Online Payment Methods: How to accept payments online

There are two main methods to accept business payments online: credit (or debit) card payments and bank payments, such as Direct Debit and Instant Bank Pay. Online payments can be taken as bank payments - direct, automated transfers between two bank accounts - or via credit and debit cards through an all-in-one payment processor such as PayPal or Worldpay Online Payments. These methods provide your customers with a quick, simple and safe way to pay online.

We've compiled a guide to your main online payment options to help you decide the best way for your business to accept payments online.

Payment options for your customers: Embracing online payments

Before you start taking online payments, you're going to want to choose the best online payment method for your business. Options include:

• Bank payments – Including Direct Debit and Instant Bank Pay

• Card payments – Credit cards or debit cards, commonly using Visa or Mastercard's networks

• Digital wallets – Such as PayPal or Alipay

There are many different providers that let you accept online payments from your customers using these methods. Some providers are specialists in one category, while others are generalists that may provide access to multiple methods through a single platform. There are benefits to each, depending on your business's needs.

Accept Bank Payments Online

There are many benefits to accept business payments online via Direct Debit, or other bank payment methods. As an online payment method, bank payments have multiple use cases. Direct Debit, for example, is an especially great fit for companies currently using invoicing to collect payments or for businesses that run a subscription business. Direct Debit is a flexible and highly cost-effective online payment option, equally suitable for one-off and recurring payments, both regular and irregular. As an automated ‘pull’ payment, the business benefits of Direct Debit include eliminating late payments, which reduces manual admin and improves cash flow. There are several different options for accepting online payments with Direct Debit. Which is right for you will depend on your business and the volume of payments you collect. Enterprise-level businesses collecting payments at volume have different requirements than small businesses, but Direct Debit benefits all businesses regardless of size.

Online payment options – Direct Debit

While Direct Debit is sometimes thought of as a paper-based payment method used for gym memberships and magazine subscriptions, the reality couldn't be more different. Modern Direct Debit is an online payment method that's powerful and easy to use. It's suitable for a wide variety of payment types from subscriptions and memberships, to invoices, instalments, ad hoc payments, and more. There are a few ways you can get started with online payments like Direct Debit.

Option 1: Direct Debit platform

This is often the quickest and easiest way for small-to-medium businesses to start collecting online payments via Direct Debit. Here's how it generally works: 1. Sign up – Find your provider of choice and create your free account in minutes. 2. Verify your details – To meet regulatory requirements and prevent fraud, you'll need to provide a few quick details about your business. 3. Add customers – Use your provider's online dashboard to add your customers and create payments. 4. Collect payments – Your customer only needs to complete a one-time approval giving permission to debit their bank account, and then you can start collecting online payments via Direct Debit. There are many Direct Debit platforms in the market, including GoCardless. Any reputable provider will have the relevant security, privacy, and regulatory and compliance concerns covered for you, leaving you to focus on running your business.

Option 2: Via a bank or bureau

For some large enterprise businesses with enormous payment volumes, it may be cheaper to handle Direct Debit processing in-house and work directly with a bank or through a third party known as a bureau. Going directly to a bank requires specialist internal resources to meet the setup and operational requirements, including things such as having your own Bacs Service User Number (SUN), investing in Bacs-approved Bacstel-IP software, underwriting, revenue, and Know Your Customer (KYC) requirements. Going through a bureau may shift some of these requirements to the bureau instead, however, the ongoing management of your Direct Debit payments may not be as quick and easy as using a Direct Debit platform yourself. If you think these routes might be better suited to your business, it's worth reaching out to some Direct Debit platforms first to discuss your needs. Typically if you have significant payment volumes or specialist requirements, a Direct Debit platform will be willing to negotiate a competitive deal compared to their standard pricing. If you find your needs cannot be met, you can speak with your existing banking partners or search the market for bureaus and arrange an initial call to discuss their offering.

GoCardless Direct Debit

GoCardless is a secure, online account-to-account payments specialist enabling you to accept online bank payments via our API, our online merchant dashboard, or through a partner app such as Xero or QuickBooks.  GoCardless handles the technology and all the legal and regulatory requirements of Direct Debit on your behalf. GoCardless merchants get paid faster, spend less time on financial admin and enjoy improved cash flow with Direct Debit.

How to take instant bank payments online

If you're looking for a faster and even more secure online payment method than Direct Debit, you can collect instant bank payments from your customers. Here's how: 1. Sign up – If your current payment provider doesn't offer instant bank payments, find your provider of choice and create your free account in minutes. 2. Verify your details – To meet regulatory requirements and prevent fraud, you'll need to provide a few quick details about your business. 3. Create payment – Nominate the amount you want to collect, or if you want your customer to choose instead. Then add this to your invoices, online checkout, or wherever else you collect payments. 4. Collect payments – Your customer will typically be securely redirected to online banking or their mobile banking app, where they can see the transaction details and simply need to approve. These bank-to-bank payments are instantly confirmed, providing better payment visibility for you and your customers. With GoCardless, Instant Bank Pay enables you to save time chasing one-off payments and recurring instant payments create a smoother customer experience.

As with Direct Debit, instant payments can be quickly and easily set up in the merchant dashboard or via our API. Instant payments can also be combined with Direct Debit to allow you to take an initial instant payment whilst recurring payments are initiated. Trampoline business Gravity did exactly this and reduced the number of cancelled payments by 33% and save time and money, according to Shane Williams, Customer Experience Director.

Collect global online payments with GoCardless

Consumers are seeking alternative online payment options to pay their preferred way. With GoCardless international payments, you can collect online payments wherever your customers are. By offering the local bank payment option in more than 30 countries, including the UK, Eurozone, the USA, Canada, Australia and New Zealand, GoCardless allows merchants to expand their business and increase sales. GoCardless has built a global bank payment network making it easy for you to collect online payments from international customers without expensive foreign exchange fees or opening foreign bank accounts.

Online payment options – card payments

Credit and debit cards are the other main ways organisations accept online payments. If you are in the e-commerce space or run hospitality or retail businesses, then card payments could be a good online payment option for you. Although cards can obviously be used in person as well.

You can accept card payments online in several ways, from DIY to newer, full-service providers like Stripe, which do a lot of the hard work for you and save you from onerous PCI compliance requirements. Here's how to take card payments online:

1. Sign up – If your current payment provider doesn't offer card payments as an online payment option, find your provider of choice and create your free account in minutes. 2. Verify your details – To meet regulatory requirements and prevent fraud, you'll need to provide a few quick details about your business. 3. Connect up – Add card payments to your online checkout or wherever else you collect payments online. 4. Collect payments – Your customer will be able to enter their card details so you can process their online payment.

However, be aware of the relatively high transaction fees of accepting card payments. Card payments are routed through a network of intermediaries, each adding their fee, making them more expensive than bank payments, which are low-cost direct account-to-account transfers. Furthermore, the high payment failure rate due to lost, cancelled and expired cards results in lost customers, lost revenue and more time-consuming manual admin.

Option 1: DIY route

Unless you use an all-in-one payment processor like Stripe or PayPal, you’ll need to set up a merchant account and payment gateway to accept credit and debit card payments online.

A merchant account is a bank account that allows you to accept payments using credit or debit cards. It is an online bank account that temporarily holds your money until it is moved to your actual business account. You can get a merchant account with most banks, including HSBC, Barclays and RBS, and your merchant account doesn’t need to be with the same bank as your business account.

A payment gateway connects your website to one or more of the processor networks (similar to a credit card machine in a shop or restaurant). It lets your customer submit their credit card details and then tells you whether the cardholder’s bank approves the charge and submits your charges for settlement. Options for payment gateways include Braintree, Authorize.net, PaymentExpress, and TrustCommerce.

Option 2: Via a Payment service provider (PSP)

If you don’t want to do it yourself, you can use a payment service provider or a payment processor to help you accept online payments. These act as a middleman between you and the banks – it ensures that all the money ends up in the right place by taking it from the cardholder’s account and delivering it to your account. Full-service payment service providers typically act as the merchant account and the payment gateway, allowing you to accept online payments without a merchant account.

Using a payment service provider or a payment processor typically reduces the burden of PCI compliance, as you will never actually touch sensitive financial information. Online Payments Providers can also offer a full stack of services such as subscription billing, fraud management, payouts and transfers, etc., making the payment process even easier.

You may also be interested in a subscription management service (or subscription wrapper), which lets you easily handle recurring payments. Services typically have a credit card vault (where customers can store their credit card details for future use); automate billing, customer sign up and billing-related emails; and make sure the right people get charged the right amount every month. You’ll typically still need to use a merchant account, payment gateway, or payment processor. Options include Zuora, Recurly, Chargify, Vindicia, Chargebee.

Online payment methods - key takeaways

In this guide, we have focused on the two main ways to accept business payments online - bank payments and card payments. While there are several other payment methods, they are either declining in popularity and use or are new and emerging.

Cash and cheques are now almost historical forms of collecting payments, no longer relevant for most modern businesses. Digital wallets, like cards, are great for e-com, retail and hospitality - in essence, a digital wallet is a non-physical extension of your plastic card. Cryptocurrency is the newest, least understood, and most unsuitable payment method for most businesses.

Cards still make the most sense for e-com, retail and hospitality businesses, whilst bank payments, such as Direct Debit, are better suited to UK businesses that need to collect payments in such a way as to:

• improve cashflow

• save time

• reduce costs

• reduce failed payments

• reduce late payments

• reduce manual admin

• reduce stress

GoCardless offers a cost-effective, easy-to-use, automated bank payment collection service that reduces costs, manual admin and stress for business owners and finance managers.

How to use GoCardless as an online payment option

You can use GoCardless to accept payments online in just a few clicks. Authorisation forms are automatically sent to customers. Once authorisation has been given, you will automatically receive payments on the dates you specified.

There is also the option of setting up online payments by using the GoCardless API to build an integration with your current payment stack.

Furthermore, GoCardless integrates with over 350 software packages, including all the major accounting software such as Xero and QuickBooks.

To learn about the basics of Direct Debit from a business perspective, try our overview of Direct Debit for small business.

We can help with online payment options

“Setting up online payment collection with GoCardless is fast and efficient. By automating the payment collection process, GoCardless drastically cuts down the administrative responsibilities of managing and tracking invoices 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 the benefits of GoCardless as an online payment option, making it easier for you to concentrate on what matters most; your business growth.