How Does Credit Card Processing Work in the UK?

Monday, May 2nd, 2022

Credit card processing in the UK is generally easier than in other countries, but there are some caveats. The UK has a high rate of credit cards used for online purchases and a low rate of fraud. This makes it attractive to credit card processors, who can run the risk of fraud in other countries.

The country is also very proactive in developing new technologies to make credit card processing more secure. Contactless payments have been available for over a decade, and mobile payment systems like Google Pay and Apple Pay are also very popular.

How it Works

If you want to accept credit card payments in the UK, there are a few things you need to know. For starters, you need a payment gateway. Payment gateways carry out an authorization process when a customer pays by credit card. They also manage the interaction between your business and your acquiring bank (also known as your merchant account provider).

In order to get a payment gateway and a merchant account provider linked up, you will need to apply for an internet merchant account with your bank. If you have an existing relationship with a bank, then this is where you should start looking for card processing services.

Credit card processing is the series of steps that a merchant goes through to accept a credit or debit card payment. It involves authorizing a customer’s card, completing the sale, and transferring or depositing funds into the merchant’s bank account.

The Transaction Process

When a customer pays with a credit card, the retailer’s credit card processor sends the transaction details to the customer’s bank, which confirms that the funds are available and responds to the processor. 

The customer’s bank then sends an authorization code to the retailer’s credit card processor, who passes it along to the retailer. The customer signs for their purchase and receives a receipt from the retailer. The transaction is complete.

The retailer’s credit card processor then sends an electronic record of the transaction to the retailer’s merchant account provider at least once per day. 

The merchant account provider then deposits funds into the retailer’s business bank account, generally within three business days of receiving an electronic record of the sale.

Final Words

Credit card processing in the UK can be a little confusing for those who aren’t familiar with the payment processing industry. However, with a little more research, it’s easy to familiarize yourself with its ins and outs and spot the right service provider for your needs.