One of the first steps that are significantly important when setting up your new e-commerce business in the UK is to open a business bank account.
As e-commerce is a rising industry in the UK, financial institutions have been in an ongoing competition to get a piece of the pie. There’s even a whole new lineup of neobanks that specifically target this demographic, offering features like multicurrency accounts, integrated accounting, and even cash back!
We’ve put together a list of the top banks that we think would all be great fits for your online business with details on fees, features, benefits, and more.
Benefits and drawbacks of having a business bank account for e-commerce
There will always be pros and cons for anything and so is having a business bank account for e-commerce.
- Ability to manage the finances of your business better and keep them separate from your personal one
- Contribution to the credit rating of your e-commerce business
- Professional image to clients, partners, and suppliers
- Low-cost foreign transactions depending on the bank
- Might be charged a monthly fee
- Have to manage two accounts: personal and business
- Fees often apply to transactions
Choosing a bank account for your e-commerce business
With countless options to choose from, there are a certain number of factors that you may take into your consideration during the decision-making process. Let’s dive in!
Is the bank or the financial services small business-friendly?
Each bank will have its own business strategy, focus, and specialization. As such, one of the important things to consider is to research whether that bank suits your business model, your company size, and your scale.
This might be evaluated based on the bank’s brand reputation, its portfolio, any case study that is similar to you, and so on. Another good point to be taken care of is whether that bank is tailored to your industry.
The fee structure of the bank
All banks charge a fee, in one way or another. You can consider the offering package with the attached fee to see whether a bank suits your budget and business model or not.
Several common fees that banks usually charge include:
- Service fee
- Account maintenance fee
- Withdrawal/deposit fees
- ATM fee
- Transfer fee
There might be hidden fees that you need to research carefully and figure out. Make sure you do the due diligence thoroughly and prevent any unseen potential fees.
Special offers or incentives
Many banks offer extremely attractive packages, incentives, or introductory offers to customers. Make sure you understand them to seize the opportunity and make the best out of it
Is the loan process of the bank hassle-free and suitable for your business is the point that you need to consider. Many banks specialize in loans for small businesses as they offer lower interest rates and longer-term loans.
Do the policies of the bank you want to choose to align with your financial status and strategy? One of the important things to pay attention to is your cash flow
Does the bank integrate with your existing accounting system and bookkeeping software? Is there any modernization or shift that you need to make? Changing from one system to another might cause you additional investment and sometimes, that’s a lot!
Secure online banking or apps
As an e-commerce business, online is your main battleground. As such, there will be no doubt that online or digital payments will be the go-to payment options for many customers, partners, and even suppliers. As such, finding a bank that provides convenient, friendly, and most importantly, secure online banking or applications is extremely vital.
Choosing a bank with friendly, supportive, timely, and easy-to-use services is important. You don’t want to waste hours of waiting to be supported or be treated with an unfriendly attitude.
Best business bank account for e-commerce
Many UK banks have a package with joining incentives that is competitive and attractive for new startups. Moreover, some packages can be tailored specifically for e-commerce businesses. Let’s explore some of the best choices for a business bank account for e-commerce companies.
Below is a list of banks – traditional and high-tech – for you to choose for your e-commerce business.
You can also try out our online banking tool while you’re at it! It’s a quick and simple way to simplify your banking choice on the go.
HSBC Bank is one of the world’s largest financial institutions, offering bespoke financial and business bank accounts for e-commerce.
- First 12 months: FREE of the account maintenance fee and free standard transactions
- After 12 months: £8 monthly account maintenance fee
Features and benefits
- Mobile banking app
- Accounting integration
- Physical card available
Small Business Banking account is for small enterprises (including not-for-profits) with borrowing needs of up to £100,000.
Revolut is a banking technology company based in the UK that helps e-commerce businesses collect global sales and convert to multi-currency at a low rate.
A Revolut business account has different pricing and features depending on the size of your company and how much you use the account.
- The Free Business Account does not cost money, but only a few features are included, and transfer fees are charged separately
- Grow Account costs £25 per month and includes a metal card, 100 free UK transfers, and 10 free international transfers
Features and benefits
- Multi-currency (up to 28 currencies) accounts that allow you to hold, exchange, send and receive funds
- Free international and local payments within the chosen plan allowance
- Free transfers between Revolut Business accounts
- Issuing physical and virtual company cards, tracking real-time spending, and setting spending limits
Revolut business account is available for the following types of business:
- Private Limited Company
- Public Limited Company
- Limited Liability Partnership
- Limited Partnership
- Freelancer or sole trader
You cannot open or hold a Revolut account if you carry out any sort of restricted activities according to Revolut policy.
Wise is a money transfer company based in the UK that offers the best business bank account for e-commerce ventures to send, transfer, and receive funds around the world.
A Wise account enables you to convert earnings with low fees and at market exchange rates, saving a significant amount of money for your e-commerce business.
A Wise business account with an account number costs you £16, which includes direct debits, IBAN, sort code, and the ability to receive payment from a third party.
Transfer fees will vary depending on the currency, but they will be significantly lower than standard bank fees.
Features and benefits
- A business account allows you to hold money in up to more than 55 currencies
- Could convert money and save for future payments
- Batch payments functionality offers you the ability to create and send up to 1000 payments with just one transfer
- Can schedule invoice payments
- Accounting integration, meaning payments and card activities could be automatically synchronized to accounting software
To be eligible for a Wise account, you must not belong to the following category:
- Unregistered UK charities
- Charities and trusts in countries not listed above
- Businesses involved in cryptocurrency, tobacco, adult content, or other prohibited activities
- Brazilian businesses who want to make transfers in BRL
- Superannuation Funds or Self-Managed Superannuation Funds (SMSF) in Australia
- Businesses offering services or goods relating to Cuba with US relations
- Businesses with bearer shares — regardless of the jurisdiction they are incorporated in
See the full list of prohibited activities here.
Airwallex is a licensed and regulated cross-border banking service provider with the financial infrastructure to enable fast, low-cost, and secure banking for businesses in 55 countries around the world.
- Zero monthly fees for a global business account
- No minimum transactions required
Features and benefits
- Up to 80% off on online banking transactions
- Instantaneous physical card issuance
- No monthly fees for global business accounts and multicurrency account
To be eligible for an Airwallex account, you must be on the list of supported countries and must not conduct prohibited activities under Airwallex terms and policy.
How to open a business bank account?
The process of opening a bank account, although it carries many steps, is quite easy to follow if you have enough of the required documents.
If a traditional high street bank is what you prefer, you can open your business account in a branch, online, or over the phone. If you prefer fintech solutions or e-money institutions, you will be able to open an account online or via the app. The information that you will be asked to prepare includes:
- ID and proof of address
- Details about your e-commerce business.
- Company registration number
If this sounds overwhelming to you, don’t worry, BBCIncorp can help you open a UK business bank account for e-commerce with ease!
List of payment methods for your e-commerce business
The payment structure is another important aspect of the operation that you’ll want to be thorough in execution. But unless you’re financially savvy or well-versed with technical jargon, wrapping your head around terms like “payment processors” or “payment gateways” can be difficult.
So we’ve provided a list of some prominent payment methods and breakdowns of how they’d fit with your business
- Credit/debit card payment
Credit and debit card payments are probably the most well-known payment methods in any online shopping platform. The first is rather simple and straightforward; customers only have to manually input some required information like credit card number, expiry date, and card verification value (CVV) to make a transaction. Debit works on the same principle, but is more suited for financially reserved customers that only like to spend what they have.
Cryptocurrency is a digital currency that operates based on blockchain technology; transactions happen peer-to-peer instead of through a government or financial institution. This decentralized concept has contributed greatly to its growing public reception despite prevailing skepticism.
But there’s more than just the enigmatic appeal, adopting crypto payment has been shown to increase online profit margins considerably because of its low transaction costs. Whereas delegating your payment process through Stripe or Square would incur average transaction costs anywhere between 3-5%.
Other benefits include enhanced security and market expansion potential; there’s a whole untapped market of crypto enthusiasts that brands are overlooking – it’s your chance to be one of the first few to meet it.
- E-commerce payment gateways
Think of a payment gateway as the middleman between your business and the customers in that it facilitates a stable and instant transaction to happen. While being an established technology that has seen prominence in recent years, there are still those that would have reservation about it due to insufficient knowledge of how it works.
Typically, the technology comes in three variants: offsite payment gateway, redirect gateway, and onsite-payment gateway, with each having its unique attributes tailored to specific business needs.
If you’d also like to dive into the nitty gritty of things while also exploring other alternative payment methods, then visit our other article Merchant Account vs Payment Service Provider vs Payment Gateway.
Frequently Asked Questions
Do I need a business bank account for an e-commerce business?
Yes!!! Absolutely! You should set up a new bank account for your e-commerce business right away as most payment gateways used for e-commerce require one for payouts. A bank account is necessary to receive funds from your sales revenue.
What do I need to bring to open a business bank account?
Below are several documents that you need to bring when you want to open a business bank account:
- Employer identification number or federal tax ID
- Articles of organization or incorporation
- Personal identification (driver’s license, social security card, etc.)
- e-commerce, retail, AND/OR manufacturer’s wholesale license
- Doing Business As (DBA), your business’s assumed, trade, or fictitious name OR the certificate of your assumed name
- Ownership agreements
- Current monthly business revenue
Disclaimer: While BBCIncorp strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact BBCIncorp’s customer services for advice on your specific cases.
- Benefits and drawbacks of having a business bank account for e-commerce
- Choosing a bank account for your e-commerce business
- Best business bank account for e-commerce
- How to open a business bank account?
- List of payment methods for your e-commerce business
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