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, Apple Pay or Google Pay.

What e-payment companies offer and how to use them

Paying online

You can now pay directly from your bank account with some retailers. Find out more about this here.

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.

You either:

  • 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

Before buying online, check that the page is genuine, so carefully enter the address yourself and don’t use a link. Make sure it’s secure too, checking for ‘https’ and a locked padlock at the start of the address. And when you’re done, remember to log out. Find out more on the Get Safe Online websiteopens in new window.

The first step is choosing which e-payment company to use. Popular choices include PayPal, Apple Pay and Google Pay.

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.

PayPal also charges an ‘inactivity fee’ of up to £9 if you don’t log into or use your account for at least one year and your account has some money in it. If this applies to you, set a reminder to log into your account once a year to avoid the charge.

What are the drawbacks?

E-payment companies are not protected by the Financial Services Compensation Scheme (FSCS).

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.

When choosing a provider, you should check the service you’ll get and the protection it offers for your money.

To make sure your money is FSCS protected, see our page on how to choose the right bank account.

Why do people use e-payment companies?

If you’re worried about Shopping and paying safely online check out our dedicated guide.

  • 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.

Contactless payments

What is contactless payment?

A contactless payment lets you pay for things with your credit or debit card without having to enter your PIN. All you do is wave your card directly over the yellow contactless payment card reader – or just tap your card on the reader.

Is there a payment limit when using contactless?

There is a single transaction limit of £100 (used to be £45), although you can normally make more than one separate purchase in any given day (up to a total of £300). After a few contactless payments or when you reach this £300 limit, you’ll be asked to enter your PIN. Both of these measures are to help stop unlimited spending on your card if you lose it or it gets stolen.

If you register your card so you can use it with Apple Pay, Google Pay or Samsung Pay, there is no single transaction limit. Some retailers still might have their own limits though.

How to prevent fraud on your contactless card

There are two safeguards the help to prevent excessive spending if your card does get into the wrong hands – the £100 spending limit, and a restriction on the number of contactless payments that can be made before the card PIN is requested (up to £300).

However, there are still some steps you can take.

  • Cancel your card straight away if you lose it. This will stop most payments from going through on the card.
  • Keep your card in sight. If you can’t see your card, you don’t know it isn’t being used to pay something, or being put through a reader that could clone it.
  • Keep receipts or check over your statement. This way you’ll be sure how much you got charged, and can spot any charges you don’t recognise quickly.

Contactless and travelling in London

You can use your contactless card or mobile payment app on public transport in London including the tubes, London buses and National Rail services.

This is cheaper than buying paper tickets. It’s also the same price as using the official Transport for London (TfL) contactless travel card, the Oyster card. The disadvantage to using a bank card or mobile payment app over Oyster when it comes to travelling in London is you only load a Travelcard or Bus & Tram pass onto an Oyster card.

Make sure you use the same method of payment, whether it’s an Oyster card, contactless card or mobile payment app, to use contactless travel. This is because TfL has a capped pricing system, where as soon as you get to the daily or weekly limit, your travel ro the rest of the day or week is free.

If you use a different charge to tap in or out, you’ll get charged the maximum fare.

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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