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Online Payment Gateway Explained

This article will give you an overview of online payment gateways, their hosting options, and provide a list of top online payment gateway suppliers in the UK.

How Does an Online Payment Gateway Work?

An online payment gateway allows the processing of payments via an Internet connection in real time. The gateway receives the card payment information, encrypts it to secure the data and sends it to the credit or debit card issuing bank for approval. Only those online payment gateway providers who have successfully gone through rigorous accreditation can provide this service.

An online payment gateway can either be hosted or integrated. Choosing the right solution for your business depends on what your main requirements are and what in-house technical knowledge is available.

online payment gateway

Hosted Online Payment Gateway

A hosted solution provides added security and may save money in the long term as the payment service provider is responsible for PCI compliance.

It also allows to focus more on key business activities as a hosted payment solution can be used as is without the need for integration with your website. With a hosted online payment gateway solution the customer is redirected to a third party website (the online payment gateway hosted page) to complete a transaction.

This solution can be customised with a business logo to provide assurance to customers.

The main advantage of this solution is that it does not require in-house technical expertise and all the security compliance is taken care of. The main disadvantage is that the hosted page cannot be customised apart from displaying your business logo.

Integrated Online Payment Gateway

An integrated solution (also called API or application programme interface) has the same look and feel as the rest of your website and allows for additional personalisation compared to a hosted solution.

This, in turn, makes for a better customer experience as the transaction process is seamless.

The merchant has whole responsibility for PCI compliance.

In most cases integrated solutions allow for more sophisticated reporting and analysis tools, therefore they provide more insights into the monitoring of transactions and sales.

The main advantage of this approach is the flexibility of the payment solution, while the main disadvantage is that it requires more in-house expertise and a higher budget.

The following online payment gateway providers consistently rank among the best in the UK, and offer a number of different price points for small to large businesses operating online.


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Shopify

Shopify is a US provider and the UK website quotes prices in US dollars, however in forums is a very popular choice. Shopify is a good entry point for start ups and small businesses as the hosted solution takes care of all the security and technical requirements of payment processing.

Pricing: Basic plan starts at $29 a month plus 2% transaction fees – however the starter plan with very limited features (for example, only up to 25 products are allowed) is $14 a month and no transaction fees.

Sage Pay

Sage Pay is the provider of choice for larger businesses that may already use Sage accounting services, but their service can be affordable for small businesses too. Sage Pay offer both integrated and hosted solutions.

Pricing: Plans start at £19.90 a month plus 12p per transaction (but the first 350 transactions per month are free) including fraud screening tools. More expensive plans allow for 500 fee-free transactions (3,000 for customised solutions). Bespoke solutions come with your own account manager.

Cardstream

Cardstream offers both hosted and integrated payment gateways. All support staff are UK based. The service includes full management and monitoring tools.

Pricing: £18 per month with 350 free transactions per month. Additional transactions above 350 are charged at 10p.

WorldPay

WorldPay offers both hosted and integrated solutions. Sales management and reporting tools are included. Worldpay was among the first companies to provide online payments in the UK.

Pricing: Prices start at £15 per month (plus a £75 set up fee) and transactions are charged at 1.9% plus 10p. Fees are lower with larger transaction volumes.

DataCash

DataCash is a UK company and it's a subsidiary of MasterCard. It offers payment solutions with built-in risk and fraud management tools. Integrated and hosted options are available. The company's acquisition strategy allowed to expand its remit in Europe.

Pricing: DataCash charges a licence fee according to the number of websites, with prices starting at £50 for one website. The monthly usage fee ranges from £20 to £100 according to the number of transactions. Contrary to other providers, the monthly fee is higher for larger transaction volumes.

Choosing the Right Solution for Your Business

Looking at price alone is not the best way to choose the right online gateway payment solution to suit your business. Consideration must be given to the features and customer support being offered and overall customer satisfaction with a provider.

It's always a good idea to compare quotes and cross-reference them to online customer reviews to gain a better understanding of a provider.