Payment Gateway Process: How it Works (UK Business Guide)

A failed payment, a slow checkout or an unclear charge can cost an online business more than a single sale. The payment gateway process is the chain that captures a customer’s payment details, checks whether the transaction can go ahead and helps return the result to your checkout.

For a customer, this may take seconds. Behind the scenes, the payment gateway, processor, acquirer, card network and issuing bank each have different roles before a card payment is authorised and later settled.

This guide explains the payment gateway process for UK businesses, including the steps between checkout and settlement, the costs and security responsibilities to check, and how Wise Business can help manage international money after a payment provider has paid out.

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What is a payment gateway?

A payment gateway connects an online checkout to the organisations involved in approving and processing a payment. It can collect payment information from a website or app, protect that information and route it to the relevant payment provider for authorisation.

A gateway is only one part of a card-payment setup. You may also need a processor, acquirer, merchant account and an account where your provider settles the funds.

Payment gateway vs payment processor vs acquirer

When do you need a payment gateway?

You will usually need a gateway or a payment service provider that includes one if you want to:

• accept card payments directly on a website or app
• run an e-commerce checkout
• take recurring card payments
• accept digital wallets through checkout
• use fraud controls, 3-D Secure and card-authorisation flows
• route card payments to merchant settlement.

You may not need a full e-commerce gateway for every payment. Businesses that invoice clients, receive marketplace payouts or take bank transfers may have a different payment setup.

What is the payment gateway process?

The payment gateway process captures payment details, protects and routes them for authentication and authorisation, returns an approval or decline, then supports capture, settlement and reconciliation.

How the payment gateway process works (step by step)

1. The customer starts checkout

The customer chooses a payment method at your website or app checkout. Before they pay, show the price, currency, delivery details and, where relevant, renewal terms clearly.

2. The gateway captures the payment details

The gateway collects the relevant card, wallet or other payment details and begins the transaction. Many businesses use hosted checkout pages, tokenisation or provider-managed payment fields so they do not handle raw card data directly.

3. Payment data is protected

The provider applies the controls used in its setup before data moves through the payment chain. The PCI Security Standards Council says PCI DSS defines security requirements for environments where payment-account data is stored, processed or transmitted.¹

4. The customer may authenticate the payment

Some payments require an extra authentication step, such as approval in the customer’s banking app, a one-time code or biometric verification. The FCA says strong customer authentication can apply when a payer initiates an electronic payment transaction, accesses their account online or carries out a remote action that may imply fraud risk, unless an exemption applies.²

5. The payment is sent for authorisation

The request moves through the processor, acquirer and card network to the customer’s issuing bank. The issuer checks whether the payment can be approved, including whether funds or credit are available and whether any required authentication has been completed.

6. The issuer approves or declines the payment

The approval or decline message returns through the payment chain to your checkout. An approval lets the customer see a success message; a decline may mean they need to use another payment method, complete authentication or contact their bank.

7. The payment is captured

Authorisation and capture are related but different. Authorisation is the issuer’s approval; capture is the instruction to collect the money. They often happen together for e-commerce payments, but a business may authorise first and capture later for items such as pre-orders or delayed fulfilment, subject to its provider’s and card scheme’s rules.

8. Funds are settled and paid out

Settlement happens after the customer-facing approval. The provider pays out according to its own timing, which can depend on the payment method, currency, risk checks, weekends, bank holidays and account setup.

9. The business reconciles sales and fees

Match orders to gross sales, provider fees, refunds, disputes and net payouts. This makes it easier to understand what was paid, what was retained in fees and what remains available for operating costs.

What types of fees are involved in the payment gateway process?

For example, PayPal’s UK merchant-fee page lists domestic card-funded payments from users without a PayPal account at 1.2% plus a fixed fee, while other commercial transactions are listed at 2.9% plus a fixed fee. It also lists additional percentage-based fees for international commercial transactions.³

Square’s UK pricing page publishes processing and software pricing, while Worldpay eCommerce lists pay-as-you-go rates of 1.3% plus 20p for Visa and Mastercard consumer cards, and 2.9% plus 20p for commercial cards and American Express; Worldpay says other charges may apply.^4,5

Check the current rate card and terms that apply to your account before choosing, as pricing and eligibility can vary.

Payment gateway checklist for UK businesses

Before selecting a provider, check:

• which payment methods your customers expect
• whether you need online checkout, in-person payments or both
• which currencies customers will pay in
• where funds settle and how long payouts take
• domestic, international, conversion and payout costs
• how refunds, disputes and chargebacks work
• what the provider handles for PCI DSS, SCA and 3-D Secure
• whether it connects with your e-commerce and accounting tools
• whether it supports recurring billing, subscriptions or usage-based charges.

How Wise Business helps businesses receiving international payouts after customer checkout

Once your gateway or payment service provider has handled the customer’s card payment, it will pay out the proceeds according to its own payout route and schedule. If you receive sales proceeds in another currency, the next decision is whether to convert them straight away or hold them until you need to make a payment.

Wise Business can help eligible businesses receive money using local account details in 8+ currencies, where available. You can share the relevant details with a marketplace, payment provider or customer that supports bank-transfer payouts in that currency, then manage the money in your Wise Business account.

Wise Business offers a free Essential plan for basic spending and transferring. If you need to receive money, set up direct debits, or generate invoices, you'll pay a one-time £50 setup fee to unlock the Advanced features.

With Wise Business, you can:

• 🌍 Send money to 70+ countries and pay overseas invoices at the mid-market exchange rate with low, transparent fees and no hidden exchange rate markups (product availability varies by region)
• 📥 Receive payments in 24 currencies and counting
• 💵 Get local account details for 8+ currencies, including USD and EUR, to let your customers pay in a currency they know and trust - convenience for them and peace of mind for you
• 💰 Hold money in 40+ currencies
• 🔁 Convert currencies anytime at the mid-market exchange rate with low, transparent fees
• ⚡ Use the batch payments tool to create and send up to 1,000 payments in a single transfer
• 👥 Run payroll and make international payments for up to 1,000 employees all over the world - including paying suppliers using local payment methods like ACH, SEPA, and Faster Payments
• 💳 Get business debit cards with 0.5% cashback for you and your team to keep track of team expenses and spend all over the world, with real-time visibility and categorisation. See full cashback terms and conditions
• 🏢 Manage cash in 55+ currencies across international offices from a single business account and move money between business accounts in seconds (exact speeds can vary depending on individual circumstances and may not be the same for all transactions)
• 🧾 Connect and sync every business transaction to your favourite accounting software, including Xero, Quickbooks, and more
• 🔐 Create your own payment approvals process to manage your team better with customised access for different team members, roles and permissions
• 📑 Create custom professional invoices and schedule invoice payments for future dates
• 📈 Earn variable returns on GBP, USD and EUR with Wise Interest (Capital at risk, growth not guaranteed. Your money is at risk if governments default or interest rates go negative. Rates vary by country and currency. Rates are variable. Visit Wise Interest to find out more)
• 🔗 Create payment links and QR codes to get paid easily (Card payment acceptance for new Wise Business customers is currently unavailable. Payment methods subject to eligibility and availability.)
• ⚙️ Automate payouts with the Wise API (comes with 24/7 customer support, a sandbox account to test integrations, API tokens, and clear documents on how to implement and make the most of our API)

Make the wise choice when selecting a business account for your domestic and global needs.

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FAQs

Is a payment gateway the same as a payment processor?

No. A gateway captures and routes payment information from checkout. A processor handles transaction-processing messages between the relevant parties. Some providers bundle both roles.

Is authorisation the same as settlement?

No. Authorisation is the issuing bank’s approval of the transaction. Settlement happens later, when funds move through the payment chain and the provider pays out to the business.

Do UK businesses need to think about PCI DSS?

Yes. PCI DSS is relevant to environments where payment-account data is stored, processed or transmitted. A hosted checkout or provider-managed payment fields can reduce the sensitive data your own website handles, but you should still understand your provider’s and your business’s responsibilities.¹

How do you set up an online payment gateway?

Choose a provider that supports the payment methods, currencies, integrations and checkout flow you need. Apply for the service, complete any onboarding and verification, connect its hosted checkout or integration to your website, then test approvals, declines, refunds and reporting before going live.

What payment gateway fees matter most?

Compare the full cost of your likely payment mix: plan fees, domestic and international card rates, conversion, chargebacks, refunds, payouts and any hardware or compliance costs. A lower headline rate may not mean the lowest total cost for your business.

Does Wise Business replace a payment gateway?

Wise Business is not an embedded e-commerce card checkout or payment gateway. It can help eligible businesses manage money after payment-provider settlement, including receiving with local account details where available, holding currencies, converting and sending international business payments.

Sources:

1. PCI Security Standards Council – PCI standards
2. Financial Conduct Authority – Strong customer authentication
3. PayPal Merchant Fees – Seller Fees | PayPal UK
4. Square Processing Fees, Plans and Software Pricing | Square UK
5. Worldpay eCommerce: Online Payment Processing | Worldpay

Sources last checked on 9 September 2026