Do I need a merchant account for a payment gateway?

Not always. Square, Stripe, and GoCardless are payment service providers (PSPs): they maintain a pooled merchant account and you share it. You get immediate access without underwriting. Traditional gateways like Worldpay require a separate acquiring relationship, which takes longer to set up but may offer lower rates at volume.

What is the cheapest payment gateway for small businesses?

For card payments, Square at 1.4% + 25p online or GoCardless at 1% + 20p for direct debit are the cheapest for most small UK businesses. Worldpay and TakePayments may offer lower rates at higher volumes but require a quote and a contract.

Can I use more than one payment gateway?

Yes. Some businesses use Square for in-person, Stripe for their website, and GoCardless for recurring invoices. The operational complexity is manageable if the use cases are genuinely distinct.

Best Payment Gateway UK 2026: Top Options for Small Businesses

Provider	Online transaction fee	In-person fee	Monthly fee	Setup	Best for	Action
Top PickSquare Online	1.4% + 25p (UK cards)	1.75% flat	£0	No code required	In-person + free online store	Visit →
GoCardless	1% + 20p (Standard, capped £4)	N/A (online only)	£0 Standard	API or plug-in	Recurring / direct debit	Visit →
Stripe	1.5% + 20p (UK cards)	1.4% + 10p (EEA cards)	None	Developer API	Custom online checkout, subscriptions	Visit →
Worldpay	Quote-based	Quote-based	£15–£22.50 + terminal	Account + integration required	Established businesses, high volume	Visit →

Best payment gateway picks by business type

Best for in-person and online: Square

Square handles card-present payments at 1.75% and online payments at 1.4% + 25p with the same account and inventory. You can be trading online within an hour without writing a line of code.

Square Online is a full e-commerce store that shares its product catalogue with the card reader, a genuine omnichannel setup at no extra charge.

Visit Square

Best for recurring payments: GoCardless

GoCardless processes direct debit payments at 1% + 20p on the Standard plan. It is not a card gateway, customers pay via bank account, not card.

For subscriptions, memberships, and invoice collections, GoCardless’s variable direct debit outperforms card-based gateways on cost and failure rate.

Visit GoCardless

Best for developer-led checkout: Stripe

Stripe is the standard for custom online checkout. Its API handles one-time payments, subscriptions, split payments, and marketplace flows. The documentation is the best in the industry. For a business with a developer and a specific checkout requirement, Stripe is the correct infrastructure choice.

Visit Stripe

Best payment gateway providers

Square Reader

Top Pick

Best for: Small businesses wanting a free POS app and no monthly fees

Watch out: 1.75% flat becomes expensive above ~£6,000/month: no volume discount exists

Not ideal if: High-volume sellers who would benefit from Dojo or other negotiated per-transaction rates

Eligibility: UK businesses: sole traders, partnerships, and limited companies. Account holders must be 18 or over. Custom rates available for businesses processing over £200,000 annually. Prohibited categories include firearms and other restricted activities: see Square’s Acceptable Use Policy.

Not ideal if: High-volume sellers who would benefit from Dojo or other negotiated per-transaction rates

Watch out: 1.75% flat becomes expensive above ~£6,000/month: no volume discount exists

No monthly fee and no contract: zero downside risk while testing card acceptance

Free POS app usable from day one: most owners taking payments within an hour

Amex accepted at the same 1.75% rate: no surcharge or separate policy needed

Software ecosystem (online store, invoices, appointments) on the same account, no extra fees

1.75% flat becomes expensive above roughly £6,000/month in card takings

Settlement is 1–2 working days unless you pay extra for instant transfer

Bluetooth-to-phone means a flat battery or dropped app stops checkout

GoCardless

Best for: Businesses collecting recurring payments, subscriptions, or variable direct debits

1% + 20p capped at £4, one of the lowest costs for high-value recurring payments

Direct debit mandates do not expire, customers pay every cycle without re-authorising

Failure recovery tools cut average failure rate to around 2.2% across all transactions

No contract and no hardware required, software-only with fast API onboarding

350+ integrations including Xero, QuickBooks, Salesforce and most SaaS billing platforms

No card acceptance, bank-to-bank and direct debit only; unsuitable for in-person payments

First payment takes up to 7 working days to clear, a cash flow gap at the start of each new mandate

Settlement is T+2 to T+3 depending on the customer’s bank

Disputes can reverse payments weeks after collection, limited seller protection vs card payments

Advanced features (real-time bank data, Instant Bank Pay) require higher-tier plans

Stripe Terminal

Best for: Tech-forward businesses that already use Stripe online and want a unified payment stack

Eligibility:

UK-registered businesses: sole trader, Ltd, LLP, charity, or partnership
UK bank account in the business name required for payouts
No minimum trading history or revenue threshold for standard accounts
High-volume merchants moved to Stripe Custom with bespoke underwriting
Restricted categories: adult content, regulated gambling, firearms, MLM, unregulated CBD, and any business on the FCA restricted activities list
Stripe Capital and Stripe Issuing are invitation-only based on processing history (typically 3+ months at £10k+/month)
KYC/KYB via Companies House cross-check; 1-3 business days from sign-up to first live transaction in most cases

1.4% + 10p for EEA card-present transactions, competitive without a monthly commitment

Unified dashboard: online and in-person payments in one place with consolidated reporting

Stripe Radar fraud detection included, no extra fee

No monthly fee and no contract, suits variable or seasonal transaction volumes

Tap to Pay on iPhone and Android eliminates the need for dedicated hardware

Custom Terminal integration requires SDK development, not a no-code out-of-box setup

2.9% + 10p for non-EEA cards, expensive for businesses with international customers

Standard settlement takes 3 business days; instant payout costs 1% (minimum 40p)

New accounts face a 7-day holding period before first payout

Account holds can freeze both online and in-person payment channels simultaneously

Worldpay

High-volume option

Best for: Merchants processing tens of thousands of transactions a month who need scale, offline capture, and a reporting suite for a finance team

Watch out: 18-month contract is the longest on the market, setup takes weeks, not minutes

Not ideal if: Sole traders and small businesses, 18-month contract and slow onboarding are excessive for low volumes

Offline transaction capture, useful for businesses in patchy-signal locations

Tailored rates become competitive at high volume (£20k+/month)

Reporting and chargeback handling designed for merchants with dedicated finance teams

18-month contract is the longest on this list and the hardest to exit early

Setup and onboarding are slower than fintech competitors, weeks, not minutes

POS integrations require direct confirmation for your specific setup

Accepts all major card schemes including Visa, Mastercard and Amex

Offline transaction capture, stores payments when connectivity drops

Worldpay Business Manager portal with reporting and chargeback management

Multi-currency acceptance with settlement in GBP or original currency

Integrates with major UK EPoS systems including EPOS Now and Lightspeed

Dedicated UK account management on higher-volume contracts

Payment gateway fees compared

Online transaction fees vary by card origin and business model. For a UK retail business with domestic customers:

Square Online: 1.4% + 25p per UK card transaction
GoCardless Standard: 1% + 20p per bank payment, capped at £4 (no card network fee)
Stripe: 1.5% + 20p for UK cards; 2.5% + 20p for non-UK cards
Worldpay: quote-based; typically competitive at volume above £100,000/year

GoCardless is cheapest for recurring payments by bank. Square is cheapest for standard one-off card transactions from UK customers. Stripe’s 1.5% + 20p costs marginally more than Square online but offers deeper API functionality.

Payment gateway features compared

Hosted vs API-integrated checkout

Square and GoCardless offer hosted checkout pages with no coding required. Stripe is primarily API-first: you write the integration or use a pre-built plugin (Shopify, WooCommerce). Worldpay offers both but setup requires an account manager.

For businesses without a developer, Square or GoCardless is the correct starting point.

Recurring billing and subscriptions

GoCardless is purpose-built for direct debit. Stripe Billing handles card-based subscriptions with dunning, metered billing, and webhook events. Square has basic recurring invoice functionality but no subscription management platform.

Worldpay offers recurring billing via its hosted API but configuration is more complex.

Fees verified against provider websites, May 2026. This is editorial content, not regulated financial advice.

Frequently asked questions

Do I need a merchant account for a payment gateway?
Not always. Square, Stripe, and GoCardless are payment service providers (PSPs): they maintain a pooled merchant account and you share it. You get immediate access without underwriting. Traditional gateways like Worldpay require a separate acquiring relationship, which takes longer to set up but may offer lower rates at volume.
What is the cheapest payment gateway for small businesses?
For card payments, Square at 1.4% + 25p online or GoCardless at 1% + 20p for direct debit are the cheapest for most small UK businesses. Worldpay and TakePayments may offer lower rates at higher volumes but require a quote and a contract.
Can I use more than one payment gateway?
Yes. Some businesses use Square for in-person, Stripe for their website, and GoCardless for recurring invoices. The operational complexity is manageable if the use cases are genuinely distinct.

How we reviewed Best Payment Gateway UK 2026

Ranking criteria. We ranked providers on cost, eligibility, features, and ease of access. Cost and protection carry the heaviest weight because these matter across every business type and rarely change with reader preferences.

Data sources. Every provider’s pricing page, terms, and product docs were checked directly in May 2026. No comparison sites, no press releases, no affiliate material. FCA register cross-checked for regulatory status.

Update cadence. We re-verify every provider on this page at least monthly, and whenever a provider changes pricing, eligibility, or terms. The verification date on the page reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.