Winning an overseas customer is exciting. Getting paid by them can be less so. Failed card payments, surprise currency charges, slow settlement and compliance questions are among the most common frustrations for UK businesses selling across borders. The good news: with the right set-up, most can be avoided.

How do customers pay in different Commonwealth markets?

• India: instant mobile payments through UPI are hugely popular for domestic payments, alongside cards and net banking.
• East Africa: mobile money services such as M-Pesa in Kenya are central to everyday commerce.
• Australia, Canada, New Zealand and Singapore: cards and digital wallets are widespread, with growing real-time bank payments.
• Business buyers everywhere: bank transfers and invoices remain the norm for larger B2B payments.

What costs should UK businesses watch?

• Cross-border card fees: interchange on international cards is not covered by UK domestic caps and can be much higher.
• Foreign exchange margins: the rate your provider applies can quietly cost more than the headline fee.
• Intermediary bank charges on international transfers, which can reduce the amount you receive.
• Chargebacks and disputes, which are harder and slower to resolve across borders.

How should a UK business set up cross-border payments?

1. Start with your customer. Find out how buyers in each target market prefer to pay, and prioritise the top two or three methods.
2. Decide your pricing currency. Pricing in local currency usually converts better; pricing in sterling shifts FX risk to the buyer.
3. Use multi-currency accounts to receive and hold foreign currency, converting when rates suit you.
4. Compare total cost — fees, FX margin and settlement time together — not just the advertised rate.
5. Keep compliance tight. Know your customer, screen for sanctions and keep clear records. Regulated providers will ask, and good records speed everything up.

Why do local payment systems matter so much?

In several large Commonwealth markets, the way people pay has leapfrogged cards altogether. India’s Unified Payments Interface (UPI), run by the National Payments Corporation of India, now handles more than ten billion transactions a month, making it one of the largest real-time payment systems in the world. In Kenya, M-Pesa, launched by Safaricom in 2007, turned the mobile phone into a bank account for millions of people who had never had one.

For a UK business, this means a checkout that only accepts cards may lose customers who would happily pay another way. Many international payment providers now offer access to local methods through a single integration, which is usually easier than connecting to each one separately.

How do currencies differ across the Commonwealth?

Currency arrangements vary widely. Some members, such as the eight territories using the Eastern Caribbean dollar, have currencies pegged to the US dollar — the EC dollar has been fixed at 2.70 to the US dollar since 1976 — which makes pricing relatively predictable. Others have floating currencies that can move sharply, and a few have controls on moving money out of the country. Before entering a market, it is worth understanding whether customers can easily pay in sterling or US dollars, and how quickly you can repatriate funds.

How can exporters reduce the risk of not being paid?

For larger business-to-business deals, especially with new customers, payment terms matter as much as payment methods:

• Payment in advance or deposits remove risk but may put off buyers.
• Letters of credit, issued through banks, guarantee payment once agreed documents are presented.
• Trade credit insurance protects against customers who fail to pay.
• UK Export Finance, the government’s export credit agency, offers guarantees and insurance that can help UK exporters offer competitive terms while managing risk.

Are cross-border payments getting easier?

Slowly, yes. The G20 has set targets, co-ordinated by the Financial Stability Board, to make cross-border payments cheaper, faster, more transparent and more accessible by 2027. Central banks are also exploring links between national instant payment systems, and new providers have pushed down the cost of international transfers. For small businesses, the practical result is more choice — which makes comparing total costs even more important.

Open banking has moved from experiment to infrastructure. In July 2026, Open Banking Limited announced that UK open banking had passed one billion payments, with more than 40 million payments in June 2026 alone. Variable recurring payments — which let customers authorise ongoing payments from their bank — grew 6.7% in a single month.

How does open banking payment work?

At checkout, the customer chooses “pay by bank”, selects their bank and approves the payment in their banking app, usually with a fingerprint or face ID. The money moves over the Faster Payments network directly into the business’s account. No card details are entered or stored.

How do open banking and cards compare?

When does open banking make most sense?

• Higher-value payments, where percentage-based card fees become expensive
• Invoices and B2B payments, where a payment link is faster than manual bank transfer
• Subscriptions and memberships, using variable recurring payments
• Cash-flow sensitive businesses that benefit from instant settlement

Where did UK open banking come from?

Open banking in the UK was not a purely commercial invention. It was created after a Competition and Markets Authority investigation into retail banking concluded that competition needed a boost. The CMA required the nine largest current account providers — often called the “CMA9” — to open up secure access to customer accounts through standardised technology interfaces (APIs), with the customer’s consent. The service went live in January 2018, alongside the EU’s second Payment Services Directive, which introduced similar rights across Europe.

Pay-by-bank payments run on the UK’s Faster Payments system, launched in 2008, which is why money usually arrives within seconds rather than days.

What are the practical drawbacks?

Open banking is not a perfect substitute for cards, and it is worth being clear about the trade-offs:

• Refunds are not automatic in the way card refunds are. Businesses need a process to send money back, usually by bank transfer.
• Customer habit still favours cards and digital wallets. A pay-by-bank button that customers do not notice or trust will not be used.
• Payment limits set by individual banks can affect very large payments.
• In-person use is less developed than online. Some providers offer QR-code payments at the till, but contactless cards and phones remain the norm in shops.

How can a small business get started?

1. Ask your current provider. Many card acquirers and e-commerce platforms now offer pay by bank as an add-on, so you may not need a new contract.
2. Check authorisation. Open banking payments are initiated by firms authorised or registered by the Financial Conduct Authority as payment initiation service providers. The FCA register shows who is permitted.
3. Start where it matters most. Add pay by bank to invoices or high-value orders first, and measure take-up before rolling it out everywhere.
4. Explain it to customers. A short line such as “Pay securely through your banking app” increases confidence.

For most small businesses, card payments are no longer optional. Customers expect to tap, click or pay by phone. But the monthly statement from a payment provider can be hard to read, and many owners only discover what they are paying when margins start to feel tight. Understanding the structure is the first step to paying less.

What makes up a card processing fee?

• Interchange: the largest part, paid to the bank that issued the customer’s card. For UK consumer cards it is capped by regulation at 0.2% of the transaction for debit and 0.3% for credit.
• Scheme fees: charged by the card networks for using their rails. They vary by card type, transaction type and region.
• Acquirer margin: what your payment provider charges for processing, settlement, risk and support. This is the part you can negotiate.

Which card payments cost more?

The caps only apply to UK consumer cards. Commercial and corporate cards are not capped, and interchange on some cross-border payments can be considerably higher. Online, or “card-not-present”, payments also tend to cost more than in-person transactions because the fraud risk is higher. A business with many corporate customers or international buyers can therefore pay far more than the headline rate suggests.

Blended pricing or Interchange++?

Providers usually price in one of two ways. Blended (flat-rate) pricing charges one simple percentage on everything — easy to understand, but you may overpay on cheap debit transactions. Interchange++ passes through the actual interchange and scheme fees and adds a clear margin on top — more complex to read, but usually fairer for businesses with steady volumes.

How can a small business reduce card fees?

1. Know your card mix. Ask your provider for a breakdown of debit, credit, commercial and international transactions. Your mix decides which pricing model suits you.
2. Check the “hidden” lines. Monthly minimums, terminal rental, PCI compliance charges, refund fees and chargeback fees all add up.
3. Benchmark once a year. As volumes grow, your negotiating position improves. A short review can unlock better rates.
4. Reduce chargebacks. Clear descriptors on statements, good receipts and strong fraud tools cut disputes and their fees.
5. Consider alternatives such as open banking “pay by bank” for larger or recurring payments.

What does the interchange cap mean in pounds and pence?

Percentages can feel abstract, so it helps to put numbers on them. On a £20 purchase made with a UK consumer debit card, the regulated cap means interchange can be no more than 4p (0.2%). On a £20 consumer credit card purchase, the cap is 6p (0.3%). Scheme fees and the provider’s margin then sit on top of that.

The same £20 paid with an uncapped corporate card or a card issued outside the UK can carry interchange that is several times higher. That is why two businesses with identical turnover can end up with very different card bills: the difference is usually in who their customers are and how they pay, not in the headline rate.

Can a business charge customers extra for paying by card?

Not for most everyday purchases. Since January 2018, UK businesses have been banned from adding a surcharge when consumers pay with personal debit or credit cards, and with many other common payment methods. The ban does not cover payments made with commercial or corporate cards, but any surcharge there must not exceed the actual cost to the business of accepting that card.

In practice, this means card costs have to be built into pricing rather than passed on at the till. That makes understanding and managing those costs even more important.

What should you look for in a payment provider contract?

The rate is only part of the deal. Before signing, it is worth checking:

• Contract length and exit terms — some terminal agreements run for several years and carry early termination fees.
• Terminal costs — whether card machines are bought outright, rented monthly or included.
• Settlement speed — how quickly money reaches your bank account, which matters for cash flow.
• PCI DSS requirements — the Payment Card Industry Data Security Standard sets security rules for anyone handling card data. Ask what your provider expects you to do and whether it charges a compliance fee.
• Support — what happens when a terminal fails on a busy Saturday.

Are card fees under regulatory scrutiny?

Yes. While interchange on UK consumer cards is capped, the other parts of the fee are not. The Payment Systems Regulator has examined card scheme and processing fees, and the interchange charged on online payments between the UK and the European Economic Area rose significantly after Brexit, when the old EU caps stopped applying to those transactions. Businesses selling online to European customers should keep an eye on how these rules develop, as they can have a direct effect on costs.