Payment rails and fees on UK platforms: Faster Payments, Direct Debit and card acquiring

What to take away

The three rails: Faster Payments, Bacs Direct Debit and card acquiring

Every UK ecommerce platform checkout sits on one or more payment rails. A rail is the settlement system that moves money between banks. The three you will meet most often are Faster Payments, Bacs Direct Debit and card acquiring.

Faster Payments is the UK's real-time interbank transfer system. It settles payments in seconds, runs 24 hours a day and is operated under the Pay.UK umbrella. It is the rail behind bank transfers, open banking payments and many payout flows.

Bacs Direct Debit is the UK's recurring collection rail. It moves money on a three-day cycle and requires a mandate from the payer. It is the standard for subscriptions, memberships, utility bills and other repeat billing.

Card acquiring is not a single rail. It is the merchant-side service that lets you accept Visa, Mastercard and other card schemes. The acquirer takes on settlement and some fraud risk, and charges for it.

Pay.UK runs both Faster Payments and Bacs. That shared governance matters because it means the rulebooks, service levels and dispute processes come from the same body. For a finance team, it simplifies escalation.

Each rail has a different cost shape. Faster Payments is cheap per item but poor for recurring billing. Bacs Direct Debit is cheap per item and built for recurrence. Card acquiring costs more per item but carries consumer trust and dispute protection.

Payment Services Regulations 2017 and what they mean for platform checkout

The Payment Services Regulations 2017 are the UK's core payment services law. They implement the second Payment Services Directive in domestic law and set out who can provide payment services, and on what terms.

For an ecommerce platform, the regulations matter in three places. First, they define when a business needs authorisation or registration from the Financial Conduct Authority. Second, they govern payment initiation services, which is the legal basis for open banking checkout. Third, they set rules on transparency, liability and complaint handling.

If your platform uses an open banking provider to initiate Faster Payments from a customer's account, that provider is regulated under these regulations. You are not the regulated entity, but your checkout depends on one.

The regulations also shape card acquiring. They cover the information a payment service provider must give you, how refunds must be handled and how unauthorised transactions are treated. Read the actual text if you are drafting terms.

The Financial Conduct Authority expects firms to deliver fair value and customer understanding. That expectation reaches embedded finance at checkout, including buy now pay later style offers and any credit or insurance add-ons you present.

In practice, platform teams should keep three documents current: your FCA registration or authorisation status, your payment provider contracts and your customer-facing payment terms. Auditors and acquirers both ask for them.

Faster Payments: where it fits and where it does not

Faster Payments began in 2008 and replaced the old three-day Bacs cycle for one-off transfers. It now handles the bulk of UK bank-to-bank payments by volume and is the default for account-to-account transfers.

On an ecommerce platform, Faster Payments appears in three forms. The first is a manual bank transfer, where the customer pays into your account and you reconcile by reference.

The second is an open banking payment, where a provider initiates the transfer from the customer's bank. The third is a payout rail, used to send money to suppliers or marketplace sellers.

Manual bank transfer is the cheapest option on paper. There is no card interchange and no acquirer fee. But it has a hidden cost: reconciliation. If the customer forgets the reference, your finance team has to match the payment by hand.

Open banking payments remove most of that friction. The customer authenticates in their banking app, the payment is initiated under the Payment Services Regulations 2017, and the platform receives a confirmation. Settlement is near-instant.

Faster Payments works well for high-value baskets, trade accounts and any checkout where card fees would be material. It works badly for subscriptions, because there is no mandate. You cannot pull a repeat payment without fresh customer action.

It also lacks card-style chargeback rights. If a customer disputes a Faster Payments transaction, recovery depends on the banks and the circumstances, not on a scheme rulebook. That is a real risk for high-ticket goods.

For a fuller view of how payment choices feed into platform economics, see our guide on payments to exit.

Bacs Direct Debit: setup, mandates and recurring billing on platforms

Bacs Direct Debit is the workhorse of UK recurring billing. It is used for council tax, energy bills, gym memberships and a long list of subscription services. For an online store with repeat revenue, it is usually the cheapest rail per collection.

To use it, you need a service user number from your bank, or you use a bureau or payment provider that holds one. You also need to be sponsored by a bank and to follow the Bacs scheme rules.

A mandate is the customer's authorisation for you to collect. Under the scheme, you must give the customer advance notice of each collection, usually at least three working days, unless a shorter period is agreed. The mandate itself must be stored and produced on request.

The Direct Debit Guarantee protects the customer. If a collection is wrong, the customer can claim a full and immediate refund from their bank. The bank then claims it back from you. That is the indemnity claim process.

On a platform, Direct Debit is usually handled by a payment provider that wraps the mandate, the advance notice and the indemnity workflow. Platforms such as GoCardless and Stripe offer this, and some enterprise platforms support it natively through Bacs.

The cost shape is attractive. Direct Debit fees are typically a small fixed fee per collection, with no percentage of the transaction. For a 50 GBP monthly subscription, that beats card acquiring by a wide margin.

The catch is conversion. Direct Debit sign-up is slower than card entry, and some customers dislike giving bank details. It works best where the customer already trusts the brand or where the saving is passed on.

Refund handling deserves attention. If you refund a card payment, the acquirer may keep part of the fee. Direct Debit refunds follow a different path. Our note on fees kept after refunds covers where those costs land.

Card acquiring fees and how platforms pass them through

Card acquiring is the most familiar checkout rail and the most expensive. The fee has three parts: interchange, scheme fees and the acquirer's margin.

Interchange is set by the card schemes and capped in the UK and EU for consumer cards. Scheme fees are set by Visa and Mastercard and have risen over time. The acquirer's margin is what your provider charges on top.

Most UK platforms do not connect directly to an acquirer. They connect through a payment service provider such as Stripe, Adyen, Worldpay or Checkout.com. That provider is the merchant acquirer of record, and it sets the headline rate.

Typical UK card rates sit between 1.4% and 2.9% plus a fixed fee per transaction, depending on card type, volume and risk. Premium and commercial cards cost more, and some providers pass that surcharge on.

Platforms pass these fees through in different ways. Some absorb them into the platform subscription. Some add a per-transaction fee on top of the provider's rate. Some route payments through their own merchant account and settle to you net of fees.

The pass-through model matters for your margin. If your platform charges 2% on every transaction, and the provider charges 1.5% plus 20p, the platform's cut is the difference. On small baskets, the fixed 20p can dominate.

Chargebacks add another layer. A chargeback fee is typically 15 to 25 GBP per disputed transaction, win or lose. High-risk categories can face reserves or rolling holdbacks.

Inflation changes the picture. When consumer price inflation is running hot, your customers' baskets shift and your fixed fees become a larger share of revenue. The Office for National Statistics publishes the monthly figures that many finance teams use for indexation and forecasting.

Worked total-cost examples in GBP across the three rails

These examples use a fictional but realistic UK retailer, Rowan & Field, selling homeware online. It takes 10,000 orders a month at an average order value of 45 GBP, giving 450,000 GBP in monthly revenue. Refund rate is 4%. Chargeback rate is 0.1%.

We compare three setups: all card acquiring, all Faster Payments via open banking, and a split with 60% card, 30% Direct Debit for a subscription add-on and 10% Faster Payments.

Example 1: all card acquiring

Assume a blended card rate of 1.5% plus 20p per transaction. That is 6,750 GBP in percentage fees plus 2,000 GBP in fixed fees, so 8,750 GBP. Add chargeback fees: 10 chargebacks at 20 GBP, so 200 GBP.

Refund fees: 400 refunds, and if the provider keeps 20p per refund, that is 80 GBP. Total: 9,030 GBP, or 2.01% of revenue.

Example 2: all Faster Payments via open banking

Assume an open banking provider charges 0.4% capped at 2 GBP per transaction. On a 45 GBP basket, the fee is 18p, so 1,800 GBP for 10,000 orders. There are no chargeback fees in the card sense.

Assume 0.2% of orders fail reconciliation at a cost of 2 GBP each to resolve, so 40 GBP. Total: 1,840 GBP, or 0.41% of revenue.

Example 3: split across three rails

Assume 6,000 card orders at 1.5% plus 20p: 4,050 GBP plus 1,200 GBP, so 5,250 GBP. Assume 3,000 Direct Debit collections at 25p each: 750 GBP. Assume 1,000 Faster Payments at 18p: 180 GBP.

Add chargeback fees for card only: 6 chargebacks at 20 GBP, so 120 GBP. Total: 6,300 GBP, or 1.4% of revenue.

The spread is wide. The all-Faster-Payments model looks cheapest, but it is not realistic for a consumer store because most shoppers still reach for a card. The split model is the practical target for many UK retailers.

Run the same numbers on your own basket sizes. A 15 GBP basket makes fixed fees painful on card. A 200 GBP basket makes percentage fees painful, which is where Faster Payments earns its place.

Platform pricing models change these totals. Our comparison of one merchant's books shows how the same revenue can produce different fee stacks.

A fee and feature comparison table for UK platforms

The table below compares the three rails on the features that matter to a finance team. Figures are typical UK market ranges and should be checked against your own contracts.

On platform support, the picture is uneven. Shopify supports card and some local rails through Shopify Payments, and Direct Debit via third-party apps. BigCommerce and Adobe Commerce rely on providers. WooCommerce and Magento need plugins. Enterprise platforms such as Salesforce Commerce Cloud often integrate directly.

When you compare platforms, ask four questions. Which rails are supported natively? Who is the merchant of record? How are refunds and chargebacks handled? What is the total cost of payments at your basket size?

A fifth question is how the platform reports payment data. If you cannot reconcile fees to orders, your finance team will spend time on manual work. Metrics such as payment capture rates reveal whether the checkout is leaking revenue.

Finally, check the legal side. The Payment Services Regulations 2017 govern who can initiate payments and what information you must give customers. The FCA Consumer Duty sets expectations on fair value and customer understanding. Both apply to embedded finance at checkout, including instalment offers.

Common questions

Which rail is cheapest for a UK online store?

Bacs Direct Debit is usually cheapest per collection for recurring payments, and Faster Payments is cheapest for one-off transfers. Card acquiring costs more but carries most consumer volume.

Do I need FCA authorisation to take payments on my platform?

Usually not, if you use a regulated payment provider and do not hold customer funds. If you initiate payments or hold funds, you may need authorisation or registration under the Payment Services Regulations 2017.

Can I use Faster Payments for subscriptions?

Not directly. Faster Payments has no mandate mechanism, so you cannot pull repeat payments without fresh customer authorisation each time. Use Bacs Direct Debit or card on file instead.

How long does a Bacs Direct Debit refund take?

The customer's bank must refund an indemnity claim immediately. The money is then reclaimed from you through the scheme, which typically takes a few working days.

Are card acquiring fees negotiable?

Yes, at volume. Interchange is capped, but the acquirer's margin and scheme fees are commercial. Ask for blended and interchange-plus pricing before you commit.

Does the platform or the provider set the payment fees?

It depends on the model. Some platforms set their own transaction fee on top of the provider's rate. Others pass the provider's rate straight through. Read the contract to see which applies.