The moment a customer clicks “buy”, their money has to travel safely from their bank to yours. The tool that makes that journey is a payment gateway — and your choice affects every sale: the fees you pay, how fast you get paid, and whether customers trust your checkout enough to finish paying.
Three names dominate UK e-commerce: Stripe, PayPal and Square. This guide compares them in plain language so you can pick the right payment gateway for your UK online store.
The short answer: for most UK online stores, Stripe is the best-value choice — at the time of writing it charges 1.5% + 20p per UK card transaction with no monthly fee, and pays out in about two working days. PayPal (2.9% + 30p) costs more but many shoppers trust the brand and check out faster with it. Square (1.4% + 25p) is the simplest option for complete beginners.
What Does a Payment Gateway Actually Do?
Think of a payment gateway as the digital equivalent of a card machine in a physical shop. When a customer enters their card details at your checkout, the gateway encrypts that information, checks with the customer’s bank that the money is there, approves or declines the payment in seconds, and then settles the funds into your business bank account.
You may also hear “payment processor” and “merchant account” — traditionally three separate things. The good news: Stripe, PayPal and Square are “payment facilitators” that bundle everything into one signup, so there are no separate contracts to arrange.
The 3 Gateways Most UK Stores Use
Stripe
Stripe is the favourite of developers and growing businesses, built into millions of checkouts. At the time of writing, its standard UK pricing is 1.5% + 20p per online transaction for UK cards, with no monthly fee, no setup fee and no minimum contract. Payouts reach your UK bank in about two working days, fraud protection and Strong Customer Authentication are built in, and official free integrations exist for both Shopify and WooCommerce.
Best for: stores that want the lowest fees, full control, and room to grow.
PayPal
PayPal is the name your customers already know. At the time of writing, its standard UK rate is 2.9% + 30p per domestic transaction — noticeably higher than Stripe — but shoppers often check out faster with the PayPal button because they trust it and skip typing card details. It also offers Pay Later at checkout, which can lift conversion on pricier items, and since October 2026 there are optional tiered rates for higher-volume UK sellers. The trade-off: higher standard fees, and some sellers report frustration with account holds during dispute spikes.
Best for: stores whose customers ask for PayPal, and anyone selling internationally where buyers recognise the brand.
Square
Square started with in-person card readers, but its UK online rate — 1.4% + 25p per transaction at the time of writing, with no monthly fee — makes it a genuine contender. Its real strength is simplicity: you can sign up and take your first payment within the hour, the same account works with a card reader at markets or pop-ups, and a basic free online store builder is included.
Best for: complete beginners, and sellers who mix online and in-person sales.
Fees Compared Side by Side
| Provider | UK online card fee | Monthly fee | Typical payout time | Setup cost |
|---|---|---|---|---|
| Stripe | 1.5% + 20p | £0 | ~2 working days | Free |
| PayPal | 2.9% + 30p | £0 | 1–2 working days | Free |
| Square | 1.4% + 25p | £0 | 1–2 working days | Free |
Rates at the time of writing — always confirm on the provider’s official pricing page before you commit. International cards cost more with every provider.
To see what the difference means in real money, take a £50 sale to a UK customer:
- Stripe: £0.95 fee (75p + 20p) — you keep £49.05
- PayPal: £1.75 fee (£1.45 + 30p) — you keep £48.25
- Square: £0.95 fee (70p + 25p) — you keep £49.05
Scale that to 200 sales a month (£10,000 revenue): Stripe and Square cost about £190 in fees; PayPal costs about £350. That £160 monthly gap shows why the headline rate matters — but it is not the whole story.
6 Things That Matter More Than the Headline Rate
1. The payment methods your customers actually use. Cards, Apple Pay and Google Pay are table stakes — all three gateways support them. If your customers expect PayPal or buy-now-pay-later options, factor that in: PayPal includes both natively, while Stripe adds them through integrations.
2. Payout speed and cash flow. All three pay out in roughly one to two working days, though your first payouts can take longer during verification — so don’t plan launch-day spending around instant cash. “Instant” payouts exist but cost extra.
3. How it plugs into your platform. On Shopify, Shopify Payments (which is powered by Stripe) is built in, and PayPal comes pre-installed. On WooCommerce, all three connect through free official extensions. If you haven’t chosen a platform yet, our guide comparing Shopify and WooCommerce walks through the decision.
4. Ease of setup. Square is the quickest to get running; PayPal is familiar to most people; Stripe takes a little longer but rewards you with the most control. None of them requires coding for a standard store.
5. Support when something goes wrong. Stripe offers 24/7 support; Square has UK phone support in business hours; PayPal’s support gets mixed seller reviews, especially around frozen funds during disputes. Check recent reviews before you commit.
6. Chargebacks and disputes. Every provider charges a fee when a customer disputes a payment (around £14–15 in the UK) and runs its own resolution process. High dispute rates can also trigger temporary holds on your funds — read the small print.
UK-Specific Checks Before You Sign Up
- FCA authorisation: only use a provider authorised by the Financial Conduct Authority (or operating in the UK under the proper permissions). All three providers compared here are.
- Strong Customer Authentication: UK rules require extra verification (like 3D Secure) on most online card payments. All three handle this automatically, but make sure your checkout is set up to support it — otherwise legitimate sales get declined.
- GBP settlement: confirm your account settles in pounds sterling. Accepting payments in other currencies without realising can add conversion spreads of 2–4% on top of the transaction fee.
- Keep records for tax: gateway fees are a legitimate business expense. Download monthly fee statements — your accountant will thank you at year end.
For the full current numbers, check Stripe’s official UK pricing page and the equivalent pages for PayPal and Square before you decide.
Which Should You Choose?
| Your situation | Best pick | Why |
|---|---|---|
| Just starting, keeping costs low | Stripe or Square | Lowest per-sale fees, no monthly cost |
| Customers keep asking “do you take PayPal?” | Add PayPal as an option | Trust and convenience for PayPal loyalists |
| Selling in person too (markets, pop-ups) | Square | One account for online and card-reader sales |
| High monthly volume | Stripe or PayPal tiered rates | Volume discounts are available — ask |
| Already on Shopify | Shopify Payments | Built in and powered by Stripe |
A tip many successful UK stores use: offer two options at checkout — cards via Stripe (or Square) plus a PayPal button. It costs nothing extra, and letting shoppers pay their preferred way removes one more reason to abandon the purchase.
FAQs About Payment Gateways for UK Online Stores
Do I need a separate merchant account as well?
No — all three are payment facilitators, so the merchant account is bundled into your single signup. You just need a normal UK bank account to receive payouts.
How long until the money reaches my bank account?
Typically one to two working days after the sale. Your first few payouts may take up to a week while the provider verifies your new business.
Can I offer more than one gateway at checkout?
Yes — many UK stores offer cards via Stripe alongside a PayPal button. It just adds a little extra work when reconciling accounts each month.
Will these gateways work with Shopify and WooCommerce?
Yes. Shopify has Shopify Payments (powered by Stripe) built in plus PayPal pre-installed, and WooCommerce offers free official extensions for Stripe, PayPal and Square. Whichever platform you use, connecting a gateway takes minutes, not days.
Conclusion
There is no single “best” payment gateway — only the best one for your store. Stripe wins on fees and flexibility for most sellers; PayPal wins on customer trust; Square wins on simplicity for beginners and multichannel sellers.
Start with the option that matches where you are today, watch your monthly fee statements, and re-compare rates once a year — as sales grow, a switch or negotiated volume rate can save hundreds of pounds annually. Smooth, trusted payments are one of the simplest ways to turn more browsers into buyers. Explore our E-Commerce category for more practical guides on growing an online store in the UK.
