The way customers pay has changed beyond recognition. Cash and cheques have given way to a growing menu of digital payment options, each designed for different situations and customer preferences. For any business that takes payments — whether over the phone, online, or in person — understanding these methods is no longer optional. It is essential.
This guide walks through the most important payment methods available to UK businesses today. We cover how each one works, what it costs, how secure it is, and when it makes sense to use it. Whether you run a contact centre, an e-commerce shop, or a service business that invoices clients, this is the information you need to make smarter decisions about how you get paid.
The Modern Payment Landscape
Not so long ago, accepting payments meant having a card machine on the counter or reading card numbers over the phone. Today, businesses face a much broader set of choices. Customers expect to pay however suits them best — by phone, by link, by bank transfer, or through a digital wallet on their smartphone.
The shift has been driven by three forces. First, customer expectations: people want fast, frictionless payments that fit into their lives. Second, regulation: standards like PCI DSS and Strong Customer Authentication (SCA) under PSD2 have pushed businesses towards more secure methods. Third, technology: cloud-based platforms have made it possible for even small businesses to offer the same payment experience as major retailers.
The result is a landscape where businesses need to think carefully about which payment methods to offer. Get it right, and you reduce friction, speed up cash flow, and keep customers happy. Get it wrong, and you lose sales to competitors who make paying easier.
Let us look at each major method in turn.
IVR Payments: Automated Phone Payments
IVR payments — short for Interactive Voice Response — allow customers to make secure card payments over the phone without speaking their card details to an agent. Instead, the caller enters their card number, expiry date, and security code using the keypad on their phone.
How IVR Payments Work
The process is straightforward. A customer calls your business, and at the point of payment, they are transferred to a secure IVR system. An automated voice guides them through entering their card details using DTMF tones (the beeps your phone makes when you press buttons). The system captures and processes the payment, then returns the caller to the agent or confirms the transaction.
Modern IVR payment systems use DTMF masking or DTMF suppression to ensure that card details are never heard by agents, never recorded in call recordings, and never stored in your systems. This is a critical security feature because it takes your business out of scope for many PCI DSS requirements.
When IVR Payments Make Sense
IVR payments are ideal for businesses that take a significant volume of phone payments. Contact centres, utility companies, local authorities, membership organisations, and any business with a customer service team that handles payments will benefit. They are also valuable for out-of-hours payments, letting customers pay at any time without needing a live agent.
The key advantage is security. Because card data never touches your environment, you dramatically reduce your compliance burden and the risk of a data breach. For a deeper look at how this works in practice, see our IVR payments solution.
Pay by Link: Secure Payment URLs via SMS and Email
Pay by Link is exactly what it sounds like: you send your customer a unique, secure URL — by text message, email, or messaging app — and they click it to make a payment. No app download, no account creation, no fuss.
How Pay by Link Works
An agent or automated system generates a payment link for a specific amount. The link is sent to the customer's phone or inbox. The customer clicks it, lands on a secure payment page, enters their card details (or uses a saved payment method), and completes the transaction. The business receives instant confirmation.
The beauty of Pay by Link is its simplicity. The customer does not need to be on the phone. They do not need to navigate a website. They just tap a link and pay. This makes it perfect for follow-up payments, deposits, outstanding balances, or any situation where you need to collect a payment outside of a live conversation.
Why Businesses Love Pay by Link
Pay by Link solves a very common problem: how do you collect a payment from someone who is not standing in front of you and may not be on the phone? The answer used to involve posting invoices, reading card numbers over the phone, or asking customers to log into a portal. All of these create friction. Pay by Link removes it.
It also improves security. Because the customer enters their details on a secure, hosted payment page, your agents never see or handle card data. And because the link is unique and time-limited, the risk of interception is minimal.
Conversion rates for Pay by Link are typically very high — often above 70% — because the payment journey is so short. For more on how advanced payment links can transform your collections, visit our advanced payment links page.
Open Banking and Pay by Bank
Open Banking, sometimes called Pay by Bank, allows customers to pay directly from their bank account. Instead of entering card details, the customer authorises a bank transfer through their own banking app. The payment is settled quickly, often in seconds, and there are no card processing fees involved.
How Open Banking Payments Work
When a customer chooses to pay by bank, they are redirected to their banking app or online banking portal. They log in using their existing credentials, review the payment details (which are pre-filled, so there is no risk of typing errors), and authorise the transfer. The money moves from their account to yours, and both parties receive confirmation.
This is made possible by the UK's Open Banking framework, introduced under PSD2. It requires banks to provide secure APIs that allow authorised third-party providers to initiate payments on behalf of customers — but only with the customer's explicit consent.
The Advantages of Pay by Bank
The biggest draw is cost. Card payments typically cost businesses between 1% and 3% per transaction in processing fees. Open Banking payments are significantly cheaper because they bypass the card networks entirely. For businesses processing high volumes or high-value transactions, the savings add up quickly.
Speed is another advantage. While card payments can take days to settle, many Open Banking payments clear on the same day or even in real time via Faster Payments. This is a genuine improvement to cash flow.
Security is strong, too. The customer authenticates directly with their bank using methods they already trust — fingerprint, face ID, or their banking password. There are no card details to steal, intercept, or mishandle. Explore our Pay by Bank solution to see how this works for phone and digital payments.
Virtual Terminals: Software-Based Card Acceptance
A virtual terminal is a web-based application that lets you process card payments using a computer or tablet. There is no physical card machine involved. Instead, an agent logs into the virtual terminal, types in the customer's card details, and submits the payment.
How Virtual Terminals Work
Think of a virtual terminal as a card machine that lives in your web browser. It connects to your payment processor and allows you to key in card-not-present transactions manually. Most virtual terminals also support features like recurring payments, refunds, and transaction reporting.
Virtual terminals are commonly used by businesses that take payments over the phone, by post, or by fax. They are also useful for back-office teams processing payments on behalf of customers.
The PCI Compliance Consideration
Here is the catch. When an agent types card details into a virtual terminal, those details pass through your systems. This means the agent sees the card number, and your network is in scope for PCI DSS compliance. Depending on your setup, this can mean a significant compliance burden — including network segmentation, regular vulnerability scans, and staff training.
This is why many businesses are moving away from traditional virtual terminals towards solutions that combine the virtual terminal concept with DTMF masking or tokenisation. These hybrid approaches let agents process payments without ever seeing or handling card data, which dramatically reduces PCI scope. For a secure approach to web-based payments, see our secure web payments solution.
Digital Wallets and Click to Pay
Digital wallets — Apple Pay, Google Pay, Samsung Pay — and the newer Click to Pay standard have changed how consumers pay online and in person. Instead of entering a 16-digit card number, the customer authenticates with a fingerprint, face scan, or PIN and the payment is processed using a tokenised version of their card.
How Digital Wallets Work
The customer stores their card details in a digital wallet on their phone, watch, or browser. When they want to pay, they select the wallet option, authenticate, and the wallet sends a unique token to the merchant. This token represents the card but is not the actual card number, so even if it were intercepted, it would be useless to a fraudster.
Click to Pay works similarly but is designed specifically for online checkout. It is backed by the major card networks (Visa, Mastercard, American Express) and aims to replace the manual entry of card details with a one-click experience. The customer's card details are stored securely and recognised automatically at participating merchants.
Why Digital Wallets Matter for Businesses
Adoption is growing fast. Industry data shows that over half of UK consumers have used a digital wallet, and the figure is climbing year on year. Younger demographics in particular expect wallet payments to be available.
For businesses, offering wallet payments can reduce cart abandonment, speed up checkout, and improve security. The tokenisation built into wallets means you never receive the actual card number, which simplifies PCI compliance. The trade-off is that wallet payments are not yet universal — not every customer uses them, and they are primarily suited to online and in-person transactions rather than phone payments.
Comparing Payment Methods: Cost, Speed, Security and Experience
Choosing between payment methods is not about picking a winner. Each has strengths and trade-offs. The table below gives a practical comparison.
| Method | Typical Cost | Settlement Speed | Security | Customer Experience | Best For |
|---|---|---|---|---|---|
| IVR Payments | Per-transaction fee | 1–3 business days | Very high (DTMF masking) | Good — guided by voice prompts | Phone payments, contact centres |
| Pay by Link | Per-transaction fee | 1–3 business days | High (hosted payment page) | Excellent — tap and pay | Remote payments, follow-ups, collections |
| Open Banking | Low fixed fee | Same day or instant | Very high (bank authentication) | Good — familiar banking app | High-value payments, recurring billing |
| Virtual Terminal | Per-transaction fee | 1–3 business days | Moderate (agent handles data) | Neutral — agent-driven | Phone and mail order payments |
| Digital Wallets | Card processing fee | 1–3 business days | Very high (tokenisation) | Excellent — one-tap payment | Online and in-person checkout |
A few things stand out. Open Banking is the cheapest option for most businesses because it avoids card network fees. IVR and Pay by Link offer the best balance of security and convenience for phone-based businesses. Virtual terminals are flexible but carry a higher compliance burden unless paired with descoping technology. Digital wallets deliver the smoothest customer experience for online transactions.
The right choice depends on your business model, your customers, and how they prefer to pay.
How to Choose the Right Payment Mix for Your Business
Very few businesses need just one payment method. Most need a combination that covers different customer journeys. Here is a practical framework for deciding.
1. Map Your Customer Journeys
Start by listing every situation where a customer pays you. Do they pay on the phone? Online? After receiving an invoice? At a physical location? Each touchpoint may need a different method.
2. Consider Your Customer Demographics
Older customers may prefer phone payments. Younger customers may expect digital wallets. Business clients may want bank transfers. Understanding who your customers are helps you prioritise.
3. Evaluate Your Compliance Position
Every payment method has different implications for PCI DSS compliance. If you want to minimise your compliance burden — and the associated cost and risk — prioritise methods that keep card data out of your environment entirely. IVR with DTMF masking, Pay by Link with hosted payment pages, and Open Banking all achieve this.
4. Think About Cash Flow
If fast settlement matters to your business, Open Banking has a clear edge. Card payments through traditional processors typically take longer to reach your account.
5. Factor in Cost
Card processing fees eat into margins, especially for high-volume or low-margin businesses. Open Banking can significantly reduce per-transaction costs. But also consider the cost of implementing and maintaining each method — some require more integration work than others.
6. Plan for Growth
Choose a platform that supports multiple methods and can add new ones as your needs evolve. Being locked into a single payment method or provider limits your flexibility as customer expectations change.
How Paytia Supports Multiple Payment Methods
Paytia was built to solve a specific problem: how do businesses take payments securely, especially over the phone, without the compliance headache? The answer turned out to be a platform that supports multiple payment methods from a single, unified system.
With Paytia, your business can offer:
- IVR payments — Secure, automated phone payments with DTMF masking that keeps card data completely out of your environment.
- Pay by Link — Send branded, secure payment links by SMS or email, so customers can pay in seconds from any device.
- Pay by Bank — Open Banking payments that are cheaper than card transactions and settle faster.
- Secure web payments — Take card payments through hosted payment pages that keep you out of PCI scope.
All of these methods are managed from a single dashboard. Your agents do not need to switch between systems or learn multiple tools. And because Paytia handles the sensitive data, your PCI compliance is dramatically simplified regardless of which method the customer chooses.
The platform integrates with your existing phone system, CRM, and payment processor, so there is no need to rip and replace your current setup. You can start with one payment method and add others as your needs grow.
To see how it all fits together, take our product tour.
Frequently Asked Questions
What is the most secure payment method for phone transactions?
IVR payments with DTMF masking are widely considered the most secure option for phone payments. The customer enters their card details using their phone keypad, and the tones are masked so that no one — not the agent, not the call recording system — can capture the card number. This removes your business from PCI DSS scope for those transactions.
Is Open Banking safe for customers?
Yes. Open Banking payments are authorised directly through the customer's own banking app using their existing security methods, such as fingerprint, face ID, or a banking password. No card details are shared with the merchant, and the transaction is protected by bank-grade security and Strong Customer Authentication requirements.
What is the difference between Pay by Link and a payment portal?
A payment portal requires the customer to navigate to a website, log in, find their account, and initiate a payment. Pay by Link skips all of that. The customer receives a direct link to a pre-filled payment page. They tap, enter their details (or use a saved method), and pay. It is faster and has much higher completion rates.
Do I still need a virtual terminal if I have IVR payments?
It depends on your workflow. IVR payments handle the vast majority of phone payment scenarios. However, some businesses keep a virtual terminal for edge cases — for example, processing a refund or handling a payment where the customer cannot use their phone keypad. The key is to ensure that any virtual terminal usage is secured and compliant.
Can I offer multiple payment methods to the same customer?
Absolutely. In fact, giving customers a choice is best practice. A customer on the phone might prefer IVR. The same customer following up on an invoice might prefer a payment link. Offering multiple methods improves the chances of getting paid quickly and keeps customers satisfied.
How do digital wallets work for card-not-present transactions?
When a customer pays online using Apple Pay, Google Pay, or Click to Pay, the wallet generates a unique token that represents their card. This token is sent to the merchant instead of the actual card number. The transaction is processed through the card networks as normal, but the merchant never receives the real card details. This significantly reduces fraud risk and simplifies PCI compliance.
What payment methods have the lowest processing fees?
Open Banking (Pay by Bank) typically has the lowest per-transaction fees because it bypasses the card networks and their associated interchange and scheme fees. For businesses processing high volumes or high-value transactions, this can represent substantial savings compared to card-based methods.
How quickly can I start accepting new payment methods?
With a platform like Paytia, you can typically be set up within days rather than weeks. Because the platform is cloud-based and integrates with your existing phone system and payment processor, there is no complex infrastructure to build. You can start with one method and add others as you go.