As the UK fast progresses towards a cashless society, consumers have made it clear they are not prepared to give up their bank cards. Research by IDEX Biometrics ASA has revealed that three quarters (75%) of UK consumers are concerned about the UK becoming a cardless society, where they no longer have access to a physical debit card and could only rely on mobile payments. Evidently, UK consumers are actually more worried about the idea of a cardless society, than a cashless one.
For more than a third (37%) of consumers, as long as they have a debit card, the thought of a cashless society doesn’t bother them. Maybe not surprisingly, this is even more pronounced among young consumers, with 53% of 25-34-year-olds unworried about our growing cashless society, providing they still have a bank card.
These findings highlight that banks and financial institutions need to reconsider the cashless transition. This is true for all generations, as only 20% of all UK consumers believe we should already be a cashless society, but particularly so for the older generations, with only 9% of over 55s agreeing we should already be cashless.
In fact, despite the increasing popularity of smartphone payment apps, six-in-ten (60%) respondents would not give up their debit card in favour of mobile payments. This caution is likely stemming from security concerns, with a further 68% stating they still feel more secure using their debit card than a mobile payment and half (50%) of consumers concerned that contactless payments are insecure.
However, four-in-ten (41%) would trust the use of their fingerprint to authenticate payments from their bank card more than a PIN. This figure remains consistent across all age groups, highlighting consumers’ confidence in payment cards secured by biometric authentication.
For more than a third (37%) of consumers, as long as they have a debit card, the thought of a cashless society doesn’t bother them.
Misuse of mobile payments is another major concern for consumers. 58% worry that if they lost their mobile phone, people would be able to access their bank accounts. In contrast, even if stolen or lost, a biometric bank card can’t be misused without the owner’s fingerprint.
“With UK consumers showing their continued attachment to bank cards, it’s time for the financial services industry to future-proof payment cards for the next generation. Customers are still sceptical about mobile payment apps but, given their security concerns, they also require more protection than a PIN currently provides”, comments David Orme, SVP of IDEX Biometrics ASA.
“This shows that there is a clear demand for payment cards that provide the convenience of contactless payments with the added security of biometric fingerprint authentication. As the owner’s fingerprint needs to be present for biometric payment cards to work, reliable bank cards enhanced with biometric technology will prevent misuse and card fraud. This will bring reassurance to all consumers as the UK continues to progress towards a cashless society”, added Orme.
For more information, visit www.idexbiometrics.com and follow @IDEXBiometrics.
From workforce expenses to high value transactions between buyers and suppliers, the market that supports the initiating and acceptance of card-based business payments is big and growing. Below Pat Bermingham, CEO of Adflex, asks whether fear of the unknown is holding firms back.
According to Mastercard, Visa and American Express, commercial card payments hit a five year high of US $2 trillion in 2018. Companies that cater to these types of transaction rightly see opportunity and are investing in new solutions, like virtual cards, which simplify the management of a company’s payments, increase usability through mobile apps and online portals and reduce operating costs, all through a range of powerful new digital features.
Yet some businesses remain hesitant to adopt virtual card technology. Why? It’s a problem of perception. Businesses - finance departments in particular - associate change with risk and, fearing technical complexity, often shy away from adopting new tech. This is a mistake; there are big value gains to be had with comparably little cost and disruption.
Essentially, a virtual card functions in the same way as a normal credit or debit card, minus the plastic. Making this leap gives companies far more than a bit of extra space in their staff’s wallets. By going digital, the cards themselves can be endlessly reissued, and the rules that govern them quickly reprogrammed, giving a company almost limitless flexibility to shape its spending power to suit its goals.
This means that, unlike plastic cards, virtual cards can be single use. A new card, with a new card number, can be created for every transaction – and still each maintain a direct link back to a single, central bank account for easy and transparent accounting.
One key business advantage of using virtual cards lies in their ability to significantly reduce the risk of fraud. The creation of a new virtual card for each transaction means that, even if sensitive card data is intercepted, it cannot be used to make further payments. What’s more, when a virtual card is ‘spun up’, it is created for a specific payment – referencing the exact amount, merchant, and date range. Payments outside of these parameters simply won’t be authorised, seamlessly protecting buyers from fraudulent transactions without impacting the user experience.
Furthermore, the authorisation framework of the unique virtual card number (VCN) makes payments easily trackable and provides all of the data needed to help merchants reconcile payments with account receivables – increasing operational efficiency on the supplier side.
Virtual cards are uniquely valuable in B2B contexts. Although consumer products were brought to market, the inability to use them for in-store payments and ATM cash withdrawals limited their adoption, and most issuers eventually stopped offering them. As B2B payments are rarely made via a physical terminal (i.e. face to face), this adoption barrier doesn’t exist in the corporate world, prompting many industry experts to predict that virtual card volumes would snowball. Yet, years later, we’re still awaiting the watershed.
[ymal]
The adoption of new financial processes is often a long-term goal. Not unreasonably, many companies, particularly enterprise-scale firms, perceive integration challenges and downtime as both likely and high-risk.
It’s certainly true that any downtime of internal payments systems would be damaging, but the use of dedicated, cloud-based APIs from specialist digital payment firms dramatically reduces these risks – such firms are solely dedicated to ensuring their digital payment systems seamlessly integrate with a business’s existing systems, and remain continuously available.
There is also a common misconception that while virtual cards benefit buyers, their impact on the suppliers is broadly negative. An often-cited issue is that of increased interchange fees borne by the company accepting payment, which can be up to 2.5% of each transaction. This perception deserves to be challenged, principally because it discounts the business opportunities that virtual cards bring to suppliers including dramatic process efficiencies and, perhaps most importantly, improved cash flow from instant settlement.
Virtual cards from issuers like Barclays enable buyers to pay suppliers upfront via a line of credit, without affecting their own cash flow – similar to the process of paying off a consumer credit card payment.
These strategic benefits to both buyers and suppliers, while nuanced, stack up to a compelling value proposition for even the most change-resistant of firms.
The stars appear to be aligning for corporate virtual card adoption. The only real barrier remaining is that of supplier education. To ensure successful take up, issuers, digital payment integrators and buyers alike must share responsibility for communicating their value to merchants within B2B supply chains. Accomplish this and we will finally start to see the levels of adoption this terrific payment technology deserves.
Despite this shift however, the payment card is very much still alive with six-in-ten (60%) UK consumers stating they would not give up their debit card in favour of mobile payments. In fact, a further three quarters (75%) of UK consumers are concerned about the UK becoming a cardless society, where they no longer have access to a physical debit card and can only rely on mobile payments.
Here David Orme, SVP of IDEX Biometrics ASA at IDEX Biometrics ASA, explores the realities of payments preferences in the UK and what financial institutions must do to ensure that we experience a seamless transitions towards becoming a cashless society.
Do you remember coins? When was the last time you actually carried around a pocketful of pennies to pay for something? Given the rapid growth of contactless transactions, mobile payment apps and online shopping, it was probably quite a while ago now. Advancing banking technology, means we are fast moving towards a cashless society. In the UK, cash payments fell behind card transactions for the first time in 2017, while Sweden expects to become the first country in the world to go fully cashless, thanks to a country-specific payment app.
However, despite being hailed as the solution to end our use of cash and cards, mobile payment apps haven’t reached anywhere near the expected level of public adoption in the UK. By 2018, only 13% of the UK population was using mobile payments, due to the majority of the population generally preferring the ease and familiarity of contactless cards.
This is supported by our recent research at IDEX Biometrics ASA, which reveals that six-in-ten (60%) UK consumers would not give up their debit card in favour of mobile payments. In fact, a further three quarters (75%) of UK consumers are concerned about the UK becoming a cardless society, where they no longer have access to a physical debit card and can only rely on mobile payments.
Clearly, the payment card has become a strong part of our daily routine. So much so that, almost two-in-five (37%) of UK consumers stated that as long as they have access to a debit or credit card, the thought of a cashless society wouldn’t bother them. Interestingly, this number even rose to over half (52%) of 25-34-year-olds.
Given this strong evidence that consumers are still loyal to the payment card, it seems that the banking industry is focusing on the growth of the wrong payment technology. As we move towards a cashless world, the future of payments may not be in smartphone apps after all.
There is a clear generational divide when it comes to the acceptance of digital payments. While over half (53%) of 18-24-year olds believe they already live a mostly cashless life, that number plummets to only 19% of those over the age of 55. Similarly, while four-in-ten (38%) of those aged 25-34 believe cash is now obsolete, only 9% of over 55s agree.
In fact, half (50%) of those aged over 55 are continuing to use cash to buy small-ticket items. Young people, however, are so tied to their card that two-in-five (40%) of those aged 25-34 say they won’t shop anywhere that doesn’t accept cards.
One of the greatest concerns surrounding a cashless society is the potential for inequality. Consumers shouldn’t be locked out of the banking system because they are less familiar with new payment methods or have limited access to digital devices. To keep our economy fair and inclusive, our payments system must stay accessible to all. Therefore, as we approach a cashless society, the UK Government and banking sector should reconsider the cashless transition. Instead of the focus on mobile payment apps, banks and financial institutions must adopt payment card technology that is convenient, secure and reliable for consumers of all ages, particularly older generations who still rely on cash.
[ymal]
Consumers are also dismissing mobile payment apps thanks to rising security worries around the new technology and the potential for misuse of mobile payments. Over two-thirds (68%) of respondents still feel more secure using their bank card than a mobile phone to make a payment, while almost three-in-five (58%) fear that if they lost their mobile phone, people would be able to access their bank accounts.
In contrast, half (50%) of respondents say that having their debit card gives them a sense of security. Significantly, four-in-ten (41%) consumers would trust the use of their fingerprint to authenticate payments from their bank card more than a PIN.
Given these concerns, it is evident that payment technology needs to be more secure. It’s time for banks to adopt cards with biometric fingerprint authentication, which can’t be misused without the owner’s fingerprint, even if stolen or lost. Incorporating this advanced biometric technology into payment cards would enhance authentication for transactions and provide all consumers with a safer payment process that offers more reassurance than PINs or apps currently provide.
Although the idea of a cashless society holds many benefits, 55% of consumers actually think a cashless society will be inconvenient. Whether from lack of technology awareness or security concerns, consumers are still fearful of the day when they have to rely on mobile apps to access their money and pay for goods. Given this fear, the financial industry needs to work quickly to enhance payment cards by utilising biometric technology to secure payment authentication, before cash becomes extinct.
Payment cards that provide the convenience of contactless payments with the added security of fingerprint authentication are the key to a seamless transition into a fully cashless society. Such cards will prevent misuse and card fraud, while allowing fast, convenient, secure and direct access to our bank accounts, bringing much-needed reassurance to UK consumers.
UK consumers have made their feelings clear; they are just not willing to give up their payment cards. In a cashless society, cards will still be leading the way – we must future proof them for the next generation of payments now.
Of greater concern is the impact of late payments on the long-term health of the UK economy, which is estimated to have cost UK SMEs at least £51.5 billion in the last 12 months, but the true figure is likely to be much higher.
The new research from Hitachi Capital UK has determined the financial burden on the UK’s 5.6 million SMEs as a result of late paying customers and uncovered the extent to which an epidemic of late and unfair payments is hampering productivity and growth.
Over a quarter of SMEs (27%) have experienced a profit squeeze because of late payments, and 12% have had to defer staff pay, equating to an estimated 1.95m UK employees that are left empty-handed on payday.
With many SMEs already struggling to maintain liquidity, the research highlights the extent to which late paying customers represent a drain on resources. Around 40% of respondents have been forced to use their own money to address cash flow gaps in their business. The vast majority of these respondents (80%) have invested personal savings to keep their business afloat or operational.
Critically, the research exposed a need for SMEs to take measures to maintain cash flow over the course of the year to mitigate damage caused by unreliable customers. Nearly three quarters of SMEs (74%) have had a customer fail to pay during their agreed terms at least once during the last 12 months, and 34% of SMEs report customers using their position to delay or reduce payment.
[ymal]
With 21% of SMEs also turning down a contract because a customer was known to be a bad payer or offering unfair payment terms, the use of external funding options is an increasing necessity to offer a safety net when business is stalling. Today’s research indicates that awareness of potential solutions such as invoice finance remain too low.
Robert Gordon, CEO of Hitachi Capital UK, said: “An imbalance of power between clients and suppliers, often driven by larger players abusing their position, has led to a widespread late payment culture that is damaging UK SMEs. As our research has shown, if we let this go unchecked, huge numbers of businesses will continue to experience cash flow pressures at a time of wider economic uncertainty.
“This has ramifications not only for SMEs, but for entire supply chains and a fair, competitive and supportive business environment is critical for the country’s wider economic success. It’s imperative that we not only acknowledge this issue and crack down on late payments, but also take practical steps to ensure businesses are given the required support and penalties are put in place for the worst offenders.”
The findings come amid a range of new Government measures – proposed by the previous Government but currently on hold – of tougher sanctions to address late payments, including greater powers for the Small Business Commissioner to enforce best practice and revisions to the Prompt Payment Code. Of those surveyed, over two-thirds of SMEs (68%) would support legislation making it illegal to miss a payment deadline, with over half of respondents (57%) spending nearly a day a week chasing outstanding invoices, suggesting that late payments are contributing to the productivity deficit within the UK economy.
In analysing the sector landscape, professional services was identified as one of the worst offenders, with 17% of SMEs identifying this grouping as a leading culprit for late payments.
The South East was the region with the highest proportion of SMEs reporting financial issues caused by late payments, representing 18% of the total number of responses, followed by Greater London at 16%.
Andy Dodd, Managing Director, Hitachi Capital Invoice Finance, added: “As one of the UK’s leading finance providers, we understand first-hand the impact that late payment can have. Many SMEs struggle to maintain liquidity and this remains an underlying threat to their personal finances and ultimately the survival of their businesses.
“Fortunately, there are a number of solutions available to small businesses. Firstly Invoice Finance which provides an immediate advance, normally of up to 85% of the invoice value, to provide instantaneous cashflow injection. Secondly, using a good credit control provider, perhaps aligned to Invoice Finance – it’s an area that frequently neglected, but should be front-of-mind amongst SMEs.”
But as the digital payments ecosystem continues to expand, it is becoming increasingly apparent that ‘payment tokenization’ solutions, such as network tokenization, can address the urgent need for increased security and reduced complexity, while promoting enhanced consumer experiences. Here Andre Stoorvogel, Director of Product Marketing at Rambus Payments, explains for Finance Monthly.
Tokenization solutions can be broadly divided into two categories: security tokenization and payment tokenization.
Security tokenization (also known as acquirer tokenization or non-payment tokenization) approaches have traditionally been used to protect cardholder data and personally identifiable information (PII) stored in merchant databases. This is needed to enable popular consumer payment methods such as recurring billing and one-click ordering.
In comparison, PCI tokens are security tokens that comply with PCI guidelines to meet PCI DSS standards.
The publication of EMVCo’s EMV Payment Tokenization Specification – Technical Framework in 2014 marked the introduction of ‘payment tokenization’ to the ecosystem, and was followed by an update in 2017. The aim? To enhance the underlying security of digital payments by replacing primary account numbers (PANs) with unique EMV payment tokens. Network tokenization is a type of payment tokenization where the payment network plays the role of the token service provider (TSP) to generate tokens.
Although EMV payment tokenization found immediate success in securing in-store mobile contactless payments, Consult Hyperion predicts that it is online payments that will deliver ‘the real volume’. The question is, what differentiates network tokenization from security tokenization?
Proprietary security tokens are designed to protect sensitive information when it is ‘at rest’ within a merchant’s database after a transaction has been completed, reducing the risk and impact of a data breach.
The problem is, sensitive data is vulnerable throughout the entire payment processing chain. Not just at rest.
Neither proprietary or PCI tokens protect the consumer data while in transit or in use, introducing opportunities for fraudsters to hijack data through phishing attacks, malware and more. The rapid growth in card-not-present (CNP) fraud, despite ever-increasing investment in fraud protection, demonstrates a more fundamental, holistic approach to payment security is needed.
Below are three ways in which network tokenization can help meet those needs:
The main benefit of network tokenization is that card details are protected throughout the entire transaction lifecycle.
Network tokens can be restricted in their usage, for example, to a specific device, merchant, transaction type or channel. With the proliferation of new payment methods, such as online, IoT and voice, the ability to limit and control how network tokens can be used is key to preventing cross-channel fraud.
Since network tokenization protects card details throughout the entire transition lifecycle, issuers treat network tokenized payments as inherently more secure than non-network tokens. This can deliver numerous benefits downstream and address key pain points for merchants, by limiting fraud prevention spend, increasing approval rates and reducing false declines.
This trio of benefits are not the beginning, middle and end, however… there’s more.
As well as escalating security challenges, merchants must also deal with spiralling complexity.
Security tokens are limited to specific relationships, such as between a single acquirer and merchant. As the digital payments ecosystem expands, the burden of managing different proprietary tokens from multiple acquirers, payment service providers (PSPs) and gateways will become increasingly challenging.
The good news is that network tokens are globally interoperable across multiple acquirers and gateways. With the growth of omnichannel retail, consistency across different acceptance environments is a significant value-add.
We must also consider the backend impact. Security tokens are not formatted as routable PANs, so cannot be accepted as a like-for-like ‘replacement’. Network tokens are in the same format as a regular PAN, so can be accepted and routed along the normal payment rails without impacting the existing merchant systems.
Hampered innovation is one of the hidden costs of fraud. Merchants want to spend their time, effort and resource on better consumer experiences, not tackling fraud.
It is true that security tokens can be effective in specific scenarios. Network tokenization offers more than just security, however, and can also be utilized to enhance the buying experience.
Digital card art to increase brand recognition, the ability to instantly refresh card details, push provisioning to enable consumers to keep track of where and when their payment credentials are being used. All these features complement the security proposition to increase convenience and reduce friction.
Although often referenced interchangeably, it is apparent that security tokenization and payment tokenization solutions (such as network tokenization) are very different propositions. Both are effective solutions for their defined purposes, but we should look to network tokenization as a foundational technology enabling secure, simple digital commerce through end-to-end security, global interoperability across different acceptance environments and value-added services.
The average American has a credit score of 704. If your Fair Isaac Corporation (FICO) score is around that number, that’s fantastic. But even though that’s a pretty healthy figure, there’s still plenty of room for improvement. And if your score is lower than that, don’t lose heart. You can do plenty to bring up your credit score - it all boils down to making the right financial choices over time.
If your credit score is lower than expected and you’re not sure why, it’s a good idea to get a copy of your credit report. This document spells out all your credit-related activities. You should be able to get a free copy of your credit report each year and Best way to repair credit from either Experian, Equifax, and TransUnion.
Go through the document thoroughly to check for errors or fraudulent activity. If you don’t find any, you should be able to find out what’s affecting your score, such as late payments, repossessions, and so forth. By having a clear picture of your credit standing, you’ll have a better idea of how to improve it.
Your payment history shows potential creditors how reliable of a borrower you are, as they’re indicative of how you’ll be paying in the future. Doing something as simple as paying bills on time can make a significant positive difference to your credit score. Conversely, paying late — or less than the agreed-upon amount — can damage your credit score.
Your credit card bills are the most important when it comes to your credit score, but this can also be affected by your other bills, such as student loans, rent, and even your phone bill. To make sure that you don’t miss any deadlines, you can set up automatic payments or calendar reminders to help you stay on schedule. If you’re behind on payments, try to catch up as soon as you can.
Your credit utilization ratio (or credit utilization rate) measures the balance you owe on your credit cards relative to your credit limit. If your credit limit is $10,000 and your current balance is $5,000, your credit utilization is 50 percent. A high utilization ratio shows that you could be overspending, which is why it can damage your score.
To improve your credit utilization ratio, the best thing to do is paying off your debt. And if you have any unused credit cards, keep them open — especially if you’re not paying any annual fees. You can lower your ratio by getting a higher credit limit. There are two easy ways to do this: either by simply asking your credit card provider for a higher limit, or even applying for another card. (However, it’s important to note that this could tempt you to spend even more than you can afford to pay back, wreaking more havoc on your credit score.)
Your payment history and credit utilization ratios are two of the most important factors when calculating your credit score. Together, they make up to 70 percent of your credit score, so keeping these two in check is crucial. It takes time for your credit score to improve — late payments, for example, stay on your credit report for seven years. But the sooner you get started, the better.
By now, cryptocurrencies acquired an army of investors and true believers. It is worthy of note that regardless of the market conditions, the top 3 cryptocurrencies remain the unchangeable leaders. What makes Bitcoin, Ethereum, and XRP so valuable?
Created in 2009, Bitcoin is the first peer-to-peer digital currency, which the world has ever seen. Being a father of cryptocurrencies, Bitcoin has the first-mover advantage, it can’t lose. Regardless of 2,000 altcoins available on the market, investors do not stop to purchase Bitcoin, keeping it at the top of the list.
Ethereum’s road was rough throughout 2018 having lost 85% of its value. Despite this fact and despite the competition from other smart-contract based altcoins like NEO and EOS, Ethereum remains the second-largest cryptocurrency.
XRP rounds out the top 3 largest cryptocurrencies by market capitalization. XRP is one of the cheapest and fastest coins available today. Despite accusations from cryptocurrency enthusiast concerning its centralized character, XRP entrenches oneself in the top and has never claimed to be decentralized one.
1,500 transactions per second is an impressive result, especially in comparison with the scalability of other cryptocurrencies or even with common money transfer systems, used by the banks. Upon that the cost of the instant transaction regardless of destination point is over 50% cut down. Initially, Ripple was focused on financial institutions and banks with prospects to become the major payment system. Therefore, not cryptocurrencies, but dominated transfer systems like SWIFT and VISA are its main rivals. Working on the improving transaction speed, the XRP development team reached the unparalleled scalability of 50,000 transactions per second outperforming VISA capacity twofold.
Multiple banks and credit card companies are already collaborating with Ripple, hundreds of other bank institutions are looking for a partnership with it. Backed by the financial sector and constant increase of the user number, XRP will strengthen the position in the crypto market.
This week Finance Monthly hears from Simon Rodway, a solutions architect at Entersekt, on the potential and realistic impacts of Libra on the traditional banking system.
The social media giant Facebook announced in June that it has developed a cryptocurrency dubbed Libra and plans to launch it early next year. While some may dismiss it as just more hype, the sheer dominance of Facebook in people’s social lives gives it huge potential to disrupt banking and payments as we know it today.
The company claims that Libra will improve the way we send money online, making it faster and cheaper, as well as improving access to financial services – even for those without bank accounts or limited access to traditional banking. It will be based on a blockchain platform called the Libra Network and Facebook says that it will run faster than other cryptocurrencies, making it ideal for purchasing and sending money quickly. Importantly, Libra will not be managed by Facebook itself; rather, by the Libra Association – a not-for-profit organisation comprised of 28 companies (so far) from around the world such as Paypal, Lyft and Coinbase. It aims to sign up 100 companies by the time the cryptocurrency is launched.
One thing’s for sure: it’s going to be an interesting development to watch, especially in the wake of Facebook’s cryptocurrency wallet company Calibra’s David Marcus presenting his testimony to the United States Congress banking committee. The result was that Facebook would “take time to get this right” and there would be no launch until all concerns could be fully addressed.
So, even though it’s still early days, Libra has given us a lot to think about. Ill-informed speculation and click bait aside, there are legitimate concerns around fraud – with reports already of over one hundred fake domains being set up relating to Libra. There are also the money laundering and financial risk concerns.
In terms of the impact and financial risk, most of what we’re hearing is coming from within the more established financial sectors. They’re either dismissing Libra as noise or decrying it as a vehicle for potential terrorist activities – something, they say, that regulators won’t allow to happen, despite Calibra openly reporting its intention to work with said regulators and policymakers to ensure the platform is secure, auditable and resilient.
At the same time, of course, they’re defending the current system, claiming that it works well, is safe and secure, and doesn’t support terrorism. But, if we’re honest, Anti-Money Laundering (AML) systems have, to date, been largely unable to stop the vast amounts of laundered funds from moving around. In addition, our Know Your Customer (KYC) and Know Your Business (KYB) processes use data from the likes of Companies House, which has been heavily criticised for their own lack of data validation and governance.
All that aside, what’s become quite clear is that the existing system presents too many blockers for the poorer, under-banked members of our society. Those working in the UK, for example, and legitimately wanting to transfer their wages to their families in other countries, end up paying exorbitant banking fees, only to wait days for their funds to clear.
This is where Libra, with its vision for financial inclusion, could make a difference. And if Libra doesn’t make it happen this time around, the technology and conceptual design are essentially open source, so someone else will. The wheels are in motion, and financial institutions that ignore the trend do so at their peril.
Two thirds (66%) of people rate safe and secure payments as most important in the online checkout process, with only one in ten being most concerned about speed or simplicity. Security ranked highest across all age groups, and was a particular concern for over 55s (75%) compared to just over half of 18-24 and 25-34 year olds (52% and 53% respectively).
The survey, conducted online with YouGov, also revealed a further 76% of Brits would be willing to accept a slower or less convenient checkout experience in return for greater payment security. Meanwhile, almost half (45%) said security concerns about online payment processes were the reason most likely to put them off using a particular online retailer, more so than having to create an account (14%), a confusing process (8%), or too many steps during checkout (6%).
Keith McGill, head of ID and fraud at Equifax, said: “With more than 20% of retail revenues coming from online sales*, it’s positive to see so many consumers have security front of mind when they’re at the online checkout. The latest stats from Cifas do however show an increase in identity fraud** so it’s important shoppers remain vigilant. If you have any doubts about the professionalism of a website you should always think very carefully before entering your personal or payment details.
“New European wide regulations are on the horizon which will require two stage verification for any online purchase for more than 30 euros, similar to the security checks used for online banking. While this might feel like an extra hoop to jump through, it’s an important step forward in the ongoing battle to fight fraud.”
(Source: Equifax)
But when is it sensible to use a card and when to save? MoneySuperMarket data shows that the usage of credit cards seems to be growing, and have recently conducted a study to identify how much you’ll actually pay on average based on the size of the payments you’re making, the average monthly repayment possible, and the average interest involved as a result.
Alongside the credit card payments, the research highlights how long it would take to make each payment by saving up a monthly average of £352.31 (based on average earnings of £1,827.10 a month, and average expenditure of £1,474.79 a month) – so you can compare whether it’s a better option to save up or to use a card.
With the average person being able to save around £350 a month, there’s minimal difference in terms of time and total amount spent for a purchase under this amount – whether you’re saving or using a credit card. But the interest does take an effect at higher costs. On a credit card payment of £600, for example, you would on average pay £17 in interest, taking two months to pay it off. At £5,000, the interest reaches up to £931 over 17 months of repayment, against 14.2 months of saving with no interest.
The research suggests that while you could save up for a bespoke suit in 2.7 months and save yourself £36 in credit card interest, for a train ticket you might be better off paying on your credit card – as you’ll still have to travel while saving, and the costs of individual tickets is likely to be higher than the £8 you would save in credit card interest.
Buying a winter coat on a credit card can be a sensible choice as lower payments that can be paid off immediately, without any interest, will contribute positively to your credit rating.
Even at higher costs, holidays can be a smart choice for a credit card. Despite the average £2,417 spend accruing as much as £208 in interest and taking just over two more months to pay off than to save up, credit cards can provide security on payments, meaning you’re better protected against problems with flights and hotels.
More affordable equipment like a mountain bike or sports trainers can be paid off quickly and improve your credit score without accruing any interest, but for a football season ticket, which you can plan to buy well in advance, there’s no significant advantage to buying on card. Instead of paying the additional £27 in interest over three months, you’re better off spending the average £794 after saving up for 2.3 months.
A high-end smart phone like the iPhone could cost nearly £50 in interest on a credit card, making saving up the better option. But for a cheap laptop, it might be much lower interest of around £15 or less – and many retailers offer finance options for smart phones and laptops, making it sensible to research your shopping before you buy.
Weddings are expensive events – so it makes sense to split up the cost as much as possible. Saving up for purchases like the dress and photography, and putting the cheaper payments such as cake and groom’s outfit on credit card, may be the best way to minimise interest payments. Using a card to cover the venue can be helpful as well, as this can protect you against any last minute problems.
While the study provides some details of smart ways to use your credit cards, some of the top tips include:
It is essential that you improve your credit score prior to applying for a mortgage in order to boost your chances of getting one.
Here are a few ways that you can bump up your credit rating with the help from Howells Solicitors:
The first, and most obvious, point to make would be to start paying your bills on time, or in advance. This is one of the biggest contributing factors to getting a good credit rating. Paying your bills late will give your bank a reason to tell everyone that you’re not trustworthy enough to lend money to, and therefore bring your score down.
Again, not too far away from point one but your monthly phone bill contributes heavily to your credit score. While it may only be £20/30 a month, ensure that there is enough money in your bank to pay this.
Usually, network providers give you a few days’ notice if the payment does not go through as they are aware that there could be a number of contributing factors (closed bank, new bank, fraud, etc.), but you should realistically always leave enough money in your account to pay this by direct debit. The smoother the transaction goes, the higher the rating gets.
If you don’t have a credit card, then it might be worth getting one. If you make small purchases on your credit card and pay them back on time, or before the due date, it shows your bank that you’re reliable and can pay back things on time.
Think of it this way; would you be more likely to lend money to someone that has no history of paying things back, so you have no idea whether you’ll get the money back or not, or more likely to lend money to someone that you know has a great history of paying people back on time?
You should sign-up to a free credit report checker, such as Experian, which sends you monthly emails. This way, you will be made aware of any changes and can dispute any errors that have been made that reflects your credit in a bad light, however there is no need to run multiple, full credit checks
Closing any unused bank accounts can improve your credit score. If you opened a bank account back in the day, and you haven’t touched it since, then take the money out that is currently in there and close the account. If you have more than one credit card, then you should consolidate the debt on just one.
For further information on whether your credit score will affect your chances of getting a mortgage, or further information on how you can improve your credit score, check out this FAQ Series by Howells Solicitors, or contact the team for guidance using the contact form on their website.
They're not called Zuckerbucks but Facebook just reinvented digital money. Facebook's Libra cryptocurrency that will launch early next year is more like PayPal than Bitcoin — it's designed to be easy enough for everyone to use. But it's still complicated to understand so I'm going to break it down for you nice and simple.
