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Ecommerce Payment Processing: A Complete Guide for UK Businesses

Saim Jalees

06.02.26

Read time 8 minutes

Losing sleep over hidden transaction fees or watching potential sales vanish at checkout?

Whether you're just launching your ecommerce dream or looking to smooth out your existing operations, understanding payment processing is key to keeping customers happy and your profits healthy.

This guide breaks down the essential bits for UK businesses, helping you choose the right setup and potentially save a pretty penny along the way.

And once you're collecting sales, we’ve explained how Wise Business can help you manage them, especially if you're selling across borders.

Key Takeaways

Topic	Notes
What is Ecommerce Payment Processing? 💳	The digital system and technology that allows online businesses to securely accept and process customer payments.
Ecommerce Payment Processing Workflow 🔄	A multi-step flow where data moves from a secure gateway to a processor, which then authorises funds with the customer’s bank.
Payment Gateways & Processors 🔐	The gateway encrypts sensitive data for transport, while the processor handles the actual communication with banking networks.
Payment Service Providers (PSPs) 📦	Integrated solutions that bundle multiple ecommerce payment processing functions, often removing the need for a separate merchant account.
Selection Criteria ⚖️	Key factors for a UK business include total transaction costs, PCI DSS security compliance, and ease of platform integration.
International Ecommerce Payment Processing 🌍	Wise Business helps manage cross-border sales by providing local account details and the ability to exchange money at the mid-market exchange rate, with no hidden fees*.
Common UK Providers 🚀	Popular options include Stripe, PayPal, Square, and Shopify Payments, each offering different fee structures and features.
Payout & Settlement ⏳	Funds from successful sales are typically settled and transferred into your business bank account within 1 to 3 business days.

*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

What is Ecommerce Payment Processing?

Ecommerce payment processing refers to the technology and system that allows online businesses to accept and process customer payments^1,3,4.

It’s the digital handshake that turns a customer's click into a confirmed sale and money in your bank account. Think of it as the virtual till for your online shop.

How Does Ecommerce Payment Processing Work?

When a customer buys something online, a few things happen in quick succession. First, their payment details are captured securely. This information is then sent to a payment gateway, which acts like a digital postman, relaying the details to a payment processor^1,3,4.

The processor then talks to your customer's bank to check if the funds are available and to get authorisation. If all's well, the payment is approved, and the money eventually makes its way to your business account.

Key Components of Ecommerce Payment Processing Explained

The Role of the Payment Gateway

A payment gateway is the first point of contact for your customer's payment information^1,3,4,5. It’s like a secure digital terminal that encrypts card details, ensuring sensitive data is protected as it travels from the customer to the processor. It doesn't actually handle the funds itself but is crucial for the secure transmission of data.

The Role of the Payment Processor

The payment processor communicates with the banking networks to authorise or decline transactions^1,3,4. It's responsible for transferring funds from the customer's bank to your merchant account, making sure the money flows correctly and securely.

The Role of the Payment Service Provider (PSP)

Many businesses opt for a Payment Service Provider (PSP). These are often all-in-one solutions that combine the functions of a payment gateway and a merchant account^2,4.

They simplify things by offering a bundled service, often with easier integration and a single point of contact (it’s what makes PSPs one of the best startup payment gateway options).

Why Robust Payment Processing Matters for UK Online Businesses

Getting your payment processing right is more than just a technicality; it's fundamental to your business's success. A smooth, secure checkout builds trust with your customers, encouraging them to complete their purchase and return for more.

Poor processing can lead to lost sales, frustrated customers, and a damaged reputation. For any UK business aiming for legitimacy and growth, robust payment processing is non-negotiable.

Essential Factors to Consider When Choosing a Payment Processor

Transaction Fees and Overall Cost of Ownership

It’s not just about the advertised percentage. Look at the whole picture — are there monthly fees? Setup costs? What about charges for chargebacks or international transactions?

Understanding the total cost of ownership helps you make a truly smart choice, saving money in the long run^2,4. This is especially the case if you’re seeking the cheapest online payment processing, when it’s important to factor in indirect costs.

Security and PCI DSS Compliance

Leaving your customer's data unprotected is like shouting their card details across a crowded room – bad for them, and potentially catastrophic for your reputation.

Ensuring your processor adheres to strict security standards, like PCI DSS compliance, is a non-negotiable move for any business^2,4.

Customer Experience and Payment Methods Offered

A complicated checkout is a deal-breaker. Offering a range of popular payment methods – from major debit and credit cards to digital wallets – makes it easier for customers to buy^2,4. A slick, simple payment journey is key to converting browsers into buyers.

Integration with Your Ecommerce Platform

How easily does the payment solution plug into your online store? Whether you're on Shopify, WooCommerce, or a custom build, seamless integration means less hassle for you and a smoother experience for your customers^2,4. It’s the wise way to ensure things just work.

International Transaction Capabilities and Currency Exchange

If you're thinking global, this is vital. Can your processor handle multiple currencies?^2,4 Crucially, how does it handle currency exchange rates? Look for transparency in fees to avoid unnecessary costs eating into your profits when selling abroad.

Common Ecommerce Payment Processing Solutions for UK Businesses

Payment Gateways

These are the secure digital tunnels for your transaction data. They encrypt sensitive information, ensuring it's protected as it moves from customer to bank^1,3,4,5. They don't hold money themselves but are a vital part of the chain.

Merchant Accounts

To accept card payments online, you traditionally need a merchant account. This is a special type of bank account that holds funds from your sales before they are transferred to your main business account^1,3,4.

However, most modern Payment Service Providers (PSPs) like Stripe or PayPal include this functionality, so you often don't need to apply for a separate merchant account yourself.

Integrated Payment Service Providers (PSPs)

PSPs often bundle gateway and merchant account services into one package^2,4. They aim to simplify the process for businesses, offering a single provider for managing online payments. Most major ecommerce payment providers like Stripe and PayPal are well-known examples.

Popular Ecommerce Payment Gateways and Processors in the UK

Provider	Best For	Typical UK Fee (for online card payments)	Key Feature
Stripe	Tech-savvy businesses, subscriptions, custom integrations	1.5% + 20p for standard UK cards²	Powerful API, developer-first tools
PayPal	Businesses seeking wide customer trust and brand recognition	2.9% + 30p for commercial transactions²	High brand recognition, strong buyer protection
Square	Small businesses, omnichannel sellers (online & in-person)	1.4% + 25p for UK cards²	Simple setup, unified online/offline payments
Shopify Payments	Businesses using the Shopify platform	From 1.5% + 25p (depending on Shopify plan)²	Seamless integration with Shopify ecosystem

Stripe

Stripe is a popular choice for UK businesses due to its modern API and developer-friendly approach^2,4.

It offers robust features for handling payments, subscriptions, and fraud prevention. Integration is generally straightforward for many ecommerce platforms, making it a solid contender for many.

PayPal

PayPal remains a household name and a trusted option for many UK shoppers^2,4. It offers both buyer and seller protection, and its widespread recognition can boost customer confidence. While convenient, it’s worth comparing its fees and features against other options for your specific business needs.

Square

Square is known for its simplicity and ease of use, often appealing to smaller UK businesses or those starting out². It provides a straightforward way to accept payments online and often pairs well with its physical point-of-sale systems, offering a unified payment experience.

Shopify Payments

For businesses built on Shopify, Shopify Payments is often the most integrated solution². It’s designed to work seamlessly within the Shopify ecosystem, simplifying setup and management. It aims to provide competitive rates and a smooth checkout experience for Shopify store owners.

Make the most of your online sales and global growth with Wise Business

Wise Business is the ideal international account to help you manage your ecommerce store's finances, whether you’re selling to customers down the street or across the globe.

You can manage your business payments with ease by holding balances in 40+ currencies and sending money to 140+ countries, all while using the mid-market exchange rate to avoid hidden fees.

And because Wise Business provides 8+ local account details, you can receive payments like a local from international marketplaces and customers, making it a powerful domestic alternative to a traditional bank account.

Beyond cross-border transactions, Wise Business serves as a comprehensive tool for your day-to-day domestic operations:

You can earn a return on your GBP, USD, and EUR balances by switching on Wise Interest for Business, ensuring your business capital is always working for you (Capital at risk, growth not guaranteed)
You can manage team finances using multi-user access to set spending limits and issue expense cards for your team.
You can save time on accounting admin work by connecting popular accounting software like Xero, QuickBooks, and FreeAgent to automate your bookkeeping

Be Smart, Get Wise.

Investments can fluctuate, and your capital is at risk. Interest is offered by Wise Assets UK Ltd, a subsidiary of Wise Payments Ltd. Wise Assets UK Ltd is authorised and regulated by the Financial Conduct Authority with registration number 839689. When facilitating access to Wise investment products, Wise Payments Ltd acts as an Introducer Appointed Representative of Wise Assets UK Ltd. Please be aware that we do not offer investment advice, and you may be liable for taxes on any earnings. If you're uncertain, we urge you to seek professional advice. To find out more about the Funds, visit our website.

The Wise account is not a bank account but offers some similar features and your money is safeguarded.

Frequently Asked Questions About Ecommerce Payment Processing

What is the difference between a payment gateway and a payment processor?

A payment gateway securely encrypts and transmits payment data from your customer to the processor. A payment processor then takes that data and communicates with banking networks to authorise the transaction and move funds^1,3,4.

How can I ensure my online store is PCI DSS compliant?

Most reputable payment gateways and PSPs are PCI DSS Level 1 compliant, which means they handle the heavy lifting of security for you. By using their pre-built checkout tools, you significantly reduce your compliance burden.

However, it's important to know that you still have some responsibility, which usually involves following the provider's integration guidelines and sometimes completing an annual Self-Assessment Questionnaire (SAQ)^2,4.

What are chargebacks and how can I prevent them?

Chargebacks happen when a customer disputes a transaction with their bank. Preventing them involves clear product descriptions, good customer service, robust fraud detection, and keeping detailed records of all transactions.

Which payment methods are most popular with UK online shoppers?

Visa Debit and Mastercard Debit cards are incredibly popular. PayPal is also widely used, along with emerging Buy Now, Pay Later (BNPL) options^2,4. Offering a good mix caters to most customer preferences.

How quickly can I expect to receive funds from my online sales?

Payment Service Providers (PSPs) like Stripe often offer streamlined settlement, which can be faster than legacy systems. Payout times vary by provider and country, but funds are typically transferred to your bank account within 1-3 business days^1,3,4.

Sources:

Stripe - https://stripe.com/resources/more/ecommerce-payments-101
Airwallex - https://www.airwallex.com/uk/blog/ecommerce-payment-solutions-providers
Gocardless - https://gocardless.com/guides/posts/how-does-ecommerce-payment-processing-works/
Checkout - https://www.checkout.com/blog/guide-to-ecommerce-payment-processing
Merchant Savvy - https://www.merchantsavvy.co.uk/payment-gateways/

Sources last checked on 6th February 2026

*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.

We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

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