An assortment of credit cards surrounding the PayPal logo.

All the ways to pay

author: Hayley Cox

By Hayley Cox

These days there are a lot of ways to pay and choosing which is best for you can be tricky.

Our guide discusses the different methods available – some you’ll know all about, others you may be unsure of.


The oldest form of payment in the book, after trading directly with goods, that is. It’s still accepted by most traders, however, it can be a little tricky if you want to buy something online, as you’d have to send the cash through the mail to them. This is possible, but will require extra security in the form of registered mail, which allows you to claim back the cash if it’s lost, and will take considerably more time to process. If you’re only buying something that costs a couple of pounds, it may end up costing more to send the money than you’re actually paying for the item. 

Debit cards

Almost the same as cash, but not quite. When you make a payment using a debit card, it comes directly out of your bank account, as if you’d been to the bank and taken the physical cash out. It can be used in most places that require payment and for online purchases too. There’s usually no charge for making payments with debit cards. Payment in shops is done via a terminal, which reads the card, connects with you bank and requests a PIN for payment authorisation. Payment online will trigger a security process from your bank that requests that you input security details, which are different to your PIN.

Now payments using your debit card may be contactless too, depending on your card provider. This is currently available for payments up to £100, and is the same process as a chip and PIN debit card payment, only you simply touch the card machine and the payment authorises without the need for you to input your PIN.   

If you make a payment with your debit card and you are then not provided with the goods or services you’ve paid for, you may be able to claim the money back using chargeback. However, chargeback is not a certainty and your bank may not be able to retrieve the money even if they try, but it would be worth a shot.

Credit cards 

Operates much like a debit card, but rather than the money coming from your bank account, it is lent to you as credit, by the credit card provider. Then at the end of the month you are sent a statement that advises you of how much you owe. You can choose to pay all or some of it off, with interest usually being applied to any portion remaining. They can be used to pay for pretty much anything, but some transactions will sometimes attract a small fee – for example airlines and holiday companies often charge extra for credit card payments. One of the main advantages of paying with a credit card is that payments between £100-30,000 are protected under the Section 75 rule. This means that if the goods or services provided to you are not as described, you can claim your money back via your credit card provider or the retailer you bought the goods from.    

Pre-paid debit cards 

Work in the same way as regular debit cards, and are accepted in most of the same places as debit and credit cards.  Instead of the money being taken directly from your bank account you need to pre-load the card with money. The card simply allows you to do away with carrying cash around, plus you’re able to use pre-paid cards to purchase items online, for example. Once you’ve used up the original load amount, the card will simply stop working until you choose to load more funds on to it. There are some place where you can’t use this type of card, one of the most notable examples is at self-service petrol stations. It’s also worth noting that there’s no Section 75 protection for payments over £100 with pre-paid debit cards.

Direct Debits

These are mandates that you set up with a merchant or service provider for either a one-off payment or a regular monthly payment. The merchant takes your bank account details and fills in a Direct Debit authority. This is then passed on to your bank to be set up. The money comes directly from your bank account and is transferred directly to the recipients.

Direct Debits are common for such things as gym memberships, mobile phone contracts, insurance payments and utility bills. They can be cancelled anytime up to about a day before the payment is due to be debited with the company claiming the money. However, you can call your bank and request that they don’t pay the money from your account and they are obligated to follow your request. Bounced Direct Debits may well result in fees being charged by your bank.   

Standing orders 

These act a little bit like Direct Debits in that a regular payment comes out of your bank account each month. However, unlike Direct Debits, these can only be set up and altered by you. You fill in the standing order mandate and drop it off at your bank to set up. These are great for paying things that don’t vary each month - like your rent.  

Direct bank transfer 

This is great for one-off payments as it allows you to transfer money directly from your account into another account. And with the recent introduction of Faster Payments, the money can be moved in as little as two hours. There are some risks with this mode of payment though. Until very recently, if the account number of the recipient of the money was wrong and the money ended up in another person’s account, the bank would accept no responsibility, nor try to help you retrieve the funds. Now the rules have changed slightly and it is the responsibility of the bank to help you find and try retrieve incorrectly deposited money – although it isn’t always possible to do so. These can be used to make one-off payments of large amounts, so that it prevents you from having to carry large amounts of cash around with you. So, direct transfers are useful for paying rental deposits, for example. 


This is one of the newer modes of payment. It’s an electronic form of payment that allows you to make payments online all over the world. Many online stores now accept PayPal and it’s great for making payments to stores overseas. There’s also some protection with payments sent through PayPal. If the goods are faulty or don’t arrive you may be able to claim your money back. This payment method is also available as an app too now, so you can pay on-the-go.


This is one of a raft of new and different kinds of payment methods available for your smartphone. Paym is support by most of the major UK banks and it uses the technology already provided by your bank in the form of their mobile banking app. Both the sender and receiver of the payments need to be registered with Paym and, once that’s done, you can start sending payments directly from your banking app using just the mobile number of the receiver. It simply means that you don’t need the bank account details of the receiver.  


The good old cheque has served the buying public well over the years. However, it is now becoming an outdated mode of payment and one that the banks have been trying to do away with for some time. There is, however, some resistance to this from MPs who are worried about the elderly in our society who may not want or have access to more technologically advanced payment methods and small business who appear to need cheques to enable smooth cash flow.

But, they are paper-based, so they cost money to produce, as well as having an impact on the environment and they can take a number of days to clear, which in this day and age, is a pretty unacceptable amount of time to wait.   

Disclaimer: We make every effort to ensure that content is correct at the time of publication. Please note that information published on this website does not constitute financial advice, and we aren’t responsible for the content of any external sites.

An assortment of credit cards surrounding the PayPal logo. An assortment of credit cards surrounding the PayPal logo.