Top 5 e-commerce payment gateways for your online store: UK edition

As e-commerce continues to thrive, choosing the right payment gateway is crucial to ensure a seamless shopping experience for your customers. In 2021, e-commerce accounted for 30% of the UK’s total retail market, with revenue projections reaching $194.1 billion by 2027. Whether you are a startup or an established business, having a reliable payment system can influence your checkout process, customer experience, and ultimately, your sales.

Here we look at some of the best payment service for your business; comparing their features, fees, and pros & cons, to help you decide which of these top payment solutions is suitable for your online store.

PayPal

PayPal is one of the most recognisable names in the online payments industry. They are widely trusted by businesses and customers across the globe. Known for its ease of use and security, PayPal offers a wide variety of payment options, including credit and debit cards, digital wallets, and even cryptocurrency in some regions.

PayPal remains a heavyweight in the e-commerce payment world, and with good reason.

Key features

• Multiple payment options, including PayPal Checkout, Pay Later or Pay in 4 solutions, and crypto.
• Quick setup and easy integration with platforms like Shopify and WooCommerce.
• Trusted by over 100 million active users worldwide.
• Instant access to funds.
• Seller protection on eligible transactions.

Pricing

• Transaction fees for domestic payments range between 1.2% and 2.9%, depending on the payment method, plus a small fixed fee.
• No setup costs.

Pros

• High trust factor among customers.
• Simple integration with most major e-commerce platforms.
• Offers a variety of payment methods, boosting customer convenience.

Cons

• The fee structure can be confusing and costly for certain types of transactions.
• Disputes often favour buyers, which can be challenging for merchants.

Our verdict

Best suited for small to medium-sized businesses that need a globally recognised payment system with instant credibility. It’s widespread acceptance and ease of use tend to justify the higher fees for international retailers.

Stripe

Stripe is yet another top contender in the payment gateway market, known for its developer-friendly design and wide array of payment methods. It is ideal for businesses looking to offer flexible payment options like recurring billing or Buy Now, Pay Later services.

Key features

• Supports over 100 payment methods, including local options like SEPA and Bancontact.
• Customisable checkout options with APIs and integrations for various e-commerce platforms.
• Has advanced fraud protection tools like Stripe Radar.
• Supports credit/debit cards, mobile payments, and local payment methods.
• Offers recurring billing and invoicing options.
• Has robust fraud protection tools.
• Offers customisable checkout experience.

Pricing

• Additional fees for international cards and currency conversion

• Domestic cards: 1.5% + 20p per transaction.
• International cards: 3.25% + 20p, with an additional 2% fee for currency conversion.

Pros

• Wide range of payment options, including Apple Pay, Google Pay, and Afterpay.
• Competitive fees, especially for UK transactions.
• Strong fraud protection and customisable features.

Cons

• More technical setup compared to PayPal.
• Transaction fees are not refunded in case of disputes.

Our verdict

Best for businesses with a strong developer team or those that require custom features. Stripe’s competitive pricing, extensive feature set and wide range of payment options make it perfect for growing businesses with a need for customisation.

Square

An excellent choice for businesses that operate both online and offline, Square provides seamless payment processing for in-person and e-commerce sales. Originally designed as a point-of-sale (POS) system, Square has since expanded into the online space, making it ideal for retailers who need to manage both types of transactions in one platform.

Key features

• POS systems and online payments are integrated into a single dashboard.
• Supports popular mobile payment methods like Apple Pay and Google Pay.
• Allows recurring billing and Buy Now, Pay Later options through Afterpay.
• Built-in e-commerce platform (Square Online Store).
• No chargeback fees.
• Free dispute management

Pricing

• Standard transactions: 2.9% + 30p.
• Afterpay transactions: 6% + 30p.

Pros

• Perfect for businesses that handle both physical and online transactions.
• Transparent pricing structure with no chargeback fees.
• User-friendly interface, especially for small businesses.

Cons

• Fewer online payment options compared to competitors like Stripe.
• Higher fees for Afterpay transactions.

Our verdict

Ideal for small brick-and-mortar stores that are expanding online. Square’s seamless integration between online and offline sales makes it particularly attractive for businesses with both physical and digital presence.

Worldpay

Worldpay is a trusted and established payment gateway in the e-commerce industry, known for its robust security features and global reach. With support for over 120 currencies, it provides businesses with the ability to process payments seamlessly across borders. Its reliability and comprehensive fraud protection features instill trust in customers, offering a secure and streamlined checkout experience that can help boost conversions for your online store.

Key features

• Provides a variety of payment options, including credit/debit cards and mobile payments.
• Offers in-depth reporting and analytics.
• High-level fraud prevention measures.
• Accepts payments in over 120 currencies.

Pricing

• UK domestic: 2.75% + 20p per transaction.
• International payments: additional fees apply

Pros

• Trusted by large enterprises for secure and scalable payment solutions.
• Supports international payments in multiple currencies.
• Advanced fraud detection and chargeback protection.

Cons

• Higher setup fees compared to other gateways.
• Monthly fees may not be ideal for small businesses.

Our verdict

Best for large enterprises or businesses with international reach. Worldpay is ideal for scaling businesses that prioritise security and need multi-currency support, with strong fraud protection features.

Klarna

Klarna has made a name for itself by offering flexible payment options that can boost conversion rates, especially for higher-ticket items. Known for its Buy Now, pay later option, Klarna appeals to customers looking for payment flexibility while allowing merchants to receive payment upfront.

Key features

• Offers multiple payment options, including “buy now, pay later.”
• Merchants receive payment immediately, regardless of customer payment plans.
• Can increase average order value and improve checkout conversions.
• Integrates smoothly with many major e-commerce platforms.

Pricing

• Klarna’s pricing varies depending on the services provided and the agreement with the merchant.

Pros

• Flexible payment options increase customer satisfaction and sales conversions.
• Easy integration with leading e-commerce platforms.
• Helps boost average order value by offering customers flexible financing.

Cons

• Pricing details are not publicly available and require direct contact with Klarna.
• Some customers may have concerns about using financing services, depending on their financial situation.

Our verdict

Best suited for retailers selling higher-ticket items where flexible payment options can make a difference. Klarna helps merchants boost conversions, especially for customers looking for payment flexibility.

E-commerce payment gateway comparison

Final thoughts

“When choosing the right payment gateway, pick based on your specific business needs, target market, and growth plans. Consider factors like fees, ease of use, fraud protection, and customer preferences when making your decision. Remember, offering multiple payment options can increase your conversion rates and cater to a wider range of customers.

As you grow your e-commerce business, regularly review your payment gateway performance and be open to testing new options. The right mix of payment systems can significantly contribute to your online store’s success.”

Arham Khan, CEO, Pixated