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Finger slip could be costly as contactless and cashless payments become more popular

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BRITONS are frightened by moves towards a cashless society as one slip could see real money disappear in an instant.

A typing error, for example, could unwittingly send an electronic payment to a complete stranger’s bank account.

There is no guarantee you will see your money again or even receive compensation if you fall victim and some customers have lost tens of thousands of pounds.

Rising credit and debit card fraud is another worry, while contactless payments also leave users feeling vulnerable.

Losing contact

Older spenders are reluctant to lose cash as they believe it offers more security than other payment methods, according to new research from fraud protection specialist Defender Note.

Half of all over-55s would be upset if cash was phased out altogether.

Many are also wary of contactless cards and think their bank should ask for their approval before issuing the new technology.

Defender Note director Morgan Rothwell says: “Contactless card use is skyrocketing and cash is on the decline, but this is unsettling for many older spenders.”

Electronic payments are a quick and efficient way to transfer money to family or friends, or to settle oneoff payments, such as a household bill or a deposit on a major purchase like a car or property.

Contactless payment

Many are wary of contactless cards

However, if you key in the recipient’s bank details incorrectly, even with just one digit wrong, your money could go astray.

With around 25 million users of online banking, there have been regular reports of huge sums being sent to the wrong recipient.

Others have fallen victim to an evil new fraud where scammers intercept emails between house buyers and their conveyancing solicitors then con them into forwarding their property deposit to the trickster’s bank accounts.

According to research from Payments UK, more than half of us are wrong in thinking the recipient’s name is used to route online payments.

In fact, banks solely rely on the sort code and account number so it is vital you key in both without any errors.

Check the reference as well if you are paying a business.

Maurice Cleaves, chief executive of Payments UK, says that sending electronic payments has become second nature for many: “Although the overwhelming majority of payments are sent to the correct place, you must use the right sort code and account number.”

Take care

David Black, banking specialist at DJB Research, says the growing use of the new Faster Payments Service has added to the risk as your funds are transferred within hours rather than days: “There is no opportunity to spot and correct the payment if you have made a mistake.”

Setting up a forward payment to go out in one or two days’ time would allow you to correct any errors.

Black adds: “It also makes sense to send £1 as a test payment and ask the recipient to confirm receipt before sending the full amount.”

If you do send money to the wrong recipient, tell your bank as quickly as possible.

Black says. “If you are lucky, the incorrect numbers will not correlate to an account and your payment should bounce back to you or be held in a suspense account.”

Otherwise your bank will endeavour to retrieve the money on your behalf, but it can be a slow and frustrating process.

Person banking online

Faster payments add to the risk of funds going astray

Get it back

In January, the banking industry introduced new rules making it easier to recover misdirected money, but these apply only in straightforward cases where there is clear evidence of a genuine mistake.

Money can be returned within 20 working days where the recipient does not dispute the return of the funds, but banks do not have the power to pluck money from the recipient’s bank account without permission, even if it is not theirs.

The recipient has to consent to the funds being returned, so you are relying on their honesty.

Black says: “If not, you might have to go to court to get your money back. While your bank will try and recover your funds – and may charge for doing so – it will not be liable for any loss.”

The cashless society may be convenient, but any slip-ups can prove expensive, so people are right to be wary.

 


Jones, H. (2016) Home. Available at: http://www.express.co.uk/finance/personalfinance/680015/contactless-cashless-payments-lose-money-mistake (Accessed: 15 June 2016).

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