Payment Gateways

What is a payment gateway?

A payment gateway is software that securely captures card payment data from a customer and transfers it to the acquirer (aka merchant account) which results in an approval or disapproval decision being transferred back to the customer. The cardholder’s bank only submits payments for settlement once they receive approval from the payment gateway.

You will have used a payment gateway every time you so a bit of online shopping. It is a critical middleman when taking card payments when the card holder is not present (CNP payments).

At a very high level, a payment gateway provides 3 main functions :

Card payment forms on websites and apps
Transaction encryption
Verification systems on the back end

Most merchant account providers offer their own payment gateway to their customers (and vice versa) but it is often a good idea to investigate whether it may be better to use different companies for your payment gateway and merchant account. You can get a better user experience, higher conversion rates and lower transaction fees by splitting them (we can give you advice on this based on your business requirements).

How to choose the best payment gateway provider for your business

There are various factors you need to consider when selecting a payment gateway.

1. Compatibility

If you are buying separately from you merchant account provider, you need to make sure you can integrate the two. Similarly, if you are using an eCommerce platform check the integrations possible. If not, then it’s failed a key requirement and you should cross it off your shortlist.

2. Checkout experience and ability to customise UX

What is the user experience for entering card details on desktop and mobile devices? 18% of online shoppers in abandoned an order in Q1 2021 due to a checkout process that was too long or complicated.

Customer experience at checkout has a significant impact on your bottom line and a good payment gateway will allow you to improve this.

3. Offering payment options your customer wants

Offering the payment options your customers want to use will reduce friction at the checkout screen and increase sales. This could include adding additional card types like Amex, additional payment methods like Apple Pay or buy now and pay later functionality.

5. Security & fraud prevention

Does it have the level of PCI compliance your specific business requires? As a guide, here is how Visa decide on required PCI levels. Online payments have a reputation of more chargebacks and your gateway wil provider will affect how well fraud is prevented (and save you chargeback costs)

6. Speed of payment

Some gateways are painfully slow to transfer funds so make sure you check how quickly you can expect to access your money once settled (it typically takes 3 days).

7. Reporting & user interface

The user interfaces and reporting of some payment gateways are head a shoulders above others. They are not only intuitive and a joy to use but they can improve your decision making.

7. International coverage

If you are taking international orders it is obviously important to check about the ability to multiple currencies and card types. You should also confirm any additional fees incurred for international payments and if a merchant account in a specific country is required.

Payment gateway costs

There are several types of cost associated with a payment gateway that can be split into:

Set up (one off fixed fee)
Transactions (added to each transaction by associated the merchant account provider)
Admin & security (fixed monthly fees)

You can see some examples of the fees charged in the payment gateways listed below.

How is a payment gateway different from a merchant account?

A merchant account is a bank account which temporarily holds the funds from online or card payments before transferring them to your nominated business bank account. A payment gateway connects your merchant account and a customer’s bank enabling the funds to flow into the merchant account (and then onto your business bank account) once the payment is authenticated.

In order to take online payments online you need a payment gateway and a merchant account but they are not the same (even though they could be provided by the same company under one contract). Some payment gateways come with merchant accounts bundled together as a package (Stripe, Braintree. PayPal, Adyen) whilst others offer standalone payment gateways (i.e. Cardstream).

How is a payment gateway different from a payment service provider?

You may hear payment gateways and payment service providers (PSPs) used interchangeably but they are different.

PSPs (aka merchant service providers, payment processors or ISOs) are companies that provide a range of services that help businesses accept payments whereas a gateway is software carrying out a specific service in the payment process.

Many PSPs combine payment gateways and merchant accounts into one package and take a nice premium for the convenience of doing so (which is why it is often worth looking at getting your own payment gateway provider and a separate contract with a merchant account provider which can often lower transaction fees).

Most payment processors will charge higher fees for online sales than face to face payments with additional risk associated with ‘card holder not present’ payments often being used as a reason. However, in most cases there should be no need to pay more for online card processing than in-person payments received via a POS terminal.

Beware of trying to find the cheapest payment gateway

Of course price is important but you need to weigh up the fees against potential losses incurred by going down a more budget route. If a payment gateway’s lower costs are outweighed by the money you end up losing on expensive chargebacks it might not be worth that investment.

A poor checkout experience due to a poor gateway will also cost you in lost sales so going for the cheapest is often a false economy.

Should you get an All-In-One solution (i.e. Gateway + Merchant Account from one provider)?

It depends. Sorry we can’t give a definitive answer but it really depends on your company and level of card turnover. Just know that you can shop around for payment gateways and have a merchant account from another company in order to secure better card processing rates (you integrate them with your merchant ID number).

As a general rule, payment processors offering all-in-one solutions (i.e. a payment gateway plus a merchant account) will be more expensive. Similarly, companies which do specialise in payment gateways separately are keen to upsell you into their preferred merchant account that offers them a percentage of your sales.

Should you consider stacking multiple payment gateways?

If you find that your preferred payment gateways lack one or two key features and none cover all your requirements it may be worth combining more than one. For example, you may want add functionality so you can accept Amex, Apply Pay, multiple currencies or recurring payments and therefore sign up to multiple providers.

Adding payment options your customers want via multiple payment gateways will cause less friction at checkout and could increase conversion rates.

Compare Popular Payment Gateway Providers

Some of the best gateway providers (with and without merchant accounts included) are below but others not listed may be more suitable for your business. Please fill in our form above if you are looking for recommendations.

Pros

Highly customisable payment gateway
No monthly fees
Competitive transaction fees
Transparent pricing
Great desktop and mobile payments UX
Extensive integration options

Cons

Stripe

Stripe is quite different from other gateway providers in the UK in that it offers its payment gateways with a range of APIs (an application program interface that you or your web developer can use to integrate your payment gateway into your online store). This gives you full control over the look and feel of your payment pages that should enable you to create a great shopping experience and minimise cart abandonments.

You also have the option to integrate it into your existing ERP system. It can be integrated into a wide range of third-party systems, including shopping carts, invoicing systems, analytics tools, email systems, fundraising programs, marketplaces, mobile and card systems as well as a number of POS systems. Stripe accepts all major credit and debit cards in more than 100 currencies and is PCI compliant.

The most common complaints with Stripe are withheld funds and unresponsive customer service when it matters most.

Stripe Payment Gateway Features

Accept payments from all major card issuers
Accept payment in 135+ currencies
Extensive wallet payment support
Extensive local payments support
Fully customisable checkout experience
Build your own checkout from scratch using Stripe.js
Advanced security features
Financial reports
Extensive integration with third-party platforms

Pros

Cons

Paypal

PayPal for business is one the easiest payment gateways to add to any website and one of the most trusted names among online shoppers.

The ideal PayPal customer is going to be a small business with a relatively low volume of card transactions because those transaction fees at the bottom end are a steep.

The downsides are offsite checkouts and non competitive prices.

There are also numerous complaints from PayPal business that accounts can be suspended without justification and getting a resolution can take too long.

Pros

Cons

Opayo

Opayo is one of the largest payment service providers in Europe after being formed when Elevon purchased the UK and Irish Sage Pay business for £232 million in March 2020 and took on their 50,000 customers.

They can process payments in more than 25 currencies and allow full and partial customisation options depending on whether you are using a hosted and self hosted integration.

Integrations include Woocommerce, BigCommerce and Shopify.

Opayo has a fixed pricing plans for under 3000 transactions per month starting at £25 per month for their Flex plan for up to 350 transactions per month.

Opayo Gateway Features

Accept payment in 25+ currencies
Deferred and recurring payments
Advanced security and fraud prevention
24/7 support
eInvoices and phone payments included
Reporting and analytics

Amazon Pay

Amazon Pay is newer to the online payments game than PayPal but its got all the brand reputation it needs to take on the leaders of any industry.

Once again, there isn’t a great deal between them in terms of transaction fees but with Amazon there’s no setup fee, no monthly service charge or cost for using with WooCommerce.

With Amazon Pay, customers never leave your website and you don’t need to pay for a hosted payment page.

Braintree

Braintree is owned by PayPal but the company operates mostly as an independent entity from its parent company. In fact, it operates differently from PayPal in terms of the payments service it provides so we’re not talking about a direct alternative. While PayPal and many other gateway providers aggregate accounts, Braintree offers individual merchant accounts to its users on the behalf of partnership banks.

Braintree is also highly customisable, designed more for programmers, startups and tech-savvy business owners. You’ll need to get your code on to integrate Braintree but you can do it mostly on your own terms and you might find you’re paying lower fees than you will by using PayPal Pro.

Authorize.net

Authorize.net, owned by Visa, now has over 430,000 merchants and offers dedicated merchant accounts from its network of partnership banks.

Fees are only prices in USD at priced at 2 levels:

Payment Gateway Only (if you already have a merchant account)

No setup fee
Monthly gateway $25
Per transaction 10¢, daily batch fee 10¢

All-in-One Option (they will provide the merchant account)

No setup fee
Monthly gateway: $25
Per transaction 2.9% + 30¢

2Checkout

2Checkout, acquired by Verifone in 2020, is a direct competitor to the likes of PayPal and Stripe and you’ll probably have heard this name before if you’re in the eCommerce space. It’s got a good reputation for simple pricing plans and transaction fees are marginally cheaper than PayPal, although chargebacks and currency conversions are more expensive.

On the other hand, there are no monthly fees with 2checkout, which we can’t say about PayPal Pro. Both providers offer their services without any setup or application fees and there are no contracts or termination fees to worry about with either choice.

The key benefit of going with 2checkout is its global support – more than 200 markets in total, making it a strong option for international merchants. How important this is to you depends entirely on which counties you want to sell to, of course. The biggest concern we hear about is related to the closure of accounts which appears to catch some customers out.

Trust Payments

Trust Payments offers a payment gateway as part of its wider range of merchant account services. It boasts an impressive 99.97% uptime record and is big on security (you better be with a name like Secure Trading) and it’s won awards for payment innovations – most recently for in-game payments on mobile.

With this in mind, it shouldn’t come as a surprise that Secure Trading’s gateway integrates very well with mobile and supports a wide range of alternative payments. Aside from security, the company talks a lot about giving customers choice over how they pay for goods and services and this means fewer customers slipping away because you don’t provide their preferred option.

In terms of pricing, Secure Trading is more like a traditional merchant account service provider and its pricing isn’t publicly disclosed. However, its rates are known to be cheaper than acquiring banks and we understand it offers 12-month auto-renew contracts to customers.

Checkout.com

Checkout.com bundles its payment gateway with a merchant account as part of its all-in-one payment solution. The company supports payment in 159 countries for eCommerce brands with international customer bases and it prides itself on its unique pricing structure. Instead of the usual 2.9% + ¢20 transaction fees, Checkout.com charges 0.25% + ¢20 for European cards and 2.9% + ¢20 for non-European cards.

There are also discount rates for merchants who qualify for its Enterprise plan.

Aside from this, there are no contracts involve with Checkout.com – you simply pay on a month-to-month basis without any worries about early termination fees. Likewise, there are no setup fees, maintenance charges or other hidden costs that often catch merchants out.

10 different payment types. It aims to be the only merchant account provider a modern business needs and it makes a good case for itself.

In terms of pricing, things look very similar to the likes of PayPal with 2.9% +$0.30 fees per transaction. This is good for merchants with low transaction volumes although these payment models work out more expensive for high-volume merchants. BlueSnap says it offers discounts for high-volume clients but you can only get this information by speaking to its sales team.

Pros

Cons

Worldpay Payment Gateway

Worldpay / FisGlobal is the UK’s biggest payment service provider and it offers everything you need to accept payments online, in-store and over the phone. This includes one of the most robust payment gateways in the industry and, if you’re looking for the most secure option, this is about as far as you’ll need to search.

The thing is you’ll need to meet the criteria for one of the merchant account providers Worldpay tries to connect you with. If you can get accepted, then you’ll get some of the best transaction rates and overall fees in the industry but you’ll probably need to be a relatively high-volume merchant and considered a low-risk business to be accepted.

If you do get accepted, things are looking good and Worldpay has every payment service you could ever possibly need covered, as your business continues to grow.

The big downside to Worldpay is it requires you to sign up to lengthy contracts and you’ll be looking at early termination fees if you ever decide you no longer want to use the company’s services – a common but unwelcome trait among traditional payment services companies.

Payment Gateway Features

Accept all major credit and debit cards as well as PayPal
Accept payments in over 116 currencies
Hosted and integrated gateway options
Recurring payments and subscription-based payment plans
Fraud screening to help protect you and your customer
Advanced fraud protection
24/7 UK support

Worldpay Set Up Fees: None.

Worldpay Transaction Fees: Varied

Worldpay Monthly Fees: Starting at £19.96

Pros

Cons

Cardstream

Cardstream is the only company in the UK to provide a fully independent “white label” payment gateway. This is the system that allows you to accept card payments on your website and it also provides a real-time virtual terminal so you can take payments over the phone or by mail.

The key difference with Cardstream is it’s entirely independent from acquiring banks and any other payment company that actually processes the card payments. This means you can use Cardstream as your payment gateway, regardless of which bank is handling your card payments and seamlessly integrate a fully customisable gateway into your website.

That said, while Cardstream is an independent company, it has connections with a vast network of global acquirers and payment firms, which it can help you get set up with if you don’t already have one on board.

Cardstream Payment gateway Features

Create a fully branded gateway page, on your own chosen URL.
Shopping modules make it easy to integrate with your website, CMS or shopping cart.
Virtual terminal allows you to take payments over the phone and by mail.
Acquirer independent means you’re not tied to any single acquiring bank.
Receive updated cardholder data to prevent failed payments due to cards going out of date, being lost/stolen or other issues.
Tokenisation – a secure method of setting up and accepting recurring payments.
Velocity checks – a powerful fraud prevention system that limits the number of card payments accepted over a period of time.
Alternative payments include PayPal, Apple Pay, Android Pay and MasterPass.
Card Security Code checks and 3D Secure authentication.
Extensive support for multiple currencies.
Embed HTML pay buttons onto your website or emails.
Protection against Distributed Denial of Service (DDoS) attacks.
Receive alerts about any chargebacks so you can respond to cases faster.
Branded receipts for both merchant and customers.

BlueSnap

BlueSnap is another strong option for international merchants with support for 180 countries, online checkouts in 29 different languages and 110 different payment types. It aims to be the only merchant account provider a modern business needs and it makes a good case for itself.

Nochex

Nochex positions itself as the “#1 Alternative to PayPal & Stripe” for businesses in the UK. However, Nochex is a little different from its rivals and this will suit some businesses – or, perhaps more importantly, some customers – more than others.

First of all, customers don’t need to have an account to make payments through Nochex, which is a major plus point for providing this payment option on your site. The main limitation with Nochex is it doesn’t provide any hardware like tills or card machines for face-to-face payments, so you’ll need to get these from elsewhere if you need to take payments in person.

Remember, it’s generally a good idea to have more than one gateway on your site so people without a PayPal or Amazon account can still make a payment. So, even if you need tills and card machines, Nochex is still a great payment gateway, simply because people don’t need an account to use it.