Freedom to Pay: what’s next?

Chris, Sorry but having worked in the payments business for over 40 years (working with, not for the Banks) the two big challenges and expenses are cheques and cash. The sooner the former, in todays market place, is stopped the better.(You have to pay cheques into the bank and then wait for funds to clear) As far as cash is concerned, at this point in time there is a real covid problem with handling cash (germs being passed) beyond that cash is a big expense to businesses because of potential theft, the cost of paying it into the bank, not just the charges the banks made but the time out and security of staff taking funds to the bank and worse the risk of collecting cash at ATM’s.
I also think you are not totally correct on credit cards as the use of them gives you extra protection (look at Section 75 protection) and provided you set up to pay the balance in full EVERY month it costs no more and often you can get rewards for using a particular card.
You are perhaps also wrong on fraud and theft, of course it happens much to the delight of our negative press and media, but electronic payments, used properly can have a significant impact on its reduction.

Hi Roger – Thanks for dropping in to give views from the business perspective.

I can understand that continued use of cash is more expensive for business and that at present there is concern that use of cash could spread the virus.

I do take exception to your suggestion that cheques should be phased out. I work for a charity and most of the donations we receive are in cash or cheques. We encourage electronic payments where possible but that won’t work for casual donations. (Where I volunteer were are outdoors and there is often no mobile signal, so card and phone payments won’t work.)

I strongly agree with your advice about credit cards. We discuss Section 75 frequently on Which? Conversation. Credit cards are extremely useful in managing money and helping to avoid punitive overdraft charges and I wholeheartedly support your advice to pay the balance in full by direct debit, also to avoid punitive interest charges. Perhaps this should be the default when new cards are issued.

No-one would doubt that cash is a security risk but there are many Conversations about scams and people losing large sums of money. Although I believe that it’s not difficult to avoid becoming a victim I do understand why a significant number of people feel comfortable with cash or don’t feel comfortable using some or all of cards, contactless cards, phone payments and online banking.

I suspect that mobile banking with limits to the size of transactions could win over many of those who feel more secure with cash, just as PAYG phones remove the possibility of large mobile phone bills.

I cannot accept the argument that because cash and cheques are a big expense for banks they should be abolished. People’s money is the business of retail banking so it goes with the territory that they have to look after it, supply it and provide it on demand, and also facilitate the exchange of money through instruments such as cheques. Over the course of the year I receive quite a few payments from businesses and would be reluctant to give them all my bank details so they could transfer funds electronically. I will gladly accept cheques and cash.

If cash and cheques are taken out of the system there will no longer be much need for any bank branches at all; they have already closed far too many branches and removed too many ATM’s.

Lots of things are expensive for businesses, like wages, and energy, and computing but the basic stock in trade is essential, and in the case of banks that is money in its various forms. I would venture to say that it is not the use of cash and cheques that has impacted on retail banking profits over recent years but bad lending decisions and the miss-selling of personal protection insurance. Investment banking is another tale of woe. Banks need to put their own house in order before making life even more difficult for their customers. Most industries treat customers as a precious resource to be nurtured; banks seem to consider them a nuisance.

Disagree as my earlier comment to Chris.
Why should bus drivers have to handle cash apart from the risk of theft there is now the increased risk of passing on an infection.
If you don’t have or don’t want a bank card get a pre paid card.

In my experience, only a tiny minority of bus passengers are paying with cash, mainly young people and occasional passengers and those who, for whatever reason, don’t have or need a payment card, so it is hardly worth getting difficult over it. Most of those who do pay with cash are buying day passes or other facilities which means they don’t have to pay cash on future journeys.

Once life returns to normal we need to get more people out of their cars and onto public transport so all forms of payment should be welcomed. Regular travellers and those eligible for concessionary fares will naturally prefer to use cards so the problem is minuscule and the amount of cash handling is negligible. I have noticed that the bus drivers in my area are wearing gloves.

Our local buses accept cash. Few use it, so the amount involved is hardly likely to be a security risk. By all means encourage users to use a payment card but please accommodate the minority who want to pay by cash.

I hope they will also be wearing masks come 15th June along with their passengers.

Using cash on a bus does slow down its progress. It seems to me if you can buy a travel card with cash from shops for example that goes a good way towards overcoming the problem.

Ask the company to pay into your Bank or Building society and then you can have a ‘touch and go card’. Much easier than cash and no time is wasted waiting for change.

I have all the necessary facilities for complete cash avoidance but still carry cash and use it quite a lot for small purchases, spontaneous charitable donations, various impromptu expenditures, and so on. I have never considered the time taken to do such business to be wasted. Perhaps society needs to rebalance its priorities away from the mercenary towards a more amicable way of living. I think we would all benefit.

I absolutely agree, John. There are still people without bank accounts, either by choice or because they are not allowed them. I can understand why others are wary of using credit cards for various reasons, not least the risk of landing up in debt. You could lose the content of a wallet or purse but if you have cards or an online bank account, there are risks that may be difficult to relate to.

Many (young) children won’t have bank accounts. Prepaid cards are one way but two things about handling money are, I believe, it gives a good sense of value – maybe makes you think harder about whether you really want something when your cash physically disappears, and it helps you learn to count and do arithmetic.

If someone receives a scam message by text or e-mail or via social media they have all the time in the world to stop and think about it and make up their mind whether or not to respond to it. Why should banks be required to put a stop on their account and hold the payment up by four hours in case the account holder has second thoughts? I would not object to allowing customers who wish to have that sort of facility paying a service charge for having it applied to their account so the operational costs fall on them rather than across all the bank’s customers. People have to take responsibility for their own decisions and act accordingly; that is the only way people will build up their own defences and protect themselves.

Reducing fraud would be a very good reason. I agree with Frederick and although I have never been scammed I would opt for a delay. If payments are automated I cannot see why there would be a significant increase in cost but I am happy to learn.

Bearing in mind that the withdrawal is not being activated by the authentic customer but by a fraudster, I am struggling to understand the mechanics of the unauthorised withdrawal process.

If someone falls for a scam message and reveals their bank account details I am not sure how the customer can stop and trap any withdrawal unless they have contacted their bank immediately afterwards and even then it could be too late. In other cases the details are harvested for later use or sold on to other criminals for their use; how would it be possible to block any such withdrawals temporarily. The person scammed is unlikely to know the details of the receiving account for the money taken fraudulently.

If this were to apply to all electronic funds transfers whether generated by the customer or illegitimately then I feel there should be an opt-out facility for those who wish to execute the payment without any delay. When I make a transfer using the Faster Payments Service there is an opportunity to select the timing of the transfer; criminals who have hacked into a bank account will probably choose the same day option.

I agree, John. People do need to take responsibility for their lives and actions. I wonder how many people who are susceptible to scams will realise within 4 hours what has happened.

However I think we should have features in online banking as options to help account holders who may be more vulnerable. These could include making all online payments delayed by a fixed time, putting a chosen limit on all online transactions, limiting the daily number of transactions, requiring a second authentication for any transaction or above a given value by a nominated person. These options could be the account holder’s choice, chosen by a family member or imposed by the bank. I don’t see any cost involved.

John – In the Convos about scams, some people have reported that they have realised that they have been scammed when they put the phone down. I expect that others have been concerned and had their fears confirmed as a result of a web search or a phone call. With a short delay (Frederick suggests four hours), that could reduce the number of successful scams and therefore the amount of crime.

Consumers are allowed a cooling off period if they have entered into a contract, very necessary with pushy salespeople pushing them to sign-up on the day.

Sometimes it seems to me that we can have too much protection for consumers. I have never understood why online traders are obliged to provide a full refund if customers order goods and then simply change their mind. In the same circumstances a business would be charged a restocking fee.

Malcolm – I would be very happy if customers were given choices as you suggest. Thankfully, mobile phone service providers have made it possible for customers to prevent themselves from accidentally exceeding their data and call allowances, and even advertising that this facility exists. In the past it was necessary to use PAYG to be sure that you could not face a large bill.

The time to do the web search and make the phone call is before responding to the potential fraud, not after. However the delay would help some in some instances but, as I suggested above, could (should) be a choice. Presumably the delay would have to be applied to all online payments and there will be many for Which this would not be sensible. Suppose you are paying for a product or service you need immediately?

That’s easy in some circumstances, for example if you receive a scam email and you can confirm that it is a known scam. It could be harder if you receive a scam phone call, like some of those featured in the magazine and in Which? Convo.

The sooner that positive action is taken to fight back against scammers the better. You and I may never have been scammed but I wonder how much we pay indirectly towards dealing with crime.

Wavechange – [Responding to your post addressed to me] I agree that there could be a problem with money withdrawals activated during a telephone conversation . . . but I took that to be outside the context of Frederick’s comment which referred only to messages and I clarified that by identifying messages by text or e-mail or via social media. Such scam attempts will give the recipient as much time as they need to check the authenticity of the message if they are tempted by it and to decide whether or not to respond [which could, of course, be by phone conversation].

Lists of known scams are available on the internet, plenty of warnings have been given not to act on impulse prompted by an unexpected phone call or other form of contact or from an unknown party, and some banks [perhaps most] produce guidance on how to avoid scams and draw attention to it on their websites.

I appreciate that many vulnerable people can easily be duped into acting on a scam telephone call and I agree that there certainly is a need to find a technical solution to that particular source of fraud, and I suspect that solution lies within the depths of telecommunications technology and switching centres to prevent number spoofing and other ways of making fraudulent calls. Waiting for the technical solution to be found and rolled out will take forever, so relatives, friends and carers need to be aware of the vulnerabilities, organise the installation of programmable caller-restricted phones, and set them up for the person concerned.

Stopping the payment after the fraudster has committed the crime seems to me to be going about it the wrong way round, especially since neither the identity of the receiving account will be known nor the perpetrator of the fraudulent withdrawal [who is pretending to be the genuine customer] – or are the banks expected to intercept all withdrawals against every personal customer account and pause them for four hours [standing orders and direct debits excepted]? If the bank made a mistake and let a payment through without holding it for a period there would probably be a dispute over liability, as well as problems getting through to the bank at certain times of day or during busy periods – and doing that in itself would involve a verification process that might fluster some customers.

Unluckily in this life misfortunes happen and the only defences are alertness and common sense. Those who lack those attributes need protection but I think it should be closer to home than at their bank.

Thanks for coming back to discuss this, John. I cannot begin to understand why some people are so easily taken in by scams. Why should anyone, for example, ever believe that anyone is going to give them money? If only everyone behaved responsibly and cautiously it would not be worth scammers’ time to engage in illegal activities.

I am concerned that we need to achieve a balance in consumer protection. I would like to know more about banks refunding money in ‘no blame’ cases such as APP scams. Fair enough if there is genuinely no blame but I don’t want the rest of us subsidising other people’s carelessness, which means looking at cases individually and carefully. Many of us were not impressed by how mis-sold PPI cases were handled and I wonder how much of our money was used to pay opportunists who claimed in the hope of receiving a payout. I believe that we need compromises that offer appropriate protection and recognising that consumers must take some responsibility for their actions. In the discussions about parking fines it is obvious that some people take the risk of overstaying or otherwise contravening the rules.

Scams are widely recognised as becoming more sophisticated and the need for consumer protection is well established. Perhaps regular payees could be whitelisted for immediate payment but I would prefer having a delay before large payments were actioned.

Agreed.

I thought Malcolm’s suggestion for a number of optional control features on payment transfers was a sensible way forward. That would give those who want it or need it varying degrees of control at different levels.

I would be more than happy for limits to be put on accounts and relaxed if customers prove to be responsible.

There are various other ways in which the customer could be more in control of potential risk. Although I am happy with using a contactless card and have never had any unauthorised withdrawals I would prefer to be able to choose the number of transactions or total amount that could be spent within a day.

Perhaps we could have a separate conversation topic on on-line banking, credit and debit cards to explore options that could be attached to accounts for the benefit of the vulnerable, the cautious and others. Maybe something Which? could then pursue.

Hi Jan, a quick Internet search showed me that several major UK banks are aware of both dyslexia and dyscalulia.

That said, depending on your specific circumstances, the extent to which they can help you will vary.

I think I am a tiny bit dyslexic myself and I have a work colleague who is distinctly dislexic. That used to be readily apparent in his written work, but now is barely noticeable. Over the years, I think he has developed working methods that help him to overcome the challenges that he faces.

I also have some colleagues who are red/green colourblind. Working with them has taught me not to make presentations where red and green are intended to be seen as distinct contrasting items.

Those are interesting suggestions Nadia but I cannot see the banks volunteering to provide such an intervention service for nothing. There are millions of transactions every day and personal accounts are not actively monitored to spot a misdirected payment. How would a bank know you wanted to pay the solicitor and not be sending money to a private account? They might in the future if they are required to check the name of the payee as well as the account and sort code numbers but scammers will no doubt find ways round that.

The banks place warnings and instructions on the relevant parts of their websites to help people avoid being tricked, they do keep a watch on suspicious bank accounts and those under investigation so that they can trap payments and contact the customer, and they provide alternative payment services with built in delays and security checks but they are chargeable. I would not be in favour of them intercepting payments because sometimes the transfer might be urgent and delay would cause significant inconvenience.

Solicitors also include clear warnings on all their correspondence and invoices not to change the destination of their payments in response to an e-mail and they also state that they will never communicate any change in banking details in an e-mail message. House-buyers have normally made at least one payment to their solicitor before having to transfer a large sum either for the deposit or on completion so they have usually already set up the account and payment details in their on-line banking facility and achieved a successful transfer; they should never change those references. It is very rare for a legitimate bank account to be moved overnight and the process itself is quite time-consuming so it is never a sudden and unplanned event. Solicitors have also had to upgrade their security systems to protect their clients from any hacking activity.

When the new three-part authentication process eventually comes into full operation I think transferring money on-line will be much safer than most other methods.

Mark, I guess you are actually quite lucky to get those mobile bank visits. Many places now just have sub-post offices and cash points.

When I’m paying in cheques, I do prefer to do that in person at at a bank, as it seems more secure that mailing cheques in, which I often used to have to do when I was working. My late dad also liked to get his cash from a bank counter. In latter years, he had to hand over his cash point card to make those transactions, so he did eventually realise that he could just as convenienty use cash points, or, even better, shops that did cash back. During his life, he never had any reluctance about paying for anything by credit card though.

My last visit to a proper city bank branch was about a year ago, to pay in some random cheque. It was good to see that a few old fashioned counter positions were still available, to serve those who did not want to tackle any of the vast array of self service machines there. These latter seemed to fill much of the floor space inside the bank. Thankfully, there were also staff available to help with the use of these devices.

But my last actually necessary visit to a bank branch was now almost 10 years ago, when I had to turn up and personally verify my ID, before my savings bank would pay my solicitors with money needed for a house purchase. My girl friend just opened a bank account for her daughter and was able to do it completely on-line. But most of the other competing accounts would have required a branch visit, to turn up in person with ID documents, instead of just uploading images of them. I have found that, if you have a steady hand and a good smartphone camera, you don’t actually need a document scanner to produce acceptable images of passports and such like.