E-payments – why, when and how to use them
Worried about giving out your credit or debit card details online? There is another option – an e-money account from a payment company like PayPal or Google Checkout.
What e-payment companies offer and how to use them
An e-payment account provides another way to send and receive money online.
An increasing number of people use e-payment companies because they can make it easier to transfer money and make purchases.
They also mean you don’t have to share your card details.
How does an e-payment account work?
Using an e-payment company means you don’t have to give out your credit or debit card details when you shop online. This reduces the risk of fraud.
There are two main ways that e-payment accounts work.
Pay money into your e-money account using a payment card. When you shop online the money is deducted from your balance – or if you’re selling things, it’s added to your balance, or
Link your e-money account to your payment card. There’s no actual money in your account. When you buy online the e-payment company charges the money to your card – or pays it to your card, if you’re selling things.
How to use an e-payment company
The first step is choosing which e-payment company to use. Popular choices include PayPal and Google Checkout.
Once you’ve picked a company, most will ask you to:
Set up an account - register your details and follow the instructions.
Connect a bank card - enter your credit or debit card details.
Once you’re registered, you’ll be able to pay for purchases using your new account details.
What does it cost?
It’s usually free to use e-payment services to buy things (though you might be charged for selling).
These companies make their money by charging retailers.
You might be charged for making or receiving payments in foreign currencies, or if you spend more money than you have access to.
What are the drawbacks?
E-payment companies are not protected by the Financial Services Compensation Scheme.
This means you might not get compensation if your e-payment company goes out of business.
Even if you pay using a credit card through PayPal, or similar service, you will not get the additional protection under section 75 of the Consumer Credit Act.
Why do people use e-payment companies?
It’s safe - you don’t need to give out your card details.
It’s quick - just type in your password.
It’s usually free - no charges for paying or setting up your account.
What to do if there’s a problem with a payment or purchase
If you have a problem with your purchase, the first thing to do is to talk to the retailer and try to get it sorted out.
If you can’t get your money back from the retailer you can ask for help from the e-payment company.
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