How do I add additional payment zones?

[googly]

I want to set my store up so that at this moment in time, I only allow credit card processing to UK customers. It looks like I have to select the Payment Zone in the payment module settings, but I'm not sure how to add additional geo zones in order to display the UK. At the moment mine only displays Europe in the drop down list.

 

Also if I manage to add the united kingdom into this dropdown list, how does the shop know where the user if from? It would make sense if it compared the zone to the ip address of the customer?? or does it compare it somehow to the country under which their account is registered?

 

Hope someone can help me