Last editedJul 20236 min read
Recognising the pivotal role online payment systems play in UK businesses today is crucial. With an increasingly digital economy and the growing demand for seamless online transactions, choosing the right payment system can be the difference between stagnation and success. Each system has its own unique set of strengths and weaknesses, moulded by factors such as transaction fees, set-up costs, payment method, speed of processing, and more.
Traditionally, card payments have been the go-to method for many businesses, providing an easy, familiar route for transactions. However, an in-depth review reveals that bank payments such as Direct Debit often offer a more robust, flexible solution than card payments, particularly for businesses with recurring payment models.
To fully appreciate the benefits of bank payments, we must first understand their inner workings. Unlike card payments, which are routed through a network of interbank payments are direct transfers between bank accounts, reducing the number of intermediaries involved and thereby reducing transaction costs.
Bank payments also offer a level of stability that cards can't compete with - bank details rarely change, unlike card details which change every time a card is lost, stolen or expired. This consistency reduces failed payments and manual admin and improves cash flow. In addition, consumer safeguards like the Direct Debit Guarantee offer the business and customers protection and peace of mind, securing trust and loyalty.
Next we review the top online payment systems in the UK.
Not a household name yet like Worldpay or PayPal, but GoCardless offer the most cost-effective payment collection system if you’re looking for a complete and affordable package. With no contract or long-term commitment required and no set-up or monthly fees, you can try GoCardless risk-free. Read more about pricing.
GoCardless makes business owners' lives easier by automating payment collection via the UK’s bank payment network. Whilst card payments are still very popular, using bank payments has many advantages for businesses. These include reductions in late payments and manual admin, plus more flexibility in setting up payments and more convenience for your customers.
GoCardless allows businesses to set up automatic payment collection, reducing the administrative burden associated with manual invoicing and improving cash flow. With bank payments, such as Direct Debit, your business controls the payment process, reducing the chances of late payments due to customer oversight.
Direct Debit is a ‘pull’ payment - this means that once your customer authorises your business to take payments directly from their account, without them needing to take any further action. The authorisation lasts until a specified date or cancellation, allowing you to take recurring payments, even changing the amount, frequency and due date, without requiring further authorisation.
Finally, GoCardless integrates with popular business software and platforms, including accounting software like Xero, QuickBooks and Sage, along with various subscription management platforms, making it easier to manage payments within existing workflows.
The affordability, flexibility and seamless integrations make GoCardless an attractive choice for businesses looking for a comprehensive, modern payment system.
How to collect Direct Debit payments with GoCardless
Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).
Easily set up & schedule Direct Debit payments via payment pages on your website checkout or secure payment links.
From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.
While PayPal might be the more visible brand due to its long-standing partnership with eBay, the title of largest payment system provider in the UK goes to Worldpay. The brand handles over 40% of all UK card transactions and boasts numerous flexible pricing plans for businesses of all shapes and sizes.
The headline feature is arguably the “pay by link” system that allows businesses to send secure payment links through email, which could be invaluable to companies that are just getting started and don’t have a complete website yet. It can also be integrated easily with existing sites, and you can be up and ready within 24 hours.
This Swedish fintech aims to change the way your business accepts payments completely. They offer a buy now, pay later service that can be incredibly attractive to companies offering more “big-ticket” items. Customers can either pay immediately, defer payment or pay in instalments through consumer finance.
There are set transaction fees, but they decrease as your business becomes more established, and there are zero setup or monthly fees to consider. Klarna also offers a bespoke payment widget that shows a customer’s preferred and most relevant payment options.
An increasingly popular payment gateway for businesses that don’t charge by transaction, SagePay might be a great option for businesses that process between 100 and 350 monthly transactions. Everything is handled for you – from compliance checks to invoicing, done through Sage’s system. Indeed, it can also be integrated with the company’s other range of products.
The only negatives are that running the system takes a little technical know-how and struggles to generate a quote if you pass more than 3,000 monthly transactions. This means there might be better options for larger-scale operations.
While it seems outdated compared to its competitors, PayPal is still going strong and enjoys a pretty hefty market share. The company offers a small business option known as the Web Payments Standard, which allows you to add a payment button to your site by copying and pasting a line of code, and it’s straightforward to set up. As so many customers already have PayPal accounts, it will also be the favoured choice of many.
However, PayPal’s fees are among the highest if you’re selling at low volumes (3.4%), and the Web Payments Standard can look unprofessional. If you are happy going with the devil, you know, then PayPal is at least a faster payment system than most and is a secure and incredibly mobile-optimised option to consider.
Stripe is another online payment system that is used widely. It differentiates itself through its robust API, allowing for customised integration with websites and mobile apps. Its pricing structure in the UK offers a straightforward, pay-as-you-go model. However, costs can add up quickly for businesses with a high volume of transactions, especially when one factors in the level of payment failures associated with card payments.
Stripe offers a variety of additional features beyond payment processing, such as subscription services, marketplace payments, fraud detection and financial reporting. This extensive range of tools might be overwhelming for small businesses that simply need a straightforward payment solution.
While it supports over 135 currencies, this could be an unnecessary feature for businesses that only operate within the UK. Despite its comprehensive offering, the need for a more streamlined, cost-effective solution might be a more suitable choice for many UK businesses.
While traditionally popular, card payments might not always be the best fit. Bank payments like Direct Debit have emerged as preferable alternatives. Their flexibility makes them a better choice, particularly for businesses handling recurring payments.
Bank payments save you money on transaction fees. Card payments are routed through a network of intermediaries, each of which adds a fee, increasing the cost of each transaction. Bank payments are cheaper because they are direct transfers between two bank accounts - essentially, they save you money by eliminating the middleman.
High success rates
One of the standout features of bank payments is the stability they bring. Bank details tend not to change as frequently as card details, reducing instances of failed payments and customer churn and helping businesses maintain a steady cash flow.
Bank payments enhance customer trust with protections like the Direct Debit Guarantee, which gives peace of mind to both businesses and customers.
When choosing the best online payment system, businesses should consider several factors: the stability and reliability of the system, the associated transaction costs, ease of integration with existing systems, the level of customer trust, and the flexibility of the payment methods on offer.
In essence, businesses seeking a dependable and efficient online payment system in the UK might find bank payments, particularly those offered by GoCardless, a compelling choice due to their flexibility, potential cost savings, and integration capabilities.
Perky Blenders’ case study
GoCardless has proven to be an invaluable asset for Perky Blenders, a growing coffee business, resulting in substantial monetary savings, improved time management, and increased customer satisfaction. Their decision to employ this bank payments system has simplified the process of receiving payments, reduced administrative expenses, and expedited their cash flow.
Adam Cozens, the co-founder of Perky Blenders, revealed that the system had allowed them to compete with larger businesses: “It's an expectation from larger businesses that you'll be able to pay via direct bank payment, so it’s definitely reassuring as a small business to be able to offer that service.”
The cost-effectiveness of GoCardless was also highlighted, with Adam noting that the company had saved around £20,000 in admin costs:
As for time-saving, GoCardless has significantly reduced the time spent on managing payments. Victoria Cozens, the co-founder, stated:
Further, the compatibility between GoCardless and Perky Blenders' Xero accounting software was crucial Victoria explained:
In sum, the partnership with GoCardless has provided Perky Blenders with financial benefits, operational efficiencies, and confidence in their ability to scale and grow their business.
We can help
GoCardless is a top online payment system that automates the payment collection process, drastically cutting down on the administrative responsibilities of managing and tracking payments for your team.
GoCardless makes it quick and easy to get started, and with no contracts or long-term commitment required, there’s no risk. You can set up instant, one-off, or recurring payments in the merchant dashboard in just a few clicks, and GoCardless automatically creates and sends all the necessary forms, doing all the heavy lifting for you. You can also connect to GoCardless via over 350 partner apps, such as Xero and Quickbooks.
Discover how GoCardless can facilitate online payments making it easier for you to concentrate on what matters most - your business growth.
Bank payment via GoCardless is more affordable, more secure and more reliable than accepting credit and debit cards.
"Customers don't need to worry about fraud like they do with credit cards and bank accounts don't expire, so they’ll never need to update their details." - Scott Westbrook, Director of Business Systems, Deputy
Frequently asked questions - FAQs
What is the most popular online payment method in the UK?
The UK's most popular online payment method is debit card payments, primarily through Visa Debit and MasterCard Debit. Online retailers widely accept these methods, offering high convenience and security. Close followers include direct debit and digital wallets like PayPal and Apple Pay, with growing interest in Buy Now Pay Later (BNPL) services like Klarna and Clearpay.
Which payment gateway is best in the UK?
Determining the optimal payment gateway for UK businesses relies on specific requirements. Renowned for its user-friendly interface and exceptional Direct Debit services, GoCardless is designed to automate recurring payments, making it ideal for businesses seeking steady cash flow and lower transaction costs.
While Stripe, PayPal, and Worldpay provide flexible and comprehensive services, GoCardless excels particularly in the Direct Debit arena, making it a leading contender when considering the UK's 'best' payment gateway.
What is the most used online payment platform?
The most used online payment platform globally is PayPal. Known for its user-friendly interface and robust security measures, PayPal facilitates online payments for millions of individuals and businesses.
In the UK, it is widely accepted by online retailers and favoured by customers for its swift and secure transactions and buyer protection policies. Its position as a trusted brand and its extensive international reach contribute to its status as the most frequently used online payment platform.