Businesses often begin by accepting cash payments and using card payment terminals. I am going to share my findings on the options available and which payment system could help you and your business. - Tom Noble

Businesses often begin by accepting cash payments and using card payment terminals. Over time we consider accepting online payments but the prospect can seem almost daunting with so many options. Having recently been approached by a number of my clients to provide advice on which payment system would suit them best, I am going to share my findings with you so that you can make an informed decision.

The payment solutions provider

The first solution people often think of is a payment solutions provider - or a payment gateway. These solutions provide you, the business owner, with a mechanism to accept payments, facilitate refunds and often take in person credit card payments. A conventional solution to a common problem.

The market is littered with providers but the 3 most notable contenders are PayPal, SquareUp and Stripe. Each platform has it's own merits, all of which provide a very similar service, and each has it's own pricing strategy. Let's consider a business that has a monthly transaction amount of less than £5000.

PayPal SquareUp Stripe
Online transactions 2.9% + 20p 2.5% 1.4% + 20p
Chip and pin setup £75 £39 + VAT Additional setup required
Chip and pin transactions 1.75% 1.75% Additional setup required

As you can see, the prices of these services vary and each business needs to compare these fees to what their business bank account can offer. Some providers support extended functionality such as built in invoicing, all of those mentioned above provide integration opportunities with your existing online platforms.

Ecommerce solutions

An often overlooked, underestimated, solution is using an ecommerce platform to provide payment services. The advantage of such an approach is that if you sell physical product, you can utilise the platform for online sales and in-store sales also. Keeping all your data in one place is often good for making life easier.

As a Shopify partner and affiliate, I will concentrate on how Shopify could help in processing payments both online and in store.

Firstly, as we are hosting an online store with Shopify, there is a monthly fee of $29.

For online payments - using the Shopify processing system - we pay 2.2% + 20p per transaction. For in person payments - using the free Shopify app - we pay 1.7% per transaction.

There is an option to add in a Point of Sale solution, known as the retail package, for those who regularly take in person transactions. I think the real benefit of this comes in when you are selling physical product, in person, and need a card reader. If you can use the app, take advantage of the lower cost.

Comparison and recommendations

Going back to my example of £5000 in turnover a month, I will compare the different options. For the purposes of this comparison I will assume the following:

  • Upfont costs (capital expenses) in creating integrating the platform and buying hardware are covered;
  • Transactions are of £50 each, totaling 100 transactions;
  • All transactions are made with either a Visa or Mastercard;
  • 50% of the transactions are made in person and 50% via an online payment gateway integration.
PayPal SquareUp Shopify
Online % fee £2500 @ 2.9% = £72.50 £2500 @ 2.5% = £62.50 £2500 @ 2.2% = £55.00
Online per transaction fee 50 x £0.20 = £10.00 - 50 x £0.20 = £10.00
In person % fee £2500 @ 1.75% = £43.75 £2500 @ 1.75% = £43.75 £2500 @ 1.7% = £42.50
Monthly service fee - - £20.00 (29 USD)
Total £126.25 £106.25 £127.50

* I have omitted Stripe from the comparison based on the additional setup required for in person card payments. Whilst it is possible to achieve this functionality with their service, it is not available out-of-the-box.

Based on the above, simply for payment processing, SquareUp is the cheapest option. This comparison doesn't factor in fees for invoice payments etc. which could alter the cost analysis depending on your needs.

I would recommend, for simple online payments with an existing web platform solution (where no online store is required and you are already integrated with a solution), SquareUp with PayPal being a close contender.

If you are looking to start selling online and want to setup a store, or have physical product with inventory and shipping management to consider, or want a managed platform which provides an end to end solution, I would recommend Shopify.


If you would like to explore payment solutions for your business, would like help in setting up your chosen solution, or have a migration in mind, get in touch. As a Shopify Partner I can help develop a store that matches your needs, or if you are wanting to setup your own store, click here to get a 14-day free trial.

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