Most common payment methods among UK merchants

Whether you’re a shop owner or service provider, sell to businesses or individuals, or operate your business online, in person, or a combination of both, your payment methods are an essential part of your business operations.

Not only are payment methods significant to you, but they’re also significant to your customers.

The payment methods you accept as a merchant can impact your customers’ ability to make purchases and even influence their decision-making process, meaning it’s essential to implement commonly used methods so that you and your customers will be happy.

Of the many payment methods available, these seven are some of the most common among merchants in the UK.

Credit and debit cards

Credit and debit cards are used for the majority of purchases made in the UK and are among the most widely accepted payment forms both online and in person.

For consumers, they’re easy to use, and, in the case of credit cards, they offer the bonus of spending perks and credit building. For merchants, they’re a reliable and efficient way to get verified payments. Among the most popular credit cards used by customers are Visa, Mastercard, and American Express.

To accept credit and debit cards, merchants must pay processing fees (typically in the form of a small percentage for each sale). These fees will vary depending on your payment processor, the card used, and whether the payment was made online or in person.

Though fees are associated with accepting card payments, the popularity of these payment forms makes them a worthwhile option to offer your customers.

Cash

Cash payments in the UK had been steadily declining for years, but an unexpected shift happened in 2022 that saw the number of cash payments increase (for the first time in a decade) by seven per cent.

This shift in purchasing behaviour has been attributed to increased inflation and an uncertain economy. A similar move to more cash payments happened during the 2008 economic crisis.

The turn towards cash during economic uncertainty indicates that this form of payment will remain essential, so if merchants can accept cash payments, they should keep this option available to their customers.

Contactless payments

This form of payment allows purchases to be processed with a phone or by tapping a credit or debit card on a point of sale (POS) terminal. It speeds up the sale process by not requiring a PIN from customers or clients to authorise the payment.

Digital wallets

Digital wallets are increasingly popular options thanks to a rise in services like PayPal, Apple Pay, Amazon Pay, and Google Pay. Even businesses like online casinos accept a digital wallet payment method since it operates very similarly to a bank by verifying purchases and processing payments quickly and painlessly.

Similarly, the ability to pay with a digital wallet is efficient and easy for customers to use since they don’t need their physical credit or debit cards on them to make a purchase.

This ease of purchase streamlines the payment process, which is an important feature for businesses accepting payments online. When faced with a long or overly complicated payment process, customers are more likely to abandon their purchase.

Buy now, pay later

Buy now, pay later, or BNPL, options are becoming increasingly popular among e-commerce businesses as they allow customers to buy a product immediately but pay for it later in monthly instalments.

This option allows customers to make purchases that they may not have cash for immediately and tends to lead to bigger sales for merchants. Website providers like Shopify and digital wallets like PayPal allow you to use this payment method.

Gift cards or pre-paid cards

This form of payment was used for 17% of online purchases in 2023, making it well worth adding to your selection of payment options. In addition to this popular form of payment, developing gift cards for your business can be a useful profit driver.

Gift cards can encourage new people to discover your company and increase your revenue since people tend to spend more than the amount on a gift card when they redeem it.

Bank transfers

Bank transfers, also called electronic fund transfers (EFTs), allow customers or clients to make payments from their bank account to a business account.

While this is the least popular of the payment options included here, it’s common enough – and practical enough in certain situations – to consider using. It’s a secure payment method that some customers will feel more confident about using.