Our best online payment gateways

An online payment gateway is a service used by businesses to enable them to accept debit or credit card payments from customers online. As well as ensuring the transaction goes through correctly, a payment gateway keeps customers’ payment data secure and private. 

Essentially, a payment gateway is the technology responsible for sending customer information to the merchant bank and processing the transaction securely. As well as including payment processing portals found in online stores, it can also work with card payment solutions or point-of-sale (POS) terminals used in bricks-and-mortar businesses. 

First, a customer places an order on a business website and enters their card details onto the payment page. The payment gateway encrypts the cardholder’s payment details and this information is transferred to the acquiring or merchant bank - this is the financial institution that’s in charge of the merchant’s account.

The payment gateway determines which credit card provider (Visa, Mastercard or American Express) issued the card and the information is passed on to the relevant card scheme who then transmits the payment data to the issuing bank for authorisation.

The issuing bank carries out fraud checks and ensures the cardholder has adequate funds for the purchase before sending a response back to the payment gateway to say whether the transaction has been authorised or declined.

If it’s authorised, the funds will be transferred to the merchant’s business account in a matter of days.

An online payment gateway can be a great option for ecommerce businesses that want a secure way of accepting debit or credit card payments. This could apply whether you’re an online clothing store or food delivery firm, for instance. 

However, there are different types of online payment gateways so you’ll need to consider which one best suits your business needs. Different payment gateways charge different fees (this could be monthly or per transaction), accept different payment methods, and some also support multiple currencies. 

To assess whether a payment gateway is right for your business, ask yourself the following questions:

• Where is your customer base – in the UK or overseas? If overseas, you’ll want a payment gateway that supports other currencies.

• How do customers prefer to pay? For example, by credit card, debit card, PayPal, Apple Pay, Google Pay. 

• What do monthly sales volumes look like? If you have lower sales volumes, you’ll want a payment gateway that only charges transaction fees. But if monthly sales volumes are high, you could be better off paying a monthly fee in return for a lower transaction fee rate.

Transaction fees

There are three types of fees to look out for with payment gateways:

• A one-off setup fee of up to £250

• A monthly subscription fee of around £10 to £50

• A transaction fee of around 2% plus 20p per transaction. This might be higher if you accept international card payments

Not all payment gateways will charge all three. You might find a payment gateway that doesn’t charge a setup or monthly subscription fee, but transaction fees could be higher. This could be a good option if your monthly sales volumes are fairly low.

Security features

As a business, it’s crucial to protect your customer’s card data. Fortunately, payment gateways have evolved over time and offer a number of security features, with encryption technology helping protect businesses and their customers’ personal details from being stolen. When comparing options, it’s particularly important to make sure your chosen payment gateway complies with the Payment Card Industry Data Security Standard (PCI DSS). This ensures it maintains a secure environment for processing, storing and transmitting cardholder data. If your payment gateway is PCI compliant, this reduces the burden on your business to meet these requirements independently.

Accepted payment options

When choosing a payment gateway, look for one that can support a variety of payment methods. The more payment methods you can accept as a business, the more sales you’re likely to make. Most payment gateways will accept Visa and Mastercard, but not all will accept American Express. You should also consider options such as Apple Pay, Google Pay and PayPal. Plus, if you want to trade internationally, you’ll need a payment gateway that supports multiple currencies.