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How to set up online payment systems for a small business

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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

One of the first steps in setting up a new business is figuring out how to get paid. If your small business has a web presence, it makes sense to set up a payment system online. With a selection of payment methods, you’ll be able to make checkout more convenient for existing customers while attracting new ones. Keep reading to learn how to set up online payment systems for your small business.

How online payment systems work

There are many different types of online payment systems and methods to choose from. Some systems focus on card payments, while others facilitate ACH bank transfers – but how do they work?

Most online payment systems use three elements to process debit and credit card payments.

Payment gateway: Takes customer card details and sends them securely to the payment processor for authorization
Payment processor: Serves as the middleman between the payment card and the acquiring bank
Merchant account: Used to hold funds from the transaction for clearance and settlement before the payment is transferred into your business bank account

While there are separate elements, what’s important to remember is that many of today’s online payment systems combine all three into one package. For example, if you open a business PayPal account you can start accepting card payments without any need to set up a separate merchant account.

Online payments must also be PCI compliant. The best online payment systemfor small businesses will include built-in security features to keep your customer’s financial information safe. This includes tools like SSL encryption and tokenization.

How to set up a payment system online

Now that we’ve covered the basics of how these systems work, how can you get started? There are several options when you want to figure out how to set up a payment system online. One is to sign up for an all-in-one processor that hosts the checkout form, overseas payment processing, and stores your client details securely.

Small, mobile businesses and freelancers often benefit from accepting mobile payments. To accept these on the go, you’ll need to purchase a mobile card reader that attaches to your phone. This lets you accept online payments from customers on-site.

Businesses offering subscription services might choose to set up recurring payments with customers. When your customer fills out an authorization form, your business can pull payments directly from their bank account on prearranged dates. You can find out how to set up Direct Debit payments in our guide.

What are the benefits of online payment systems for small businesses?

Compared to traditional forms of payment like checks and cash, online payments offer an array of benefits. The first, of course, is that you can get paid faster. While paper checks take several days to clear, online payments are settled quickly and efficiently.

Many customers also prefer to pay online. A good payment gateway offers several different payment methods, allowing customers to choose between card payments, digital wallets, and even Buy Now, Pay Later services. They can simply click their method of choice at checkout and complete the transaction.

Finally, using online payment systems offers greater access to valuable data and reporting. You’ll find out more about customer payment preferences, invoice amounts, popular services, and buyer behavior. With data-driven insights, small businesses can improve their services to better suit customer wants and needs.

What are the most common online payment systems?

There are many different payment gateways on the market to choose from, but customers might be unwilling to give payment details to those that are untested. Here are a few of the most common online payment systems for comparison.

PayPal: One of the world’s most popular online payments services, PayPal lets businesses process credit and debit card purchases in multiple currencies. It’s easy to set up on your website with a PayPal payment button.
Stripe: This ecommerce payment platform lets small businesses take payment directly from their own website. It’s best suited to those with some developer know-how, because it’s highly customizable. You'll need to have a website up and running first, after which you can integrate Stripe’s gateway.
Square: This all-in-one payment processor helps you build a website or integrate with your existing one. It also stands out for its point-of-sale card readers, enabling mobile payments in person or on the go.
GoCardless: GoCardless is quick and easy to set up, with hosted checkout pages and integrations with over 350 systems. You can use it for recurring payments using ACH direct debit, which pulls payments directly from customer bank accounts for maximum convenience. GoCardless is also suitable for taking one-off payments using open banking technology. It’s simple, secure, and cost-effective for small businesses.

We can help

GoCardless is a global payments solution that helps you automate payment collection, 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.