A guide to online payment gateways for your clients

Published Thursday 11 June 2026

Table of contents

• What is a payment gateway and why it matters now
• Why payment gateways matter for your clients
• Types of payment gateways available in the UK
• How to set up payment gateways for your clients
• Streamline client payments through your practice
• FAQs on online payment gateways

Key takeaways

• Late payments cost the UK economy an estimated £11 billion per year, and 38 businesses close daily as a result. Payment gateways give your clients a practical way to collect what they are owed, faster.
• Card payments, Direct Debit, and Open Banking each suit different client profiles. Matching the right gateway type to a client's transaction patterns can reduce fees and speed up cash flow.
• Xero customers who use online invoice payments get paid up to twice as fast. Connecting a gateway to Xero's payment tools automates reconciliation and cuts manual follow-up.
• Strong Customer Authentication (SCA) under the Payment Services Directive 2 (PSD2) is a UK requirement. Any gateway you recommend must support it out of the box.

What is a payment gateway and why it matters now

You already know the basics. A payment gateway sits between your client's invoice and their customer's bank. It authorises and processes the transaction in seconds. The reason this topic deserves a fresh look is timing.

Card payments now account for 57% of all UK transactions, and Open Banking adoption is accelerating. Meanwhile, Making Tax Digital (MTD) for VAT requires digital record-keeping that links neatly to automated payment processing. MTD for Income Tax is on the horizon. Advising clients on connected payment infrastructure now positions your practice ahead of the curve.

For your practice, this is both an operational efficiency play and an advisory opportunity. Setting clients up with the right gateway reduces the time you spend chasing payments and reconciling bank feeds manually.

Why payment gateways matter for your clients

Late payments remain one of the biggest threats to UK small businesses. The numbers tell the story clearly.

• The UK economy loses an estimated £11 billion per year to late payments.
• 62% of UK small businesses deal with overdue invoices regularly.
• In Q1 2026, there were 17.48 million overdue invoices across the UK.
• Around 38 businesses close every day because of cash flow problems linked to late payments.

When a client adds a "pay now" button to their invoices, the friction drops significantly. Xero customers who use online invoice payments get paid up to twice as fast. On average, invoices are settled up to 20 days sooner.

That speed improvement changes cash flow forecasting and reduces debtor days. It also frees you from sending reminder after reminder on the client's behalf.

From an advisory perspective, recommending a payment gateway is one of the simplest, highest-impact actions you can take. It directly improves the metric most small businesses care about: cash in the bank. The UK government confirmed late payment reforms in March 2026, with implementation expected no earlier than 2027. Getting your clients set up now puts them ahead of any regulatory changes.

Types of payment gateways available in the UK

Not every client needs the same gateway. The right choice depends on transaction volume, average invoice size, customer preferences, and how the client sells. Here is a breakdown of the main types available in the UK market.

Card payment gateways

These are the most common option and suit clients whose customers prefer to pay by debit or credit card. Typical providers and fee ranges include the following.

• Stripe. 1.5% + 20p per transaction for UK cards. Strong API and broad integration support.
• Square. 1.4% + 25p per transaction. Popular with retail and service-based businesses.
• PayPal. 2.9% + 30p per transaction. Wide consumer recognition, though fees sit at the higher end.

Card gateways work well for clients with varied customer bases and moderate transaction values. For e-commerce businesses, look for providers that also support in-app and online checkout flows.

Direct Debit gateways

For clients with recurring revenue, Direct Debit is often the most cost-effective route. This includes subscription services, membership organisations, or retainer-based work.

• GoCardless. 1% + 20p per transaction, capped at £4. Lower failure rates than card payments and ideal for predictable billing cycles.

Direct Debit also reduces the risk of involuntary churn from expired cards. That makes it a strong recommendation for clients with ongoing billing relationships.

Open Banking gateways

Open Banking enables bank-to-bank payments without card networks. Fees tend to be lower, and settlement can be near-instant. This option is growing in the UK as both businesses and consumers become more comfortable with account-to-account transfers.

It suits clients with higher-value invoices where card processing fees would be significant. Some providers, including GoCardless, now offer Open Banking alongside Direct Debit. As adoption grows, expect more payment providers to add Open Banking as a standard option alongside card processing.

Digital wallets

Apple Pay, Google Pay, and similar services add a convenience layer on top of existing card infrastructure. They do not replace a card gateway. However, they can increase conversion rates for clients selling online, particularly in e-commerce.

What to look for when comparing providers

Whichever type suits your client, check for these features before committing.

• Accounting software integration. The gateway should connect directly to the client's accounting platform. With Xero, look for native integrations that automate payment matching and bank reconciliation.
• Strong Customer Authentication (SCA) compliance. SCA under the Payment Services Directive 2 (PSD2) is a UK regulatory requirement. Any gateway you recommend must handle SCA natively, including 3D Secure for card payments.
• Transparent fee structure. Clients need to understand what they are paying per transaction. Avoid providers with hidden charges for chargebacks, refunds, or currency conversion.
• Recurring payment support. If the client has subscription or retainer-based revenue, the gateway should support automated recurring billing with minimal manual intervention.
• Multi-currency capability. For clients invoicing internationally, the gateway should handle foreign currency transactions and display fees clearly.

How to set up payment gateways for your clients

Rolling out payment gateways across your client base works best as a repeatable process. These five steps give you a framework to follow for each engagement.

1. Assess the client's payment needs

Start by reviewing the client's current payment patterns. Look at average invoice value, payment terms, and the split between one-off and recurring transactions. Consider where their customers are based. A sole trader invoicing five clients a month has very different needs from a SaaS business with hundreds of subscriptions.

Also check whether the client already accepts online payments informally, for example through bank transfers referenced manually. That gap between current process and best practice is your advisory opportunity.

2. Choose a payment gateway provider

Match the provider to the client's profile. Consider transaction fees, integration with their accounting software, supported payment methods, and whether they need multi-currency support. For most UK small businesses using Xero, Stripe and GoCardless cover the majority of use cases.

Compare the total cost of processing, not just the per-transaction fee. Some providers charge monthly fees, setup costs, or additional charges for chargebacks and refunds.

3. Connect the gateway to their accounting software

Once the client has an account with their chosen provider, connect it to Xero's online payment options. This integration means payments are matched to invoices automatically. It reduces manual reconciliation and keeps the books up to date in real time.

The connection typically takes a few minutes. Test it with a small transaction to confirm everything flows through correctly before going live with clients' customers.

4. Configure invoice templates with pay now options

Enable the "pay now" button on the client's invoice templates. This is where the real behaviour change happens. Customers receiving an invoice with a one-click payment option are far more likely to pay on the spot.

Customise the template to reflect the client's branding and ensure the payment options displayed match the gateways connected. You can also set up automated invoice reminders in Xero to follow up on any that remain unpaid.

5. Monitor and reconcile payments

Once the gateway is live, build a regular review cadence into your workflow. Check that payments are reconciling correctly, monitor for failed transactions or chargebacks, and review fee summaries.

This ongoing oversight is a natural extension of your practice services. It gives you visibility into each client's cash flow health and creates regular touchpoints for advisory conversations.

Over time, you can benchmark payment performance across your client base. Look for patterns such as industries with consistently slower payment cycles, or clients who might benefit from switching providers.

Streamline client payments through your practice

Helping clients collect payments faster is one of the most tangible ways to demonstrate the value of your advisory services. Build payment gateway setup into your standard onboarding. It turns a one-off recommendation into a scalable, repeatable practice service.

The Xero Partner Programme gives you the tools to deliver this at scale. You get free Xero for your practice, discounted plans for clients, and access to Xero HQ. Standardise payment workflows across every engagement from one place.

Join the partner programme.

FAQs on online payment gateways

Here are answers to some frequently asked questions about setting up and managing online payment gateways for your clients.

What is the cheapest payment gateway for UK small businesses?

It depends on the payment type. For card payments, Stripe charges 1.5% + 20p per UK transaction. For recurring payments, GoCardless at 1% + 20p (capped at £4) is typically the most cost-effective option. Always compare total cost, including fees for refunds and chargebacks, not just the headline rate.

Can clients accept payments directly through Xero invoices?

Yes. Xero integrates with several payment gateway providers, allowing clients to add a "pay now" button to their invoices. Payments are then matched and reconciled automatically within Xero.

Do payment gateways comply with UK SCA requirements?

Reputable providers like Stripe, GoCardless, and PayPal all support Strong Customer Authentication as required under PSD2. Check that the specific gateway handles 3D Secure for card transactions and provides a smooth authentication flow for end customers.

How do payment gateways affect MTD compliance?

Payment gateways that integrate with MTD-compatible software like Xero help maintain the digital links required under Making Tax Digital. Payments flow directly into the accounting records, reducing the need for manual data entry. This supports the digital record-keeping requirements for VAT and, eventually, Income Tax.

Should I recommend one gateway or multiple gateways for a client?

It depends on the client's customer base and payment patterns. A single gateway keeps things simple for most small businesses. However, clients with both recurring and one-off revenue streams may benefit from a combined approach. Pairing a Direct Debit provider like GoCardless with a card gateway like Stripe optimises fees and coverage.