Accepting Payments: The Complete Guide for UK Businesses

Most UK businesses can accept a card payment within a day of signing up for a card reader. The harder question is whether the setup they choose will still be cost-effective at higher volumes, and whether they have accounted for the less obvious fees.

In this guide, we cover every mainstream way to accept payments in the UK in 2026 — in-person, online, and recurring — what each method costs, and how to match the right setup to the way your business actually operates.

How UK Card Payment Processing Works

We have broken the processing chain into its three components below, as the distinction between them matters for understanding why costs vary by card type.

When a customer taps a card, the transaction moves through several parties before money reaches the merchant. The card scheme sets the rules and the interchange fee. The issuing bank authorises or declines.

The acquiring bank — your payment processor — settles the funds to your account and charges a fee for doing so.

Interchange fees are set by the card schemes and vary by card type. UK debit card interchange is capped at 0.2% under the Interchange Fee Regulation. UK consumer credit card interchange is capped at 0.3%.

Premium and corporate cards are uncapped and can be 1.5–2% or more. Processors pass some or all of this cost on to merchants, either as a blended rate or as interchange-plus pricing.

Settlement timescales matter for cash flow. Most UK acquirers settle next working day. Some take two to three days. A few hold funds for longer during an initial period. Check the contract before you sign.

Payment Methods UK Businesses Can Accept

We cover each payment method in turn below, including cost, how settlement works, and which business types each suits best.

Card payments — credit, debit, and prepaid — are the default for most UK consumer transactions. Digital wallets (Apple Pay, Google Pay, Samsung Pay) use the same card rails but add a device-authentication layer. From a merchant cost perspective, they are treated the same as a contactless card payment.

Bank transfers remain common for B2B invoicing. Faster Payments settles same day up to limits (currently £1 million per payment for most banks). They carry no processing fee, but they are push payments — the buyer initiates them, so you cannot initiate a collection without direct debit.

Direct debit suits subscription and recurring billing. The payer authorises you to pull funds from their account on a set schedule. Failure rates are lower than recurring card payments because bank accounts do not expire and card replacement does not break the mandate.

Open Banking payments (sometimes called Pay by Bank) route directly from the customer’s bank account to yours, bypassing the card networks. No interchange fee applies. Adoption is growing but not yet mainstream — useful for higher-ticket transactions where saving 1–1.5% in card fees is material.

Buy Now Pay Later (BNPL) integration through providers like Klarna or Clearpay can raise average order values but typically costs 2–6% per transaction — more expensive than standard card acceptance and only worth it if conversion uplift justifies the cost.

Card Readers and In-Person Payment Terminals

We have separated portable card readers from countertop terminals below, as the cost and contract structure differs materially between them.

Portable card readers — SumUp Air, Square Reader, PayPal Zettle — are designed for businesses with no fixed till. No monthly fee, no contract, and setup takes minutes. The trade-off is a higher per-transaction rate, typically 1.69% to 1.75% for UK cards.

At volumes above roughly £15,000 per month, a countertop terminal on an acquirer contract usually works out cheaper.

Countertop terminals and integrated EPOS terminals suit fixed retail, hospitality, and higher-volume service businesses. Acquirers (Worldpay, Barclaycard Payments, Lloyds Cardnet, Paymentsense) offer interchange-plus pricing on contract. Monthly fees apply, and terminal rental adds £15–£30/month.

The per-transaction rate is lower — often 0.3–0.5% above interchange for UK debit — so businesses processing meaningful volumes recover the fixed cost quickly.

Contactless acceptance, Apple Pay, and Google Pay are now baseline consumer expectations in the UK. Any terminal bought or leased in the last three years will support them. If yours does not, replace it.

Mobile card readers using a smartphone and a Bluetooth dongle work well for market traders, tradespeople, and event sellers. The same per-transaction economics apply as standalone readers. Reception can be an issue at outdoor markets — a 4G SIM-enabled terminal removes that dependency.

Online Payment Gateways Explained

We explain how gateways work, what they cost, and how to avoid the most common pricing traps below.

An online payment gateway encrypts the card data entered by the customer, routes the authorisation request to the card scheme and issuing bank, and returns an approval or decline. It sits between your website or app and your merchant account.

Hosted gateways redirect the customer to a payment page managed by the provider (Stripe Checkout, PayPal, Opayo). PCI compliance is largely handled by the provider. Setup is faster. The trade-off is slightly less control over the checkout experience and branding.

Self-hosted or API-integrated gateways (Stripe Elements, Braintree) keep the customer on your site throughout. The user experience is smoother, but you take on more PCI scope. Most businesses using this route rely on tokenisation to reduce that burden.

Gateway costs stack on top of merchant account fees. Stripe charges 1.5% + 20p for UK cards (published rate, April 2026). PayPal charges 1.2–2.99% depending on account tier and card type. Dedicated acquirers charge a gateway fee (typically £15–£25/month) plus interchange-plus transaction pricing.

Currency conversion is a material cost for businesses selling internationally. Most gateways charge 1.5–2% on top of the base rate for non-GBP transactions. If international sales are significant, negotiate currency conversion terms or use a gateway with flat FX pricing.

Direct Debit and Recurring Payments

We compare GoCardless and Stripe Billing below — the two options most UK businesses reach for when setting up recurring payment collection.

Direct debit is the right tool for subscription billing, memberships, and any service invoiced on a recurring schedule. The customer signs a mandate authorising you to collect funds. You submit collection files to Bacs. Settlement takes three working days from submission.

GoCardless is the dominant UK direct debit API for small and mid-size businesses. Pricing starts at 1% + 20p per transaction capped at £4, with volume plans available.

The hosted mandate flow handles mandate creation without custom development. GoCardless is not a substitute for a merchant account — it handles direct debit only.

Stripe Billing handles recurring card payments and, via a GoCardless integration, direct debit. If you are already running payments on Stripe, Stripe Billing is the lower-friction route for adding subscriptions. If direct debit failure rates are the primary concern, a GoCardless-native integration gives more control over the collection flow.

Recurring card payments (storing a card token and charging it on a schedule) are faster to set up than direct debit but fail more often — cards expire, are replaced after fraud, or hit credit limits. For anything billed monthly at material amounts, direct debit gives more predictable collection.

What Accepting Payments Actually Costs

We set out indicative costs for the main payment acceptance methods for a UK business in 2026 in the table below. Actual rates depend on volume, card mix, and negotiated terms.

Blended vs interchange-plus pricing
Blended rate pricing charges one percentage regardless of card type. It is simpler to forecast. Interchange-plus separates the underlying interchange cost from the processor’s margin, which is usually cheaper at scale but harder to budget month to month. At volumes above roughly £20,000/month, it is worth asking acquirers for interchange-plus quotes.

Choosing the Right Payment Setup for Your Business

The right setup depends on three things: where sales happen (in-person, online, or both), average transaction value, and monthly volume. We have structured the section by business type — use whichever matches yours.

For mobile and market traders processing under £10,000/month: a portable card reader with no monthly fee (SumUp Air at 1.69%, Square Reader at 1.75%) keeps costs predictable. No contract risk, quick setup, easy to switch.

For fixed retail or hospitality above £15,000/month: a countertop terminal on an acquirer contract with interchange-plus pricing will typically cost less than a blended-rate reader at that volume, even after monthly fees.

Get quotes from two or three acquirers. Worldpay, Barclaycard Payments, and Paymentsense are the main UK options — rates are negotiable.

For e-commerce businesses starting out: Stripe or PayPal provide the fastest path to live payments with the least compliance overhead. Both integrate with every major e-commerce platform. Move to a dedicated acquirer and gateway when volume justifies the fixed costs — typically around £50,000/month.

For subscription or membership businesses: GoCardless for direct debit if recurring failure rates are a concern. Stripe Billing if you want a single platform for subscriptions and one-off payments. Consider running both in parallel for different product types.

For B2B businesses invoicing regular clients: direct bank transfer via Faster Payments has no processing fee. Add a direct debit option for clients who prefer automated collection.

Reserve card acceptance for clients who need it or for initial deposits. This combination keeps total processing costs well below 0.5% of revenue for most service businesses.

Bottom line: Match the payment method to where your sales happen and your volume. Portable readers suit low-volume sellers; acquirer contracts pay off above £15k/month; online, Stripe handles most setups until volume justifies a dedicated acquirer.

Frequently Asked Questions

Do I need a merchant account to accept card payments?
Not always. Payment service providers like Stripe, Square, and SumUp aggregate merchants under their own account, so you can start accepting cards without applying for a dedicated merchant account. A dedicated merchant account from an acquirer (Worldpay, Barclaycard) gives lower transaction rates at higher volumes and more direct relationship with the acquiring bank, but requires a longer application process.

What is PCI DSS and do I need to worry about it?
PCI DSS (Payment Card Industry Data Security Standard) is the security framework governing how card data is handled. If you use a hosted payment page from Stripe, PayPal, or a similar provider, your PCI scope is minimal — typically completing an annual self-assessment questionnaire. If you build a custom checkout that touches raw card numbers, your compliance obligations are considerably larger and you will likely need a qualified security assessor.

How long does it take to receive the money after a card payment?
Most UK acquirers settle next working day. Stripe pays out on a rolling two-day basis by default (configurable to daily). PayPal holds funds in a PayPal balance, which you then transfer to your bank — that transfer takes one working day. During an initial period with a new provider, some acquirers hold funds for a few days as a risk measure.

What is a chargeback and how do I protect against them?
A chargeback is when a cardholder disputes a payment with their bank and the bank reverses the transaction. The merchant typically has 20–45 days to respond with evidence that the payment was legitimate. Chargeback handling fees of £15–£25 per case are common. Keeping delivery evidence, signed contracts, and clear refund policies reduces the risk of losing disputes. High chargeback rates (above 1% of transactions) can result in account termination by some processors.

Can I accept payments if my business is a sole trader without a registered company?
Yes. Most payment providers accept sole traders. You will need to provide personal identification, a business bank account or personal account used for business, and evidence of trading activity. Some higher-risk processors require a limited company structure, but Stripe, Square, SumUp, and GoCardless all support sole trader applications.

What is the difference between a payment gateway and a payment processor?
A payment gateway encrypts and routes the transaction data. A payment processor handles the actual movement of funds between the acquiring bank and the card schemes. In practice, most providers (Stripe, PayPal, Worldpay) bundle both functions, so the distinction matters mainly when you are using a separate gateway and acquirer — common at higher volumes when businesses want to route transactions through multiple acquirers.

How we put this guide together

This guide draws on Visa and Mastercard published interchange schedules, publicly available acquirer and gateway pricing pages, FCA register data, and Bacs processing rules. Rates cited are indicative as of April 2026.

We have not included providers whose pricing or terms could not be verified from primary sources at time of writing. Where ranges are given, they reflect variation by volume tier, card type, and negotiated terms rather than a single published figure.

We update these cost benchmarks when published rate changes occur. If you are making a contract decision, we recommend checking current pricing directly with the relevant provider.

This is an editorial guide, not regulated financial advice. Payment processing decisions should be made based on your own volume, card mix, and contract terms.