How online processing works
The customer enters card details on your site or a hosted page. The gateway transmits the data securely to the acquirer, who routes it via the card scheme to the issuing bank for authorisation. Funds settle to your bank a day or two later.
PSD2 requires Strong Customer Authentication (3-D Secure 2) on most online transactions, adding a second-factor step for the cardholder.
The main provider types
Bundled online-first
Stripe, Adyen, Shopify Payments, PayPal. Fast to set up, blended pricing, no long contracts.
Traditional acquirer + gateway
Worldpay/Barclaycard + Opayo/Braintree. More negotiable at scale, more complex to manage.
Wallets and BNPL
Apple Pay, Google Pay, Klarna, Clearpay - added as extra payment methods on top of a primary processor.
Keeping costs low as you scale
Below £20k/month, bundled is usually cheapest. £20k-£100k, benchmark blended vs Interchange Plus. Above £100k/month, Interchange Plus or a negotiated Adyen/Worldpay deal usually wins.
Fraud and chargeback management
Online transactions carry higher chargeback risk than in-person. Enable 3-D Secure 2 (mandatory in most cases), use AVS/CVV checks, and consider a fraud tool at scale (Stripe Radar, Sift, Signifyd).
A 0.5% chargeback ratio is a healthy target for e-commerce; above 1% invites scheme monitoring.
Alternative payment methods
UK consumer preferences have shifted toward Apple Pay, Google Pay and buy-now-pay-later. Offering these lifts conversion by 5-15% in most tests. All modern gateways support them natively.
Key takeaways
- Online processing needs a merchant account and a gateway (bundled or separate).
- Bundled providers dominate low and mid volume; Interchange Plus dominates high volume.
- Review pricing at every material step-change in monthly volume.
- Wallets and BNPL lift conversion - offer them as standard.
Want a clearer comparison of your online payment costs?
We’ll look at how you take payments, the fees around the transaction and the options that fit your business. You decide what happens next.
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