Launching a payment processing company in the UK requires strategic planning, a solid understanding of regulatory frameworks, and robust technological infrastructure. In this guide, we’ll walk through the essential steps to establish a successful payment processing business while ensuring compliance and efficiency.
We’ll also explore examples of established UK payment processing companies to highlight key strategies.
Understanding the UK payments landscape
The UK has a highly advanced payments ecosystem. In 2022, the total value of non-cash payments in the UK exceeded £7 trillion, driven by the rise of online transactions and mobile payments (source: UK Finance). This growth presents an excellent opportunity for new entrants to address diverse payment needs.
Famous payment processing companies in the UK
Understanding the competitive landscape can provide insights into successful strategies and market positioning. Here are some leading UK-based payment processing companies:
Worldpay
- Overview: One of the largest global payment processors, originally founded in the UK and later acquired by FIS in 2019.
- Key strengths: Comprehensive solutions for online, in-store, and mobile payments; multi-currency processing for global transactions.
- Takeaway: Diversified services across multiple payment channels and strong partnerships with banks and card networks.
Checkout.com
- Overview: A fast-growing London-based fintech offering payment processing solutions to businesses worldwide.
- Key strengths: Advanced fraud prevention tools, support for over 150 currencies, and seamless API integration.
- Takeaway: Focus on technology and a user-friendly platform to attract enterprise clients.
Revolut
- Overview: A digital-first financial services company offering payments, money transfers, and merchant acquiring services.
- Key strengths: Integrated financial services, competitive pricing, and strong brand recognition.
- Takeaway: Combine payment processing with additional financial services to create a comprehensive ecosystem.
SumUp
- Overview: A London-based provider focusing on small businesses, offering card readers and mobile point-of-sale solutions.
- Key strengths: Affordable hardware and software for small merchants, enabling card payments without complex setup.
- Takeaway: Target underserved markets like SMEs with simple, affordable solutions.
Steps to start a payment processing company
1. Define your business model
Decide on the type of payment services you’ll provide:
- Payment gateway: Facilitating online transactions for e-commerce.
- Payment facilitator: Allowing smaller merchants to process payments without requiring their merchant accounts.
- Acquiring services: Partnering with card schemes like Visa and Mastercard to process payments.
Key consideration: Each model has specific regulatory and operational requirements.
2. Register your company and obtain licences
Payment service providers in the UK must comply with the regulations of the Financial Conduct Authority (FCA). Depending on your services, you may need to:
- Apply for authorisation under the Payment Services Regulations 2017.
- Register under the Electronic Money Regulations 2011 if you plan to issue e-money.
FCA authorisation typically requires:
- A comprehensive business plan.
- Evidence of financial resilience.
- Detailed policies for anti-money laundering (AML) and data protection.
3. Build or acquire a technological platform
Your payment system’s success relies on a secure and scalable platform. You can:
- Develop in-house: Ideal for full control but requires time and resources.
- Use white-label finance solutions: Companies like SDK.finance offer pre-built platforms tailored for payment processing. Their white-label finance solutions enable you to launch quickly with secure and compliant technology.
Essential features:
- Multi-currency support.
- Fraud detection and prevention tools.
- API integrations for merchant onboarding and payment processing.
4. Secure partnerships
Collaborate with banks, card schemes, and technology vendors to create a seamless processing network:
- Partner with acquiring banks for payment settlement.
- Integrate with card networks like Visa and Mastercard.
- Use third-party providers for KYC and AML compliance.
5. Ensure compliance and security
The UK payments market is heavily regulated. Follow these guidelines:
- Adhere to the General Data Protection Regulation (GDPR) to protect user data.
- Comply with the Payment Card Industry Data Security Standard (PCI DSS) for secure card payment processing.
- Regularly update AML policies to meet FCA standards.
6. Test and launch your service
Before going live:
- Conduct rigorous testing to identify and address any operational or security vulnerabilities.
- Engage pilot merchants to evaluate the system’s reliability.
- Offer competitive pricing and support services to attract early customers.
Challenges to anticipate
- Regulatory complexity: Navigating FCA requirements can be time-consuming.
- Competition: The UK market features established players like Stripe and Adyen, alongside local competitors.
- Fraud prevention: Payments businesses are common targets for cyberattacks.
How SDK.finance supports payment processing companies
SDK.finance provides white-label finance solutions to streamline your entry into the market. Their platform includes:
- Pre-built APIs for payment processing and merchant onboarding.
- Secure modules for transaction management and fraud prevention.
- Customisable features to suit your business model.
With SDK.finance, you can focus on business growth while relying on a proven technological backbone.
Starting a payment processing company in the UK is a promising venture but requires thorough preparation. By combining a strong regulatory foundation with advanced technology, you can address market demands effectively. Learning from industry leaders such as Worldpay and Checkout.com can provide inspiration for building a competitive advantage. Leveraging solutions like SDK.finance can accelerate your journey and reduce operational complexities.
