The answer to the question ‘How to take payments online’ depends on two main factors. The first is the type of online payment you want to take. The second is how you want to approach your online payment processing. In general, you have three main options for this. These are via a dashboard, via an integration and via an API.

Using a dashboard

Dashboards are intended to be very simple interfaces between merchants and online payment processors. With that said, the real-world user-friendliness of dashboards varies greatly from one payment processor to another. Merchants can try out the GoCardless dashboard for free by signing up for a sandbox account.

The fact that dashboards are intended to be very straightforward to use means that they also tend to be very limited in what they can do. This means that they are generally best suited to smaller merchants. Merchants processing larger volumes of payments are likely to find dashboards very limiting.

Using an integration

Online payment processors often aim to form partnerships with non-competitive businesses in relevant areas. These partnerships aim to improve the way the businesses’ products interact with each other. This improves convenience for their mutual customers.

For example, GoCardless partners with major accounting packages such as Xero, Quickbooks and Sage. These partnerships mean that invoices created in any of these packages can be automatically collected by GoCardless when they come due. What’s more, they can also be reconciled automatically, which saves a lot of time for merchants.

Merchants of all sizes can use integrations, though they tend to be best suited to medium-sized merchants. This is because they typically offer more flexibility and power than a dashboard, but less than an API.

Using an API

With an API, you build your own connection with your online payment processor’s back-end systems. Using an API delivers the maximum level of flexibility and power. It does, however, typically require a fairly high level of technical knowledge. For this reason, this approach tends to be most suitable for larger merchants.

Different types of online payments

Here is a quick guide to the main ways to take payments online.

Card payments

The main advantage of accepting online card payments is that it’s very common for most customers to have access to at least one card. For example, they may have a personal debit card, a personal credit card and a business credit card.

There are two important downsides to accepting card payments. The first is that entering card details can create friction at the checkout. This is particularly likely if the customer is on a device with a small screen, for example, a mobile device. The second is that accepting card payments is notoriously expensive.

Digital wallets

The main advantage of digital wallets is that they are designed for use online and for in-app payments. Usually, a customer just has to click on a link, authenticate themselves and confirm their purchase. This creates minimal friction at the checkout.

As with card payments, there are two important downsides to accepting digital wallets. The first is that the market is much more fragmented than the market for card payments. There are really only two main players in the card market: Visa and Mastercard. American Express is quite niche, and other payment cards are even more niche.

By contrast, the digital wallet sector is currently being heavily contested. This creates a hard decision for merchants. Limiting the number of digital wallets they support will make for a simpler checkout experience. However, it will also limit the number of customers who can pay with a digital wallet. Likewise, the reverse is also true.

The second downside is that accepting digital wallets tends to be even more expensive than accepting payment cards on their own. This is because most digital wallet transactions are backed by payment cards. Effectively, merchants have to pay two sets of fees.

Bank payments

There are several forms of bank payments. In the context of online payments, there are only two that matter. These are direct debits and PayTo. With both options, the customer provides an authorisation. The merchant then sets up the payment and debits the customer directly from their bank account.

The key difference between traditional direct debits and PayTo is that PayTo is powered by Australia’s New Payments Platform (NPP). This means that authorisations can be verified in real time. In other words, merchants know straight away that they are going to be paid. This means that PayTo can provide a viable alternative to both digital wallets and payment cards.

The main benefit of both direct debits and PayTo is that they are both much more economical than either card payments or digital wallets. The main potential downside is that they depend on the customer having funds available. There are no credit options. However, this issue can be addressed by using a buy-now-pay-later scheme such as Klarna.

We can help

GoCardless is a global payments solution that makes it easy and affordable to take payments online, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.