How to Accept Payments as a New UK Business

Getting Paid: The Foundation of UK Business Success

Getting paid promptly and efficiently is fundamental to the survival and growth of any new UK business. Establishing robust payment acceptance methods from the outset ensures a healthy cash flow and minimises administrative burdens and unnecessary fees, which are paramount in a competitive market.

Businesses must consider their primary sales channel (online, in-person, or recurring services), the typical transaction value, and the preferred payment methods of their target customers. Understanding these nuances helps tailor a cost-effective and user-friendly experience.

Streamlining Online Card Payments with Stripe

For online card payments, Stripe is widely regarded as the industry standard, particularly for digital-first businesses due to its developer-friendly API and comprehensive feature set. Its pricing structure is transparent: 1.5% + 20p per transaction for UK cards, with slightly higher rates for international or American Express cards (2.5% + 20p and 3.25% + 20p respectively).

For example, a £100 transaction from a UK customer would incur a fee of £1.70, meaning you receive £98.30. Should a customer pay a £250 invoice with an international card, the fee would be £6.45, reducing your received amount to £243.55.

Setting up a Stripe account is remarkably straightforward for UK businesses, typically taking around 30 minutes to complete the application process and link a business bank account.

Stripe integrates seamlessly with thousands of e-commerce platforms, website builders (Shopify, WooCommerce, Squarespace), and various other business tools, making it incredibly versatile. Crucially, there are no monthly fees for using Stripe in the UK, meaning you only pay when you make a sale.

Optimising Recurring Payments with GoCardless

When considering recurring payments, particularly for subscriptions, memberships, or installment plans, GoCardless stands out as the optimal choice for Direct Debits. It offers a cost-effective solution with charges at 1% + 20p per transaction, capped at £4 for most standard Direct Debit payments in the UK.

This cap makes it particularly attractive for higher-value recurring payments. For instance, a £500 monthly subscription collected via GoCardless would only cost you £4, significantly less than a percentage-based card fee of £7.70 if processed through a card gateway.

Direct Debits through GoCardless offer a substantial advantage over recurring card payments: reduced customer churn.

Direct Debits, tied directly to bank accounts, are far more stable and reliable, providing greater predictability for recurring revenue streams due to their inherent resilience to card changes. Implementing GoCardless is simple for both the business and the customer, providing strong consumer protection that increases confidence.

On-the-Go Payments: SumUp and Zettle

For businesses operating with a physical presence, such as retail stores, market stalls, pop-up shops, or mobile services, in-person payment solutions are essential. SumUp and Zettle (formerly PayPal Here) are excellent choices for mobile card readers in the UK, offering affordable hardware and competitive transaction rates.

Both SumUp and Zettle provide compact, easy-to-use card readers that typically cost between £19 and £49 for the basic models, representing a minor upfront investment. They both charge around 1.7% per tap, chip & PIN, or contactless transaction. For example, a £50 sale would incur a fee of £0.85.

A key differentiator for SumUp and Zettle in the UK market is the absence of monthly fees or minimum transaction volumes. You only pay a percentage on the transactions you process, which is highly beneficial for new businesses that may not have consistent sales volumes or high turnover in their initial stages.

Efficient Invoicing and Bank Transfers

For higher-value business-to-business (B2B) transactions, or when dealing with larger invoices, traditional bank transfers via BACS (Bankers' Automated Clearing Services) become a highly attractive, economical option. While BACS payments themselves are generally free to send and receive from your business bank account, the setup for convenient payment links can vary.

Many digital challenger banks popular with UK SMEs, such as Tide, Starling, and Revolut Business, incorporate built-in payment link functionality. These integrated features allow you to generate and share secure payment links with clients, leading them directly to a pre-filled instant bank transfer, saving administrative time and costs.

The primary advantage of encouraging BACS payments for invoices over, say, £500 or £1,000, is the significant saving on card processing fees.

For instance, a £5,000 invoice paid via Stripe at 1.5% + 20p would incur a £75.20 fee. If paid via BACS through a payment link, this fee is eliminated entirely, directly increasing your profit margin. Always clearly state your bank details on invoices alongside the payment link option.

Leveraging Accounting Software for Invoicing

Efficient invoicing is crucial for getting paid promptly. Rather than investing in a separate, standalone invoicing tool, leverage the capabilities already offered by your existing accounting software or business banking platform. Most popular solutions in the UK, such as Xero, FreeAgent, QuickBooks, and integrated banking apps like Tide, include robust invoicing features.

These platforms allow you to create professional, branded invoices, customise templates to include your logo and payment terms, and track their status. They often include a 'pay now' button directly on the electronic invoice, which can link to your chosen payment gateway, such as Stripe or GoCardless.

For example, in Xero, you can customise invoice templates, specify automatic reminders for overdue payments, and seamlessly integrate with Stripe. This integrated approach saves significant administrative time, reduces errors from manual data entry, and ensures all financial data is centralised within a single system. There's rarely a need for a new UK business to adopt a highly specialised invoicing tool.

Bottom Line

Simplify your payment strategy initially. Opt for Stripe for one-off online sales and GoCardless for recurring revenue. For in-person sales, a portable card reader from SumUp or Zettle provides essential flexibility, and actively encourage bank transfers for substantial B2B invoices. Focus on getting started and refining your options as your business grows.