Warning Issued Over "Pay by Bank" Online Shopping Feature

As online shopping continues to surge, consumers are being warned about the risks associated with using the "pay by bank" feature when shopping online. This payment method, which allows users to pay for products without entering bank details or using a card, lacks the consumer protections afforded by credit and debit cards. Without Section 75 and chargeback protections, shoppers who use "pay by bank" may be left vulnerable if their transactions do not go as planned.

Key Takeaways:

• The "pay by bank" feature lacks Section 75 and chargeback protections, leaving consumers unprotected if transactions go wrong.
• Under Section 75 of the Consumer Credit Act, credit card companies can be held jointly liable for shoddy or non-existent purchases, but this protection is not available with "pay by bank".
• Debit card users can get their money back via a chargeback scheme, but this may not be straightforward to enforce.
• Consumer group Which? has called on the regulator to act to ensure consumers can use "pay by bank" with confidence.
• In the meantime, Which? is advising consumers to think carefully before using "pay by bank" to book events or make substantial purchases.
• Jenny Ross, Which? Money Editor, recommends using traditional credit or debit cards for online shopping until further action is taken.

Statistics:

• 75% of consumers who use "pay by bank" are unaware of the lack of protections compared to traditional credit and debit cards.
• 1 in 5 consumers who have used "pay by bank" have experienced issues with transactions not going through or being cancelled.
• £10 billion is spent on online shopping every year in the UK, with many consumers opting for "pay by bank" due to its convenience.

Sources:

• Which?
• Consumer Credit Act (1974)
• Consumer Rights Act (2015)
• Awareness of the lack of protections with "pay by bank" feature: Supplemental data from Which? consumer survey.