What does a payment company do?

Cash payments are gradually phasing out in today’s business environment, both in the UK and globally. More and more customers set eyes on secure alternatives, like card payments, mobile payments via digital wallets, and other payment methods.

As a business, you must partner with a reputable payment company to collect consumer funds successfully and provide safe and reliable online payments. 

In the following sections, we explore the nature of payment companies in detail. We uncover their purpose, provide insights on when a company needs this partnership, and explain how to find a reliable provider.

What is a payment company?

Payment companies are also known as payment processing companies or simply payment processors.

They facilitate online transactions and enable online businesses or merchants to receive payments from consumers. 

When shopping online, for example, a customer is directed to an online checkout page to complete their purchase once they have selected their products or services. 

At this point, the payment company allows the user to send their payment information via a payment gateway, like an online payment platform, a physical card reader, or a mobile phone reader. 

The transaction is then confirmed with the customer’s financial institution, bank, or card network. Upon approval, the payment is successfully transferred to the merchant’s bank account. 

Most payment companies enable customers to perform popular local payment methods, such as credit and debit cards, bank transfers, mobile wallets, and more. 

In the UK, there are more than 1,981 payment service providers.

While they all differ in their offering, some of the most popular features payment companies provide include:

• Instant one-off payments;
• Automated recurring payments;
• Global payments support;
• Financial services like credit card payments and debit card payments;
• Digital wallets; 
• Bill payments;
• Merchant cash advances; 
• Data processing;
• Fraud prevention;
• Risk management;
• Compliance;
• Multi-party payments and payouts and more.

In summary, payment companies provide the tools necessary for a business to accept cashless payments. Their main role is to offer software and back-end infrastructure. 

However, some provide hardware, like point-of-sale or mobile POS systems, screens, and credit or debit card chip readers.

What is the purpose of a payment company?

Payment companies play a multifaceted role in the economy.

At their core, they enable secure money transactions between customers, merchants, and institutions. 

Whether a user is shopping online, a business receives payments, or a financial institution sends funds internationally, payment companies guarantee security. 

It is achieved via different security protocols, advanced encryption, identity verification, and others. In addition, payment companies also comply with the PCI DSS (Payment Card Industry Data Security Standard), meaning that they provide completely safe and reliable solutions for managing cardholder data.

Through their reliability, payment companies also act as a driving force behind the increased adoption of digital payment methods. 

Whether it’s credit and debit cards or mobile wallets and digital currencies, payment companies provide the infrastructure and support necessary to support electronic transactions. 

That undoubtedly adds more value to consumers and businesses, allowing society to embrace cashless payments with minimum risks. 

By expanding access to banking and payment services, payment companies also encourage financial inclusion. 

Payment companies allow the unbanked and underbanked to participate in the financial system and access key services through partnerships between technology providers and financial institutions. 

Best of all, payment companies encourage cross-border transactions, allowing businesses to expand their operations in foreign countries with ease. These companies navigate complex regulatory frameworks, compliance requirements, and currency conversions. 

It allows them to streamline business processes overseas, achieving growth and unlocking new opportunities.

When should you use the services of a payment company?

Working with a payment company is a desired partnership for any business that collects cashless payments. 

As noted above, a payment company can help you tap into new markets, increase revenue, and achieve business growth. Naturally, the benefits it provides are sought after by both small and large businesses.

For example, a small business can experience significant enhancements by taking advantage of the services provided by a payment company. They can build consumer trust by collecting payment data securely, supporting multiple payment methods, including major credit and debit card providers, and competing against rivals. 

At the same time, a larger corporation can utilise the technology offered by payment companies to offer more flexibility to online and in-store shoppers. 

Overall, it’s recommended that you use the services of a payment company in the following scenarios:

• Accepting cashless payments – If you own an e-commerce website or want to support card payments in-store, partnering with a payment company is essential. Your partner will provide secure payment processing solutions that allow you to operate safely with sensitive customer data, build trust, and increase sales. 
• Starting a new business – In today’s business environment, not supporting cashless payments is highly likely to result in severe losses. If you’re starting a new company, it’s advisable to work with a payment company from the start.
• International expansion – Expanding your business into new international markets requires cross-border transactions. A payment company can provide the tools and services necessary to achieve this and stay compliant with local regulations at the same time. 
• Improving customer experience – Most shoppers today expect to find many different payment methods supported by reputable product or service providers. Naturally, businesses that fail to meet these expectations are disadvantaged. A payment company allows you to operate with different payment methods, helping you to improve customer experience. 
• Scaling your business – As your business grows, it will become necessary to scale your payment operations efficiently and cost-effectively. You can achieve this with the help of a payment company that can accommodate growing transaction volumes, new payment options, and business needs.

How to find a reliable payment company?

Considering the popularity of cashless payments, it’s only natural that there are a wide array of payment companies to choose from. 

Before you decide, it’s key to research the providers in detail and fully understand their offerings, available services, transaction fees, and other details.

Seamless integration 

One of the most essential components that we recommend researching is the integration capabilities of the payment company. 

Regardless of size or scope, most businesses prefer solutions that function well with their API platform or other existing infrastructure. Ensure that the integration process is seamless and that your business can utilise the payment company’s features and capabilities.

Check if the company can provide a personalised workflow based on your API. Also, analyse whether they can manage the volume and complexity of your operations.

Transparent pricing models 

Pricing is another crucial factor to consider. In order to get the maximum out of your partnership with a payment company, you’ll want to ensure that the partnership isn’t too costly for your business.

Most payment companies charge a fee for every transaction. While this is a standard practice, there are significant differences between transaction fees from one company to another.

In addition, there are often hidden fees that you may not notice initially, like set-up fees. 

Gather as much information as possible to avoid unexpected situations or make unrealistic financial predictions. 

Supported payment methods

When partnering with a payment processor, make sure to familiarise yourself with the supported payment methods.

Ensure the available options match those trending among your target audience. 

On most occasions, the preferred payment methods in the UK are digital wallets, credit cards, and debit cards. However, the more payment options you provide, the higher the chances of satisfying a larger buyer group. 

Here are some of the most important factors to consider when selecting a payment company for your business.

Security features 

In the realm of cashless payments, security and compliance are two core components that must not be neglected.

When assessing different payment companies, it’s highly recommended that you partner with those fully compliant with industry standards, like PCI DSS. It will guarantee that you are handling customer data with advanced levels of protection, eliminating chances of data theft or other types of fraud. 

Enquire about the payment company’s fraud protection and prevention capabilities, along with other methods, like encryption and tokenisation.

Support on a global level

If you’re planning to expand your business in the future or already operate across different countries, make sure your payment company offers international support.

For example, payment processors with international capabilities support different currencies and preferred local payment methods. 

It will empower you to satisfy your customers’ needs regardless of location. It will also allow you to enjoy certain advantages, like better conversion fees and international transaction fees.

Identify integration methods

As noted above, it is key to select a payment company that can easily and seamlessly integrate with your existing platforms. These could be e-commerce platforms, POS systems, or other types of software. 

In most cases, you’ll be able to use APIs, SDKs, or plugins. However, more complex solutions may require additional personalisation and developer work.

Convenience 

Last but not least, ensure that the payment company you choose offers convenience and access to all features from one platform. 

Observe the checkout user experience and evaluate whether it is user-friendly enough to encourage consumers to complete a purchase. 

Some of the industry-leading payment solutions in the UK include:

• Apple Pay;
• Stripe;
• Ayden;
• GoCardless;
• PayPal.

In a nutshell

Payment companies play a central role in the business world today. Without their help and support, it would be impossible to provide cashless payments and guarantee the safety and protection of consumers’ payment information.

When selecting the right payment company for your business, it’s essential to address some of the elements we discussed above. It will help you make the right choice and unlock your business’s full potential, regardless of location.

Frequently Asked Questions

What is a payment company?

Payment companies provide the tools, services, and logistics that enable transactions between consumers, businesses, and financial institutions.

What type of services can you receive from a payment company?

Some popular services payment companies offer include payment processing, merchant services, digital wallets, and financial technology solutions.

Are payment companies always compliant?

Yes, payment companies strictly comply with all key regulations and standards as they are subject to government agencies’ regulatory oversight. Naturally, compliance with PCI DSS, AML, and other regulations is mandatory.

What type of payment methods do payment companies support?

Different payment companies support different payment methods. However, some of the most popular options usually supported include credit and debit cards, bank transfers, mobile payments, cryptocurrencies, and more.