In today's Budget the Government has announced that banks are to
be encouraged to provide free basic bank accounts to all UK
citizens. This is being introduced as a way to help the large
portion of the UK population - estimated to be approximately 1.75
million people - that don't have bank accounts to join 'mainstream
society' by being able to receive pay checks and pay bills with
greater ease.
This is a step in the right direction and we agree that
'financial inclusion' is a key issue. Our customers are a mix of
banked and unbanked and so we appreciate the different issues
affecting people and how bank accounts can bring many benefits to
those that are currently unbanked.
There are some essential issues that consumers should continue
to consider when they are deciding on payment methods, whether they
have a bank account or not.
As experts in alternative payment methods, we think that there
are numerous reasons why consumers will still be keen to use cash
when shopping, both on the internet and in shops across the
country:
Anonymity when purchasing
Using alternative payment methods such as Ukash means that all of
your purchases are made anonymously. We think that consumers often
want to be free to make the purchases they want without sharing
financial details. People's fears regarding the 'Big Brother state'
confirm this and most consumers aren't comfortable with companies
holding details about them, so using cash to pay online means you
can shop and keep your details private.
Fears of identity fraud when paying online
Even though banks and credit card companies continue to improve
security, a high volume of online fraud continues to be reported
which costs millions of pounds a year to consumers and to financial
institutions. Many people fear shopping online as a result of this,
which is why we think people should be able to shop without
providing financial information, by using cash. This means there is
no risk of consumers becoming the victim of cyber fraud.
Not all bank cards allow you to shop online
Depending on who you open a 'basic bank account' with, you may not
be able to use your bank card to shop online. The banks offer a
variety of different debit systems, for example Visa, Maestro, Visa
Electron and Solo, and some of these are more widely accepted
online than others. This means that you should be careful to select
a basic bank account that allows you to spend as widely as possible
online to provide you with as much convenience as possible.
The need to have money in your account when Direct Debit
payments are due
For many people Direct Debit is an easy way to pay your bills. It
means that money is taken from your account on a monthly basis to
pay your bills and is a convenient method of payment. However,
there are times when you are paid late, or when you have made an
exceptional purchase, that you don't have the money in your account
at the time when the payment comes out. This can result in charges
to your account, which you don't have to worry about when paying
with cash.
By using your own cash you are better at budgeting and don't
need overdrafts and credit cards
Many banks offer consumers overdraft facilities and credit cards
which allow you to borrow from the bank in order to complete
purchases. Consumers often have an overdraft or credit card
facility for exceptional circumstances or as a security measure in
case of an emergency, but it is very easy to use these facilities
too readily and run up debt. Generally, by using cash, people are
much better at budgeting, which means there is less risk that they
will go into debt and end up owing the bank money.
The popularity of using Ukash to shop online safely using cash
proves that a huge number of people, not only in the UK but around
the world, fear using credit and debit cards. It shows that many
people still prefer to use cash, even when shopping online.
Although this alternative payment method has developed rapidly
over the last few years there is still more to do. For example, it
is true that many consumers that do not have bank accounts cannot
benefit from special offers that are available online.
We believe it is right that the entire population should be able
to pay their bills and do their shopping online, and it is unfair
that they cannot currently do that using a secure payment method
that allows them to use their cash to do so.
This is why we are calling on utilities providers and mainstream
retailers to accept new and alternative payment mechanisms to allow
people to use their cash to shop online. We think that the
government shouldn't just be encouraging people to have bank
accounts, but that they should be encouraging more companies to
accept cash as payment - even if that is over the internet - which
is why we created Ukash: to enable anybody, anywhere in the world,
to shop safely online.