Choosing the Right Payment Gateway: PayHQ, Stripe, PayPal, Square or Bespoke?

The Decision: Choosing the wrong payment gateway can cost your business thousands in fees, lost sales, and compliance headaches. Here’s your complete guide to comparing the UK’s leading payment solutions and determining when a bespoke approach makes business sense.

The 60-Second Summary

Payment gateway choice impacts your transaction fees, customer experience, and technical complexity. PayHQ offers Open Banking integration with zero transaction fees through BankPay. Stripe excels for developers with 2.9% + 30p fees. PayPal provides familiarity at similar costs. Square suits small retail at 2.6% + 10p. Bespoke solutions make sense for complex businesses requiring custom workflows, though they demand significant PCI compliance investment. Your choice depends on transaction volume, technical requirements, and integration needs.

The Payment Gateway Landscape: Understanding Your Options

The UK payment gateway market offers everything from simple plug-and-play solutions to sophisticated custom platforms. But before diving into comparisons, understand what you’re actually choosing between:

Payment Gateway Types:

Hosted/Offsite Solutions: Customer leaves your site to complete payment (PayPal Standard, basic integrations)

• Lowest PCI compliance burden
• Less control over user experience
• Often lower conversion rates due to redirect

Onsite/Integrated Solutions: Payment form appears on your website (Stripe Elements, advanced integrations)

• Better user experience and conversion rates
• Higher PCI compliance requirements
• More development complexity

Hybrid Solutions: Payment form embedded through iframe (PayHQ BankPay, some provider options)

• Balance of user experience and compliance simplicity
• Maintains your site’s look and feel
• Moderate technical implementation

What Makes PayHQ Different:

PayHQ isn’t just another payment gateway—it’s an Open Banking provider with FCA authorisation that fundamentally changes how businesses handle payments and financial data.

Core Advantages:

Zero Transaction Fees with BankPay: Unlike traditional card payments, PayHQ’s Open Banking solution eliminates transaction fees entirely for account-to-account transfers.

Multi-Gateway Orchestration: PayHQ works alongside your existing payment providers, offering backup options and optimisation across multiple gateways.

Complete Business Integration: Beyond payments, PayHQ connects your entire financial ecosystem—banking, CRM, accounting, and e-commerce platforms.

Custom Development Capabilities: With their own Open Banking licence, PayHQ can build bespoke solutions rather than forcing your business to adapt to off-the-shelf products.

Pricing Structure:

• BankPay (Open Banking): £0 transaction fees
• Gateway orchestration: Competitive rates with added intelligence
• Custom development: Bespoke pricing based on requirements
• No monthly fees for basic services

Best For:

• Businesses wanting to eliminate transaction fees
• Companies requiring multi-platform financial integration
• Organizations needing custom payment workflows
• B2B businesses with high-value transactions

Potential Drawbacks:

• Open Banking adoption still growing among consumers
• Requires customer education for new payment methods
• Setup complexity higher than basic solutions

Core Strengths:

Stripe, established in 2010, is a multinational financial services and software-as-a-service (SaaS) company that’s become the gold standard for online payment processing.

Pricing:

• 1.5% + 20p for European cards and 2.5% + 20p for non-European cards
• No setup or monthly fees
• Using a payment link is more cost-effective at 1.2% + 20p for all UK cards

Key Features:

• Exceptional API documentation and developer tools
• Used by half of the Fortune 100, and over 100 companies process more than $1 billion annually through Stripe
• Comprehensive subscription and recurring billing tools
• Advanced fraud prevention and machine learning
• Global payment method support

Integration Options:

• Stripe Elements for fully customisable checkout
• Stripe Checkout for quick implementation
• Mobile SDKs for app payments
• Extensive webhook system for real-time updates

Best For:

• Businesses with development resources
• Companies requiring custom payment experiences
• Subscription-based businesses
• International operations

Potential Drawbacks:

• Higher fees for large transactions may be less advantageous for high-volume businesses
• Limited customer support options, primarily through email and documentation
• Can be overwhelming for non-technical users

PayPal: The Trusted Giant

Core Strengths:

In the UK, PayPal is a dominant player in the online payment market, with over 20 million customers and 7 million businesses, offering unparalleled customer recognition and trust.

Pricing:

• 2.9% plus $0.30 per transaction for online sales
• No monthly subscription fee for a standard PayPal account
• PayPal Payments Pro ($30/month) for advanced features

Key Features:

• Instant customer recognition and trust
• Buyer and seller protection programmes
• Multiple payment options (PayPal balance, cards, bank transfers)
• Easy setup with minimal technical requirements
• Global reach and currency support

Integration Complexity:

• PayPal Standard: Simple but redirects customers off-site
• PayPal Express Checkout: Better integration but still shows PayPal branding
• PayPal Pro: Full customisation but requires monthly subscription

Best For:

• Small to medium businesses prioritising ease of setup
• Companies targeting PayPal’s existing user base
• Businesses wanting buyer/seller protection
• International merchants needing global reach

Potential Drawbacks:

• Limited branding options without paying for Pro plans
• Higher fees for international transactions
• Account holds and limitations can impact cash flow
• Less customisation without expensive upgrades

Square: The Small Business Specialist

Core Strengths:

Square is a market leader in point-of-sale systems, serving 4 million sellers and processing $228 billion annually, with particular strength in unified online and offline payments.

Pricing:

• 2.6% plus 10 cents per transaction for in-person payments using a card reader
• 2.9% plus 30 cents for online transactions
• No monthly fees for basic plans

Key Features:

• Integrated point-of-sale system
• Free card reader and basic POS software
• Inventory management and analytics
• Same-day deposit options
• Simple, user-friendly interface

Integration Options:

• Square Online for e-commerce
• Square APIs for custom integrations
• Plugins for major e-commerce platforms
• Mobile-first approach

Best For:

• Small businesses due to its low fees and user-friendly interface
• Retail businesses needing unified online/offline payments
• Companies wanting integrated POS systems
• Businesses prioritising simplicity over advanced features

Potential Drawbacks:

• Limited customisation options
• Less suitable for high-volume businesses
• Fewer advanced features compared to Stripe
• Primarily focused on US market with limited UK-specific features

When to Consider Bespoke Payment Solutions

Sometimes off-the-shelf solutions don’t fit complex business requirements. Here’s when custom development makes sense:

Compelling Use Cases:

Complex Multi-Party Transactions: Marketplace businesses splitting payments between multiple vendors, with different fee structures and settlement timelines.

Industry-Specific Requirements: Heavily regulated industries (finance, healthcare) requiring specific audit trails, reporting, or data handling procedures.

Unique Business Models: Businesses with complex subscription models, usage-based billing, or unusual payment flows that don’t fit standard gateway patterns.

High-Volume Operations: Large enterprises where small percentage savings on transaction fees justify significant development investment.

Advanced Integration Needs: Companies requiring deep integration with ERP systems, custom accounting workflows, or specialised business intelligence.

Bespoke Development Considerations:

PCI Compliance Investment: Custom solutions require Level 1 PCI DSS compliance, involving annual audits by Qualified Security Assessors (QSAs), potentially costing £50,000+ annually.

Development Timeline: Expect 6-12 months minimum for a production-ready custom payment system.

Ongoing Maintenance: Security updates, compliance changes, and feature enhancements require dedicated development resources.

Risk Management: Custom solutions carry higher technical risk and require robust testing and monitoring.

PCI Compliance: The Hidden Complexity

Understanding PCI compliance is crucial for making informed gateway decisions:

PCI Compliance Levels:

Typical volume-based compliance levels are:

• Level 1: 6+ million transactions annually – Requires QSA audit
• Level 2: 1-6 million transactions – Self-assessment with quarterly scans
• Level 3: 20,000-1 million e-commerce transactions – Self-assessment
• Level 4: Under 20,000 e-commerce transactions – Self-assessment

Gateway Impact on Compliance:

Hosted Solutions: Minimal compliance burden – provider handles most requirements Integrated Solutions: Higher compliance requirements – you’re responsible for securing payment data Custom Solutions: Full compliance responsibility – requires significant security investment

Real-World Compliance Costs:

• Level 4 Self-Assessment: £1,000-£5,000 annually
• Level 3 Assessment: £5,000-£15,000 annually
• Level 1 QSA Audit: £25,000-£100,000+ annually
• Non-compliance fines: £5,000-£100,000 per month

E-commerce Platform Integration Guide

WooCommerce Integration:

Stripe: Easy to connect with WooCommerce. But it may take a little time to fully activate Stripe on WooCommerce platform PayPal: Native integration with multiple options (Standard, Express, Pro) Square: Simple plugin installation with basic customisation PayHQ: Custom integration enabling Open Banking alongside traditional payments

Shopify Integration:

Stripe: Powers Shopify Payments with seamless integration PayPal: Multiple integration options with varying fee structures Square: Basic integration available but limited compared to Shopify Payments PayHQ: Custom integration for advanced payment orchestration

Custom Platform Integration:

Stripe: Comprehensive APIs and documentation PayPal: Good API coverage but more complex for advanced features Square: Adequate APIs for basic integrations PayHQ: Bespoke integration capabilities leveraging Open Banking APIs

Recurring Payments and Subscription Management

Stripe: Industry-leading subscription tools with:

• Flexible billing cycles and proration
• Dunning management for failed payments
• Usage-based billing capabilities
• Advanced analytics and reporting

PayPal: Subscription capabilities include:

• Basic recurring billing setup
• Limited customisation options
• Subscription modification challenges
• Adequate reporting for simple needs

Square: Limited subscription features:

• Basic recurring payment setup
• Simple subscription management
• Limited flexibility for complex billing
• Better suited for simple repeat billing

PayHQ: Custom subscription solutions:

• Bespoke billing logic development
• Integration with Open Banking for zero-fee subscriptions
• Advanced dunning and retry logic
• Complete customisation for complex business models

Making the Right Choice: Decision Framework

Choose PayHQ When:

• Transaction volumes justify eliminating payment fees
• Your business requires multi-platform financial integration
• You need custom payment workflows that don’t exist in standard solutions
• Open Banking adoption aligns with your customer base
• You want to future-proof with comprehensive financial ecosystem integration

Choose Stripe When:

• You have development resources for implementation
• You need advanced subscription or marketplace functionality
• Global reach and extensive payment methods are important
• You want the most flexible and customisable platform
• Developer experience and documentation quality matter

Choose PayPal When:

• Quick setup and customer familiarity are priorities
• Your customers expect PayPal as a payment option
• You want buyer/seller protection programmes
• International reach is important but you lack technical resources
• Simple implementation outweighs advanced features

Choose Square When:

• You’re a small business prioritising simplicity
• You need integrated point-of-sale functionality
• Unified online/offline payments are important
• You want minimal technical complexity
• Transaction volumes don’t justify more complex solutions

Choose Bespoke When:

• Your business model doesn’t fit any existing solution
• Transaction volumes exceed £10M annually and small savings justify large investment
• Regulatory requirements mandate specific payment handling
• You need complex multi-party payment splitting
• Existing solutions create significant operational limitations

Total Cost of Ownership Analysis

When comparing payment gateways, consider all costs over time:

Transaction Fee Impact:

• £100,000 annual payments at 2.9%: £2,900 in fees
• £1,000,000 annual payments at 2.9%: £29,000 in fees
• PayHQ Open Banking alternative: £0 in transaction fees (setup and integration costs apply)

Hidden Costs to Consider:

• Monthly subscription fees
• Setup and integration development
• PCI compliance costs
• Chargeback fees
• International transaction premiums
• Currency conversion fees
• Technical support and maintenance

Example Total Cost Scenarios:

Small Business (£50K annual payments):

• Stripe: £1,450 + setup costs
• PayPal: £1,450 + potential account limitations
• Square: £1,300 + limited features
• PayHQ: Setup costs only (£2,000-£10,000) + zero ongoing fees

Medium Business (£500K annual payments):

• Stripe: £14,500 + advanced features
• PayPal: £14,500 + Pro subscriptions for features
• Square: £13,000 + scaling limitations
• PayHQ: Setup costs (£5,000-£20,000) + zero ongoing fees

Large Business (£5M annual payments):

• Stripe: £145,000 + enterprise features
• PayPal: £145,000 + complex account management
• Square: Not suitable for this volume
• PayHQ: Custom development (£50,000-£200,000) + zero ongoing fees

Implementation Timeline and Complexity

PayHQ Implementation:

• Basic BankPay integration: 2-4 weeks
• Multi-platform ecosystem integration: 6-12 weeks
• Full bespoke payment system: 3-6 months
• Complexity: Medium to High (depending on requirements)

Stripe Implementation:

• Basic integration: 1-2 weeks
• Advanced customisation: 4-8 weeks
• Complex marketplace setup: 8-16 weeks
• Complexity: Medium (good documentation helps)

PayPal Implementation:

• Standard integration: 1-3 days
• Express Checkout: 1-2 weeks
• Pro integration: 2-4 weeks
• Complexity: Low to Medium

Square Implementation:

• Basic setup: 1-2 days
• E-commerce integration: 1 week
• Custom integration: 2-4 weeks
• Complexity: Low

Future-Proofing Your Payment Strategy

Technology Trends to Consider:

Open Banking Growth: Over 750,000 SMEs now integrate their bank accounts with third-party services – early adoption provides competitive advantage

AI and Machine Learning: Advanced fraud detection and payment optimisation becoming standard

Embedded Finance: Payments becoming part of broader financial service ecosystems

Regulatory Changes: PSD2, upcoming PSD3, and consumer protection regulations reshaping the landscape

Cryptocurrency Integration: Digital currency acceptance gaining mainstream adoption

Voice and IoT Payments: New interaction models requiring flexible payment infrastructure

Strategic Recommendations:

1. Start with your current needs but choose platforms that can scale and adapt
2. Consider total cost of ownership over 3-5 years, not just initial setup costs
3. Evaluate integration complexity against your technical capabilities
4. Plan for compliance requirements that match your transaction volumes
5. Consider customer preferences and payment method adoption in your market

The Bottom Line

There’s no universally “best” payment gateway—only the best solution for your specific business needs, technical capabilities, and growth plans.

For most small businesses starting out: PayPal or Square offer the quickest path to accepting payments with minimal complexity.

For growing businesses with technical resources: Stripe provides the most flexible platform for custom payment experiences.

For businesses wanting to eliminate transaction fees and integrate their entire financial ecosystem: PayHQ offers unique Open Banking capabilities that can transform operations.

For enterprises with complex requirements: Bespoke solutions may justify their significant investment through operational advantages and cost savings at scale.

The key is honestly assessing your current needs, technical capabilities, and growth trajectory—then choosing the solution that best supports your business goals without overcomplicating your operations.

Remember: You can always start simple and migrate to more sophisticated solutions as your business grows. The perfect payment gateway is the one that serves your customers well today while providing a clear upgrade path for tomorrow.

Ready to explore how the right payment gateway can transform your business operations? Whether you need a simple integration or a comprehensive financial ecosystem solution, we can help you evaluate your options and implement the perfect payment strategy for your business needs and growth objectives.