Understanding different payment methods

Transcription

1 Understanding different payment methods

2 different PAYMENT METHODS The range of ways in which we can make and receive payments is growing at a steady pace. Where we used to rely on just cash and cheques, we now have a wide variety of options. These include credit and debit cards, automated payments like Direct Debit, and other ways to make payments such as those using phone and internet banking. Finding the right kind of payment method for each transaction you make can help you manage your finances. Yet knowing how to get the best out of what s available can be difficult and isn t always easy to understand. That s where this leaflet can help. Over the following pages you ll find simple, practical advice on how and when to use each of the main types of payment that are available. You ll also find information on the security, reliability, speed and cost of each option, so you ll know just what to use next time you make or receive a payment. It also explains how online banking can help you manage your payments. Although the Cheque Guarantee Card Scheme closed in June 2011 after a long-term decline in use, you can still pay by cheque and businesses can still choose to accept them. The Payments Council is continuing to focus on developing and promoting methods of payment that are safe and effective, as well as encouraging innovation in new and existing types of payments. This includes projects such as delivering mobile phone payments. We are very lucky to be living in an increasingly digital age which means we can speak to loved ones on the other side of the world, do our shopping without venturing out of the house and learn all kinds of fascinating information from the internet. But that means it is really important that everyone of every age feels comfortable with the internet so that we can all make the most of these opportunities. I took my time to discover internet banking, but now I find it absolutely invaluable. It means that I can pay my bills, transfer money and deal with all my affairs quickly, easily and securely, with a permanent record of every transaction, and that of course gives me much more time to spend with my family and friends and to enjoy life. Esther Rantzen, campaigner and broadcaster, 70, London Compare different payment methods using the table on the following pages.

3 Payment methods Where can I use it? What does it cost to use? How quickly is it processed? What kind of security is provided? Do I need a bank account to use it? Anything else I should know? Cash Cheque Debit Card** Credit Card** Almost everywhere! Potentially for most types Over a million UK businesses accept Over a million UK retailers take of transactions though them, in shops and online; and even them, in shops and online, and many retailers have more at cash machines and abroad. even more abroad. stopped accepting them. Nothing though a few ATMs in the UK and many abroad will charge for withdrawing cash. Immediately. If your cash is stolen, you only get it back if you have insurance that covers you. No, but you will need one to withdraw cash with a debit card or get cashback in a shop. Scottish and Northern Irish notes and coins are usually accepted throughout the UK but are not legal tender. If you use a cheque casher they will charge you. Your account will be debited 3 days after the cheque is paid in or sooner if it s paid in to an account at the same bank as yours.* If your cheque book is stolen, you won t be liable provided you tell your bank straightaway. Nothing if your account is in credit, but some businesses might charge to accept cards, or set a minimum spend. Usually the same day. If you are an innocent victim of fraud, you won t be liable. If you don t pay your balance off in full you ll pay interest on what you ve spent. You will be charged if you withdraw cash. Some businesses might charge to accept cards, or set a minimum spend. Usually the same day but you don t pay until your receive your monthly bill. If you are an innocent victim of fraud, you won t be liable. Yes. Yes. No but the card company will check your credit status before giving you a card, and having a bank account will help. Even if it isn t paid in straightaway, a cheque remains legally valid for up to 6 years. If you re abroad, it s usually cheaper to withdraw cash on your debit card than a credit card but check your terms and conditions before you go. If you have trouble using PINs, speak to your card issuer about alternatives. Some cards offer rewards, like loyalty vouchers or cashback. Charges for using your card will be on the back of your statement. Before going abroad, check the charges on your card. If you have trouble using PINs, speak to your card issuer about alternatives. * Unless you have been a knowing party to fraud, you can be certain that the money is yours 6 days after paying in the cheque. For more detailed information, please visit the Pay Your Way website or contact your bank. ** Some credit and debit cards have now been upgraded to include contactless technology, which means that small payments (up to 15 in value) can be made by simply holding your card up to a special card reader without the need to enter your PIN number or give your signature.

4 Payment methods continued Where can I use it? What does it cost to use? How quickly is it processed? What kind of security is provided? Do I need a bank account to use it? Anything else I should know? Direct Debit Standing Order Online/phone payment Chaps Prepaid card Mainly for paying regular bills or things like subscriptions or charitable donations. Over 20,000 UK companies are authorised to accept them. Immediately on the due date, or the following weekday. The Direct Debit Guarantee provides a refund if something goes wrong. You set these up to pay any UK bank or building society account for paying regular payments such as rent or subscriptions. Immediately on the scheduled weekday. You will be refunded if you are the innocent victim of fraud. If you ve given incorrect details, it may be difficult to get the money back. If you bank online or by phone you can make oneoff or regular payments to any UK bank or building society account, at any time of the day. Your account will be debited immediately and the payee receives the money either almost immediately or on the third working day. You will be refunded if you are the innocent victim of fraud. If you ve given incorrect details, it may be difficult to get the money back. Mainly used for high value payments, like buying a house, to any bank or building society account. Usually for a payment. The same day. You must authorise the payment in advance, and you ll be refunded if you are defrauded. Yes. Yes. Yes. Yes. No. You must agree to setting up a Direct Debit which you can do in writing, over the phone or online. When you set one up, make sure you give the right sort code and account number. If paying a business, Direct Debit gives you more protection so ask if you can pay that way. Be careful to give the right account number and sort code. If speed is vital, check with your bank first whether it will be processed as a Faster Payment, or via Bacs, which takes three days. Opt for a cheaper Faster Payment where possible, and take care to use the correct sort code and account number. Visa and Mastercard retailers accept them, in stores and online, around the world. Usually nothing to use, but it might cost to buy one and top it up. Check your terms and conditions. Usually the same day. You can only make purchases or use an ATM with the correct PIN. Check your terms and conditions to find out what fraud protection you have. Prepaid cards are a useful way to use a card in shops or online, even without a bank account. You can never go overdrawn on a prepaid card. As early as 2013 it may be possible to make a payment from one bank account to another using a mobile phone.

5 If you would like more information about your payment options, including anything in this leaflet, visit, ask in your bank, or contact us we ll be more than happy to help you. By post: Payments Council 2 Thomas More Square London E1W 1YN By payyourway@paymentscouncil.org.uk October 2011