payment gateways explained

Everything you ever wanted to know about payment gateways!

This article will break down and explain what a payment gateway is. It will also help you to choose the best payment gateway for your business and hopefully help you save some money.

In this post, we’ll look at:

What are payment gateways?

A payment gateway is a secure service that enables real time online credit card processing. It takes the credit card details from your customer, verifies the card, checks to see if the funds are available, and either authorises or declines the payment.

Transactions are encrypted to ensure a high level of security. Essentially it provides a secure link between your website and your payment processor or acquiring bank.

The payment gateway may be integrated with your shopping cart so that your customer stays on your website when he enters his credit card details.

While this provides the smoothest shopping experience, it means that your website must comply with the PCI DSS security standards, which has cost implications.

Alternatively your payment gateway could be hosted by your gateway provider. In this case when your customers checks out from your shopping cart he is redirected to a hosted payment page where he enters his details. While this means that your customer leaves your website, you don’t need PCI DSS compliance.

Generally you can customise the hosted payment page, for instance, by adding your logo. For smaller businesses this is often the most practical solution.

Payment gateways can also be integrated using an embedded iFrame or through Silent Order POST.

How much do payment gateways cost

When you take online payments there are several associated costs. The largest of these is the cost of processing credit cards. These vary enormously and depend on many factors, including your business sector, your trading history, and your sales volume.

While some providers have a fixed charge structure, others provide card processing charges on an individual basis and they can be negotiable.

In addition to the cost of card processing, there are charges for using the payment gateway. While these are only a fraction of the total cost, they can be significant if you are processing large volumes. Generally they consist of a setup fee, a monthly charge, and a transaction fee.

Typically this works out at around £0.09 per transaction though it can vary according to your sales volume.

Choosing a payment gateway for your business

Finding the most suitable payment gateway for your business can be a challenge. While many options are available, not all providers are transparent about their costs structures. As mentioned, costs associated with credit card processing can be negotiable.

There are other things to consider. For instance some providers require a rolling monthly deposit which they will retain typically for six months. If the deposit is 10% of revenue a month, this can have a negative impact on your cash situation.

Settlement delays can also impact on your cash flow. While settlement times offered by high street banks can be as short as one day, three to five days is typical with most providers, and for high risk merchants they can be as long as three to four weeks.

Many payment gateways allow you trade in foreign currencies; this means that if you sell to overseas customers they can pay in their local currency and the funds are settled in your currency. With some providers you receive a commission on currency conversion providing an additional income stream.

Trust is an important consideration. Your customers are likely to feel reassured if they provide their card details to an established brand such as Elavon, SagePay, or Global Payments and less so if the gateway is an unknown or obscure brand.

You need to make sure that your selected payment gateway can be integrated with your shopping cart and is accepted by your merchant account provider. While there shouldn’t be a problem with most payment gateways, there could be with less well known and specialist providers.

If you have a merchant account with a high street bank then you might have no choice other than to use their selected gateway.


Best UK Payment Gateways

Sage Pay

sage pay

Sage Pay is one of the more popular gateways for both small and large enterprises. Unlike many of its competitors it doesn’t commit you to a fixed term contract; you need only give tree months notice of termination. There are several integration options including iFrame and API.

There is no set-up fee, just a £25 a month charge which includes 1,000 transactions a quarter. Additional transactions are 10p.



NetBanx is relatively expensive, though fully featured and offers high standards of fraud detection along with advanced reporting and data management. It is either hosted or via API integration.

The set-up fee is £250 and there is a monthly fee of £50 which includes 250 transactions. The cost of additional transactions is variable depending on your sales volumes.



Ogone is an excellent choice for businesses trading overseas. It provides multi-currency processing across 35 countries. There are several integration options and it is associated with over 100 acquirers.

There is no set-up fee and a monthly charge of £20 includes 300 transactions. The cost of additional transactions is variable.


realex logo
RealEx provides a wide range of options that range from off the shelf solutions through to highly integrated complex applications. It also supplies white label services to other payment gateway brands including Global Payments.

For small businesses there is no set-up fee and monthly charges are just £19 which includes 350 transactions. Additional transactions are 10p a transaction.

Next Steps: Saving money on payment gateways

Now that you’ve gotten the low down on payment gateways and all the choices you’re faced with, it might be a bit overwhelming knowing where to start – that’s where BMA comes in.

We can help you compare the best suppliers so that you find the best deals and save as much money as possible without compromising on quality. To get started just fill in the form at the top of the page and our team will be in touch.