Paying the price of accountable payments

Adrian Buckle of Payments UK looks at the advantages of developing payment methods in schools and how it can incorporate accountability, assurance and safety.

The payments industry is fast paced, and ever growing, and affects every type of organisation, and every person in the country, including schools. The UK is a global leader in the payments industry as a result of our world class payments system, which offers so much choice.

Figures published in a report by Payments UK shows that new payment methods are becoming increasingly popular, driven in part by changes such as Transport for London (TfL) enabling contactless payments on tube journeys in London. The Near Field Communication (NFC) technology that underpins contactless is starting to be seen more widely than simply on plastic cards too, with high profile launches in this area including Apple Pay and Android Pay.

Last year, Payments UK informed Education Business readers about the variety of different, alternate payment methods that were open to them, which could make life easier for parents and their children, as well as the schools themselves (Education Business 20.7). Much focus has been put on the pros and cons of new payment methods, and understandably, there is still an element of unknown for many people, who worry about how new ways to pay could be misused, or about the level of security they offer. Here, we explain why alternate payment methods not only make payments easier, but why they are just as safe as traditional payment methods.

Tracking trends
Figures by Payments UK show that around half of all cards in the UK had contactless functionality at the end of 2015. More than three times as many contactless card payments were made in 2015 than in 2014, with one billion contactless payments made, accounting for almost three per cent of total consumer card payments. We only expect this figure to rise over the next 10 years, and by 2025 we predict contactless payments will amount to 25 per cent of total consumer payments, with customers also making use of the Samsung, Apple and Android pay NFC technologies.

More businesses are beginning to tap into contactless technology, and at the end of 2015, there were just over 0.3 million contactless enabled terminals in the UK. Currently, the spend limit on contactless technology is set at £30. Fraud on contactless cards and devices remained low during 2015, out of spend of £7.75 billion, there was £2.8 million worth of losses, according to figures produced by Financial Fraud Action UK (FFA UK).

New technologies
Paym is a simple and secure way to send and receive payments directly to a current account held with a participating bank or building society using just a mobile number, and eliminates the need to ask for an account number and sort code. Paym has been developed by the people who run the services that move mobile and internet banking payments between the UK’s banks, and built to the highest possible security standards. The system is available through your usual online banking app that you already send and receive your money from. Originally designed for p2p payments, Paym is now available to businesses via five banks. You can register multiple mobile numbers to one account, making it easy for businesses and schools to access the account, and depending on the bank, the recipient will get a text to confirm a payment has been successfully made.

There are also many other online payment systems, which offer secure payments, tailored specifically for school and have already been implemented with success. Examples include ParentPay, which is currently used over 6,000 schools across 200 local authorities in the UK, and ParentMail, which offers parents an account from which they can pay the school, view when payments are upcoming, and allow for cash and cheque payments to be made.

Accountability, assurance and safety
Over and above specialist products aimed directly at schools, technology that we take for granted such as the internet – and increasingly – mobile banking have great potential for use in schools. The convenience of online banking is demonstrated by results from Payments UK’s National Payments Study. In 2015, more than two out of three account holders (69 per cent, up five per cent from 2014) used online banking to manage their current account, while mobile banking services (typically through an app) were used by one in three (up four per cent from 2014).

Electronic payments can also be easily traced by the sending bank, cash payments have no trail. In cases of depute over payment between the school and the parent, alternate payment methods can not only provide proof of payment, but a sense of accountability. Yet it is important for you and any parent that uses these payment methods to take steps to protect from fraud and mistakes.

Electronic payments, such as mobile and online banking payments, are addressed using just the sort code and account number. Yet new research conducted for Payments UK found that more than half of people (55 per cent) incorrectly believe the recipient’s name is checked, a further 15 per cent think the recipient’s debit card number is used and just over one in twenty (six per cent) even believe their post code is checked.

With that in mind, Payments UK has produced new advice on how to avoid making errors. The new guide, published as part of Payments UK’s Pay Your Way consumer advice campaign, explains how to make electronic payments correctly, how to prevent mistakes from happening and what steps customers can take if they mistakenly send a payment to the wrong account.

How to protect yourself
It’s vital to stop and think about the process you normally go through to make a payment to someone – be suspicious if it differs from the last time you used it.

You should also think about the circumstances in which you are being asked to send money – be particularly wary if you are asked to send money by someone you do not know.

Another increasingly common tactic for fraudsters is to target individuals and businesses with unsolicited emails, calls or home visits claiming to be from your bank, the police or someone else you usually deal with. Fraudsters sometimes try to trick people into making a real payment by claiming ‘it’s just a test’ or money needs to be ‘moved to a safe account’ or ‘handed to a police officer’.

Your bank will never request login details or passwords in full over the phone or by email so never give anyone your details in this way. If in doubt, talk to your bank either in branch or on an advertised number.

Traditional payment methods
Cash payments still remain popular, especially when it comes to those on a lower income who need help budgeting their money, and cash payments still made up 45 per cent of payments in 2015.

However, for schools, removing cash not only reduces administrative time spent handling cash, it reduces the security risk of cash being left on site.

For parents, alternative technologies also offer assurance, that the money they give to their children is being spent on what they intended it to be for, as well of decreasing the chances of money being stolen from their child and other dangers associated with carrying money in schools such as bullying.

Cheque usage has fallen from the peak of four billion cheques written in 1990, however, plans are underway to enable banks to process cheques using electronic images taken on your smartphone.

This new technology will allow cheques to clear quicker than the current six working days, bringing them up to date with the current payments environment.

In addition, cheque fraud accounted for only three per cent of total 2015 financial fraud losses in the UK last year.

The above are just some of the ways that alternate payment methods can help improve life for both school leaders and parents alike, giving both confidence and a more secure option of payment, that said, cash and cheques will be around for as long as people want them. Choice for the customer is the most important aspect.

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