A beginner’s guide to e-commerce payments for small online retailers

Shoppers today expect a seamless checkout experience, no matter how they choose to pay. If the process is clunky, slow, or doesn’t feel secure, there’s a good chance they’ll abandon the purchase. Worse still, they may not ever come back.

It’s not just about collecting money - your payment setup affects customer trust, conversion rates, and even your ability to scale.

In this guide, we’ll cover everything you need to know to get started with e-commerce payments, from understanding how online payments work to selecting the right provider, a breakdown of the associated costs, and ensuring the security of your transactions.

Whether you’re launching your first store or refining an existing setup, these foundations will help you build a payment system that works for your business and your customers.

An e-commerce payment is a digital transaction made over the internet in exchange for goods or services. Unlike in-person payments, e-commerce transactions don’t involve physical card readers (POS) or cash. Instead, the customer enters their payment details online, and the transaction is processed electronically.

Even a straightforward online payment passes through several service providers:

Each party plays a role in ensuring the transaction is secure, authorised, and properly settled.

No matter how big or small an online business is, there are a number of regulations and standards that need to be adhered to that ensure that payment data is secure.

If you accept card payments, you’re responsible for meeting PCI DSS (Payment Card Industry Data Security Standard) requirements. Many providers help manage this for you.

Ignoring payment security requirements can have serious consequences for your business. Failing to comply with PCI DSS standards could result in fines, higher transaction fees, or even losing the ability to process card payments altogether.

Beyond the financial penalties, a data breach can severely damage customer trust and your reputation, which can be much harder to recover from.

If you operate in the UK or EU, GDPR (General Data Protection Regulation)also applies.

It requires businesses to handle personal data (including payment details) responsibly and transparently. Non-compliance can lead to hefty fines of up to £17.5 million or 4% of your global turnover, whichever is higher. More importantly, customers are increasingly aware of their rights and expect brands, both big and small, to take data privacy seriously.

Staying compliant isn’t just a box-ticking exercise - it’s about protecting your business and earning your customers’ trust. To help you do this, there are a number of fraud prevention tools available.

Fraud prevention tools help keep your business and your customers safe. The right tools can spot suspicious activity, stop fraudulent payments, and reduce the risk of costly chargebacks, all while keeping checkout frictionless for genuine customers.

Fraud prevention tools reduce risk and protect your revenue, such as:

A chargeback occurs when a customer disputes a payment. To minimise them:

Most payment providers will provide a suite of risk management tools that help monitor transactions to detect fraud, reduce risk, and ensure regulatory compliance.

A smooth, simple checkout can make the difference between a sale and an abandoned basket. Customers want to complete transactions quickly, and any delay in the checkout process can increase the chance of cart abandonment. The easier it is for customers to pay, the more likely they are to complete their purchase.

When designing a checkout, consider:

Customers also want to pay using their preferred method. If your checkout doesn’t support their preferred method, they’re more likely to abandon their basket and head elsewhere. By giving customers choice and convenience, you remove friction and make it easier for them to complete their purchase.

In the UK, debit cards are still the most widely used payment method, making up just over half of all transactions. Digital wallets are gaining serious traction: 40% of UK consumers used one to make an online purchase in 2024. This shift is largely driven by younger shoppers, especially Gen Z, who have grown up with smartphones and expect payments to be fast, secure, and seamless. Buy Now, Pay Later (BNPL) options are growing too, particularly for bigger purchases.

Popular online payment methods in the UK include:

Before signing up with a payment provider, take a step back and assess your needs:

Once you have identified what you need from a payment provider, it’s important to understand their offering. Some larger payment providers are not well equipped to meet the diverse needs of small businesses and prefer to focus on serving enterprise-level clients. With that in mind, they may not offer competitive pricing, and the support they provide is also likely to be somewhat limited.

When you’ve narrowed it down to a shortlist of providers, ask for a demo or trial, and don’t be afraid to ask questions. A good provider will be transparent and willing to help.

When you’ve narrowed it down to a shortlist of providers, ask for a demo or trial, and don’t be afraid to ask questions. A good provider will be transparent and willing to help.

Payment providers typically charge fees in several ways:

Make sure you understand how fees will be deducted and how they scale with your sales. Again, a good payment provider will be upfront and transparent about how their fees are calculated.

There may also be hidden costs to watch for.

The provider you choose will affect everything from how quickly you get paid to how easy it is for your customers to check out. While it’s tempting to dive in and get set up quickly, it’s worth taking a bit of time to test the basics, read the small print, and make sure the solution can scale with you. A few simple checks early on can save you time, money, and hassle later.

If your current provider isn’t cutting it, switching is possible, and often easier than you think.

A good provider will support you throughout the transition. Contact a member of the team to discover how Ecommpay can help your business grow.