September 23, 2020

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Forget the rest

Setting up a new Payment Gateway for your small business

It makes little sense for a business to sell via digital channels unless its customers have a viable way to pay digitally. A payment gateway does for an online store what a credit card machine does for a shop. It allows customers to pay using their preferred method. With the massive shift to online retailing pretty much every business needs one. Here is what you need to know.

Customers demand it

Sellers cannot afford to ignore changes in customer preferences. Research conducted by The PAYPERS UK in 2019 showed that 86% of UK customers make online purchases via credit or debit cards. Cards were the preferred pay mode for more than 60% of the research respondents. The mode of payment is a driving factor in whether customers choose to visit a store again. 

Online stores are no different. There are over 66 million digital commerce users in the UK. More than 74% of them prefer digital or mobile wallets to make payments. When your customers want to buy from the comfort of their homes, give them a fast, easy, and secure method of payment. Adding a payment gateway to your website can substantially widen your market.


The initial setup cost of a payment gateway is certainly a consideration, especially for small scale retailers. Fortunately there are multiple options to match every budget size. The initial setup cost of a new payment gateway in the UK is GBP 600-900. The monthly subscription fees range from GBP 50-100. Finally, the service providers typically charge 15p + 2% fee per transaction. Businesses can manage the costs of setting-up, transacting, and maintaining a payment gateway based on the volume of online sales they expect. This can involve multiple considerations. International payments, volumes, and chargebacks are some of these. 

Choosing a provider

Payment gateways exist in two forms: on-site (integrated) and off-site (hosted). The former allow businesses to receive payments directly on their websites. The primary advantage this setup presents is to make payments easy and fast for customers. However, it requires additional digital security (SSL certificate) which costs extra.

Off-site gateways redirect customers from vendor sites to the payment gateway vendors’ website. This setup costs retailers less, and is faster to setup. These qualities often make it a good choice for startup online retailers. The downside of an off-site payment gateway is that customers may become disengaged when directed away from the retailer’s site. They may abandon the checkout process due to the longer processing time. There are several vendors who offer payment gateways services in the UK, such as Stripe and SagePay.

Setting up

Once you’ve decided on the plan and the vendor, setting up a gateway is relatively simple.

  1. Create a merchant account. This could be with your local bank or a payment service provider that has mobile platform.
  2. Integrate your merchant account with your payment gateway. The process for doing this can vary with each payment gateway vendor. The vendors usually provide detailed instructions and assist retailers on how to do this.
  3. Minimize risks. This pertains primarily to data security. Your site may store some of your customers’ data to make repeat purchases easier. This calls for appropriate digital security measures and compliance with data regulations. 

Payment gateways usually come with security features to protect retailers from fraud. Nonetheless it is preferable to verify the safety measures and get adequate insurance cover.

Customer support

Your new payment gateway will help your site convert first-time buyers into loyal repeat customers. Depending on your vendor and plan, customers will be able to pay you by credit/debit cards, digital wallets, scan-and-pay apps, and other modes. The income from your online sales will automatically appear in your linked bank account.

This lets you focus on customer satisfaction. ‘Personalization’ is the keyword in customer service nowadays. Many small businesses choose to outsource this non-core activity to specialized service providers. These cost-effective contractors are often located in countries such as India or the Philippines. It is very convenient to pay your overseas vendors via reliable international money transfers. Take cues from successful e-tailers on standardizing your business processes and bringing consistency in customer experience.

About the author:

Hemant G is a contributing writer at Sparkwebs LLC, a Digital and Content Marketing Agency. When he’s not writing, he loves to travel, scuba dive, and watch documentaries.