Payment processors are the companies and services that let UK businesses accept debit and credit card payments, either in person via a card machine or online through a payment gateway. The best payment processors UK businesses can choose from combine competitive transaction fees, fast payouts and reliable customer support, without locking merchants into expensive long-term contracts.
With dozens of payment processing companies UK-wide now competing for SME business, pricing structures vary hugely - from pay-as-you-go card readers charging 1.75% per tap, to traditional merchant accounts charging under 1% for higher-volume businesses. Comparing providers properly, rather than accepting the first quote, can save a typical SME hundreds of pounds a year in fees and rental charges.
Compare Payment Processors — At a Glance
| Provider | Best For | Transaction Fee | Monthly Fee | Contract | Rating /5 |
|---|---|---|---|---|---|
| Online businesses & developers | 1.5% + 20p (UK cards) | £0 | No contract | 4.6 | |
| Retail & hospitality | 1.75% | £0 (from £19 with terminal) | No contract | 4.4 | |
| Micro businesses & mobile traders | 1.69% | £0 | No contract | 4.3 | |
| Fast in-person payouts | Custom, from 0.85% | From £19 | 18-month typical | 4.5 | |
| Established SMEs & multi-channel | Custom, from 0.99% | From £15 | 12-36 months | 4.2 | |
| Ecommerce & marketplaces | 2.9% + 30p (standard) | £0 | No contract | 4.1 | |
| Retail with card machine bundles | Custom, from 0.95% | From £19.99 | 12-36 months | 3.9 | |
| Small local retailers | Custom, from 0.95% | From £19.99 | 18-48 months | 3.8 | |
| Multi-site & franchise businesses | Custom, from 0.90% | From £15 | 12-36 months | 4.0 | |
| Recurring payments & Direct Debit | 1% (capped at £4) | £0 (paid plans from £39) | No contract | 4.4 |
Top Payment Processors Reviewed
Stripe
Stripe remains the go-to payment processor for UK online businesses, developers and SaaS companies thanks to its powerful API, extensive documentation and huge library of integrations. It is less suited to businesses wanting a simple in-person card reader, though Stripe Terminal now covers that gap too.
- Pros: Excellent developer tools, transparent pricing, supports 135+ currencies
- Pros: No monthly fees or long-term contract
- Pros: Strong fraud prevention (Radar) built in
- Cons: Requires technical setup for full customisation
- Cons: Support is largely email/chat-based, no phone line for smaller accounts
Transaction fee: 1.5% + 20p per UK card transaction
Square
Square is a strong all-rounder for retail, hospitality and mobile traders who want an affordable card reader with no ongoing contract. Its point-of-sale software is genuinely easy to use, and the free tier is generous for smaller businesses.
- Pros: Sleek hardware, no contract, fast setup
- Pros: Integrated POS and inventory tools
- Pros: Next-business-day payouts as standard
- Cons: 1.75% flat fee is higher than negotiated merchant account rates
- Cons: Account holds can occur for unusual transaction patterns
Transaction fee: 1.75% per transaction
SumUp
SumUp is popular with market traders, cafes and startups because of its low-cost card readers and simple pay-as-you-go pricing with no monthly commitment. It's a great entry point but becomes less competitive as transaction volumes grow.
- Pros: Cheap hardware from around £29
- Pros: No monthly fees, no contract
- Pros: Simple app-based setup
- Cons: 1.69% fee is uncompetitive for higher-volume merchants
- Cons: Customer support can be slow to respond
Transaction fee: 1.69% per transaction
Dojo
Dojo has built a strong reputation among UK hospitality and retail businesses for its fast next-day payouts and reliable card machines. Pricing is bespoke and typically requires a call with a sales rep, but rates can be very competitive for established businesses.
- Pros: Fast payouts, often same-day
- Pros: Reliable 4G/Wi-Fi terminals
- Pros: Good UK-based support reputation
- Cons: Requires a contract, typically 18 months
- Cons: Custom pricing means you must negotiate to get the best rate
Transaction fee: from 0.85% (custom quote)
Worldpay
Worldpay is one of the longest-established payment processing companies UK-wide, offering merchant accounts for businesses of every size. It suits established SMEs needing multi-channel acceptance, though newer challengers now offer more flexible terms.
- Pros: Trusted brand with decades of experience
- Pros: Strong multi-channel and international capability
- Pros: Competitive rates for higher-volume merchants
- Cons: Contracts can run 12-36 months with exit fees
- Cons: Pricing lacks transparency until you request a quote
Transaction fee: from 0.99% (custom quote)
PayPal
PayPal is the most recognised checkout brand among UK consumers, making it useful for boosting conversion on ecommerce sites. However, its standard transaction fees are among the highest on this list, so it's best used alongside another processor rather than as your sole gateway.
- Pros: High consumer trust and brand recognition
- Pros: Easy integration with most ecommerce platforms
- Pros: Built-in buyer and seller protection
- Cons: 2.9% + 30p is expensive versus competitors
- Cons: Account holds and disputes can be frustrating to resolve
Transaction fee: 2.9% + 30p (standard rate)
GoCardless
GoCardless specialises in Direct Debit and recurring payment collection, making it a favourite among UK subscription businesses, agencies and membership organisations. It isn't designed for card-present retail but excels at reducing failed payments for regular billing.
- Pros: Low fees for recurring payments, capped at £4
- Pros: Reduces failed payments via Instant Bank Pay
- Pros: Strong integrations with accounting software
- Cons: Not suitable for one-off in-person card payments
- Cons: Paid plans needed for higher features and volumes
Transaction fee: 1% capped at £4 per transaction
Adyen
Adyen is built for larger UK businesses and scale-ups needing a single platform for online, in-app and in-person payments across multiple countries. Its pricing is interchange-plus and highly competitive at volume, but it's overkill for small independent traders.
- Pros: Single platform for global omnichannel payments
- Pros: Transparent interchange-plus pricing
- Pros: Used by major UK and global enterprises
- Cons: Not designed for small, low-volume merchants
- Cons: Onboarding and integration require more resource
Transaction fee: interchange + from 0.6% (custom quote)
Frequently Asked Questions
What is a payment processor and how does it work?
A payment processor is a service that handles the transaction between a customer's bank and your business when a card payment is made. The processor securely transmits payment data, verifies funds availability, and deposits the money into your merchant account within 1-3 working days in the UK.
How much does payment processing cost in the UK?
UK payment processing typically costs between 1.5% and 3.5% per transaction for card payments, plus a fixed fee of 10p to 30p per transaction depending on your provider and business type. Some providers also charge monthly subscription fees ranging from £0 to £100+, with interchange fees set by Visa and Mastercard at approximately 0.3% to 0.9%.
What is the cheapest payment processor for small businesses in the UK?
Stripe, Square, and PayPal offer competitive rates for UK small businesses, with Stripe charging 1.4% plus 20p per online transaction and Square at 2.75% plus 20p for card payments. However, the cheapest option depends on your transaction volume and business model - established providers may negotiate lower rates with higher turnover.
Do I need a payment processor or a merchant account?
You need both - a merchant account is where your transaction funds are deposited, whilst a payment processor handles the actual transaction authorisation and settlement. Many UK providers offer integrated solutions combining both services, so you typically don't need to arrange them separately.
What is the difference between a payment processor and a payment gateway?
A payment gateway is the technology that securely captures and encrypts customer payment data (such as the checkout form on your website), whilst a payment processor handles the actual bank communication and fund transfer behind the scenes. You generally need both working together for a complete payment solution, though many providers bundle them as one service.
How to Choose the Right Payment Processors
Selecting the right payment processor depends on your business model, transaction volume, and customer base. UK businesses should prioritise providers that support multiple payment methods, offer competitive interchange rates, and provide robust fraud protection.
Evaluate processors based on setup costs, monthly fees, and per-transaction charges. Consider integration complexity with your existing systems and the quality of customer support available.
- Transaction volume: Higher volumes typically unlock better rates and more favourable terms with major processors.
- Payment methods: Ensure the processor supports cards, digital wallets, bank transfers, and emerging methods your customers prefer.
- Industry type: Some processors specialise in high-risk sectors or e-commerce, offering tailored solutions and appropriate underwriting.
- Regulatory compliance: Verify PCI DSS certification and GDPR compliance to protect customer data and avoid penalties.
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