Amazon has become the latest major retailer to introduce Pay by Bank for customers buying products or setting up Prime subscriptions, but consumer experts warn it lacks vital card protections
Amazon has become the latest major retailer to introduce Pay by Bank for customers buying products or setting up Prime subscriptions, but consumer experts warn it lacks vital card protections
A consumer champion has issued a warning regarding Amazon’s latest payment feature. Pay by bank represents a novel way to shop online without the need to input card details.
This week, Amazon joined a growing list of major retailers offering this payment method for customers purchasing items or subscribing to Prime. The system allows shoppers to transfer funds straight from their bank accounts to merchants, bypassing the need for credit or debit card information entirely.
Alongside Amazon, numerous household names have adopted the option, including Ryanair and Just Eat. For consumers, this new approach offers both speed and ease, removing the necessity of having a physical card to hand when making purchases.
Retailers benefit too, enjoying reduced transaction charges. However, despite its growing adoption, consumer rights advocate Scott Dixon has raised concerns with Sky Money about the safeguards customers forfeit when opting for this payment method.
He warns it strips away or weakens vital consumer protections – namely Section 75 and chargeback rights – two of the strongest recourse mechanisms available to British shoppers. This leaves buyers vulnerable should a retailer collapse, refuse refunds or supply defective products, effectively leaving them without protection.
The advice has been seconded by consumer group Which?, stating that businesses find it beneficial as they can sidestep card transaction fees and enjoy immediate receipt of customer funds. It highlighted the advantages for consumers too – refunds can be processed instantly, and most importantly, card details aren’t shared during a transaction, thus eliminating the risk of theft or compromise.
Which? pointed out that while all purchases are protected under the Consumer Rights Act, ensuring any goods you buy must be fit for purpose, as described and of satisfactory quality, ‘these protections are not always easy to enforce’. The consumer group explained: “In the event an item arrived damaged or not as expected a retailer should refund you under the Consumer Rights Act – but if they refuse your only recourse would be filing a claim in the small claims court, which can be an expensive and time consuming process.
“In contrast, a shopper using a credit card for these purchases would benefit from Section 75 protection, so long as the transaction was for more than £100 and less than £30,000. Under Section 75, a credit card company is jointly and severally liable for the purchase, meaning they would have to refund you if you couldn’t recoup your costs from the retailer. Similarly, those using a debit card or a credit card for purchases of any value would have protections via the voluntary chargeback scheme.”
Jenny Ross, Which? Money Editor, said: “Innovations like Pay by Bank present opportunities for businesses and consumers alike, but they’re not without risk, particularly as they lack the rigorous purchase protections you get when paying by card.
“We’re calling on the regulator to act to ensure consumers can use Pay by Bank with confidence, but in the meantime, we’d urge consumers to think carefully before using it to book events or make substantial purchases – for now, your good old-fashioned credit or debit card may be the best option.”
Mr Dixon recommended avoiding bank transfers, especially for higher-value items including holidays, electronics, vehicles and furniture, advance bookings such as concert tickets or hotel stays, and transactions with sellers you don’t know. When spending more than £100, he suggests the most robust safeguarding arrives from putting at least the deposit on a credit card.
For amounts below £100, you ought to use a debit card to access chargeback protection, which provides cover for up to 120 days following the transaction date, he explained.
Amazon has been contacted for comment.
