Last editedMay 20235 min read
There are two main methods for taking payments online: credit (or debit) card payments and bank payments, such as Direct Debit and Instant Bank Pay. Online payments can be taken directly from a customer's bank account, or via credit and debit cards, or 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 put together a summary of your online payment options, to help you decide which is the best way to collect online payments for your business.
Direct Debit
Direct Debit is an increasingly popular way to accept payments online, with businesses taking advantage of its multiple benefits.
As an online payment option Direct Debit has many use cases. It is an especially great fit for companies that currently use invoicing to collect payments or run a subscription business. Direct Debit is a flexible and highly cost-effective online payment option. It is equally suitable for one-off and recurring payments, and the business benefits of Direct Debit include reducing manual financial admin and improving 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 amount of payments you collect.
Make sure you check that any provider has included online payments in their price - this can be one of the extra costs not mentioned upfront.
How to collect payments with GoCardless
1.
Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).
2.
Easily set up & schedule one-off or recurring payments via payment pages on your website checkout or secure payment links.
3.
From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.
How to take payments online via Direct Debit
DIY
If you choose to collect online Direct Debit payments in-house then you’ll need then you’ll need to be able to call on significant resources to meet the extensive set up requirements. Not only will you need your own SUN and to invest in Bacs approved Bacstel-IP software, you’ll also need to satisfy underwriting, revenue, and Know Your Client requirements too.
SUN
This is basically a merchant account for Direct Debit. You can either apply for one yourself or through a Direct Debit bureau. Note that it's a difficult and lengthy process for businesses to apply themselves, so almost all chose to use a third-party provider like GoCardless, through which you can get set up quickly and at no cost.
Options:Â Most banks including HSBC, Barclays and RBS.
Which you choose will depend on what you need:
If you want to accept online Direct Debit payments then start by speaking to your bank.
If you want to access the benefits of Direct Debit without having to deal with the prohibitive set up requirements then look at using GoCardless.
Historically Direct Debit has only been viable for large-scale enterprise businesses due to the burdensome financial and regulatory requirements. However, specialist online payment services, such as GoCardless, have removed these barriers and made Direct Debit and its multiple benefits available to even the smallest UK businesses.
Want all the benefits of Direct Debit but without all the hassle & expense of dealing with banks?
GoCardless does all the heavy lifting for you so you can collect payments on time every time with just a few clicks!
Bacs approved Bacstel-IP software
Bacs Approved Software is software which Bacs have assessed to meet Bacstel-IP software and customer service standards for quality including:
Easy-to-use and secure connections.
Bank account data validation prior to submission of a file, using the latest version of the Industry Sorting Code Directory.
Compliance with the Bacstel-IP interface for digital signing and Secure Socket Layer (SSL) standards.
Bacstel-IP software lets you access the Bacs system so you can take online Direct Debit payments yourself. If you’d like to find out more about Bacstel-IP you may find this post useful.
Options: Fundtech, Bottomline and AccessPay.
Direct Debit bureau
A Direct Debit bureau is a third party which handles Direct Debit payments on your behalf either using your own SUN or using the bureau’s SUN allowing you to accept payments online or offline.
Options: Eazy Collect, FastPay and SmartDebit.
A bureau is great if you need the full-suite of phone, paper and online Direct Debit and want to manage everything yourself from scratch; if not take a look at Direct Debit Management Software and GoCardless.
Direct Debit Management Software
Direct Debit Management Software is a full-featured software suite that includes integration with other systems and the ability to take a range of payment types including SEPA, SWIFT and BACS. It allows you to generate Bacs files, upload submissions, automatically apply notifications from Bacs to a database.
Options: Bottomline c-series or Bottomline Webseries
Direct Debit Management Software is good if you want to consolidate various online (and offline) payment types like Direct Debit, Faster Payments, card payments and cheques all under one tool but it is very expensive and involves lots of manual processes. If you want a simpler solution which automates as much of the process as possible you might want to look at GoCardless.
If you're looking for a faster and even more secure payment method than Direct Debit, our Instant Bank Pay feature allows you to collect one-off and recurring instant payments.
End the stress of being paid late by automating your payment collection!
Getting paid on time with GoCardless is simple, affordable and easy to set-up in just a few clicks.
Credit Card
Credit and Debit cards are probably the main way that organisations accept payments online and if you need to collect instant payments or payments from across the globe then cards are probably your best option.
There are several ways that you can accept card payments online 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.
However, be aware of the relatively high transaction fees associated with accepting card payments and the high payment failure rate due to lost and expired cards, resulting in lost customers and lost revenue.
How to take Credit Card Payments Online
DIY
Unless you choose to use an all-in-one payment processor like Stripe or PayPal, you’ll need to set up a merchant account and payment gateway in order to accept credit card payments online:
Merchant account
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.
Options: Most banks including HSBC, Barclays and RBS.
Note: Your merchant account doesn’t need to be with the same bank as your business account.
Payment gateway
A payment gateway connects your website to one or more of the processor networks (similarly 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 charge is approved by the cardholder’s bank and submits your charges for settlement.
Options: Braintree, Authorize.net, PaymentExpress, TrustCommerce
Payment Service Provider
Outsource to a full service payment provider
If you don’t want to do it all yourself you can choose to 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 makes sure 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 both the merchant account and the payment gateway letting you accept online payments without a merchant account of your own.
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.
Which you choose will depend on what you need:
If you want a great API
If you want a really well known name
If you want a great mobile experience
Subscription management service
A subscription management service (or subscription wrapper) 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 either a merchant account and payment gateway or a payment processor.
Options: Zuora, Recurly, Chargify, Vindicia, Chargebee
Sign up to GoCardless today and start collecting Direct Debit payments
GoCardless is a secure, online account-to-account payments specialist which lets you accept online Direct Debit payments via our API or online dashboards. Â GoCardless does all the heavy lifting in regard to Direct Debit regulations and technology on your behalf. GoCardless merchants gets paid faster, spend less time on financial admin and enjoy improved cash flow with Direct Debit.
We offer two options: (1) with GoCardless you can use the GoCardless Master SUN to manage everything online without the kerfuffle of applying for an SUN (with this option you can get set up and start taking payments straight away); and (2) with GoCardless Pro we can get you your own SUN and give you complete control over the payment experience and notifications.
