Widespread confusion over payments in the UK - Money - News | moneyfacts.co.uk


Moneyfacts.co.uk News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Widespread confusion over payments in the UK

Widespread confusion over payments in the UK

Category: Money

Updated: 05/09/2011
First Published: 05/09/2011

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
Despite people using a variety of methods to make payments each day, there is a clear lack of knowledge about what common terms mean.

The Pay YOUR Way Campaign by the Payments Council has found knowledge gaps and a lack of confidence about how to make common transactions.

The research reveals that only one in three people could correctly identify what an APR was, whilst a worrying 7% were unable to recognise any payment terms, such as PIN, ATM and Bacs, when asked to identify them.

When it comes to specific payment terms and what they mean, the research also showed that many Britons aren't as payment savvy as they should be.

Less than a quarter (24%) of people were able to identify how to make payments by all of the following methods: debit cards, Direct Debits, standing orders and Faster Payments.

Despite the growing use of Faster Payments – which allow people to transfer money from account to account in hours rather than days – only a third could correctly identify the payment method.

The stats reveal it's the older generation who has the strongest knowledge when it comes to payment terms and uses.

Some 95% of over 55s knew what a debit card transaction was, compared to 87% of those under 35; 86% knew what a Direct Debit is, compared to 75% of the younger group, and 77% correctly identified a standing order, compared to 65% of the 18-34s.

Older respondents were also more confident when it comes to using various different payment methods, with 87% confident about setting up a Direct Debit, and 80% arranging standing orders, compared to 75% and 66% respectively of the 18-34 age group.

"Technology is evolving quickly as we've seen from contactless payment methods springing up and mobile payments not far off," said Sandra Quinn of PayYOURway.org.uk.

"However, we still rely on a variety of payment methods every day - from receiving our salary via Bacs, paying bills by cheque or Direct Debit, standing orders set up for rent and savings accounts - the list goes on.

"Although younger people tend not to use cheques as much as previous generations, preferring alternatives such as direct online transfers, electronic payments such as Direct Debits and standing orders should be in everyone's payment vocabulary."

Find the best credit card rates - Compare credit cards

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.