Payment methods

What are the different types of plastic cards available? How do cheques work? What are direct debits, direct credits, standing orders and faster payments?

This factsheet explains the main methods of making payments in the UK. 

Plastic cards

Debit Cards
When you use your debit card the money you spend is taken directly from your current (or in some cases, savings) account. As long as you have enough available funds in your account you can use your debit card to buy things in person, over the phone, by mail order and over the Internet. It also enables you to withdraw money direct from your account using a cash machine and may have a cheque guarantee function.

Credit Cards
A credit card allows you to pay for goods and services with credit up to a limit agreed with your card issuer. You have to pay back what you borrow - the costs and terms and conditions will vary from card to card. Most credit cards give some period of interest-free borrowing for purchases so long as the bill is paid in full by the payment date.

Chip and Pin
Chip and PIN was introduced in the UK as part of a global programme to tackle increasing levels of plastic card fraud. Some people may have difficulty using a PIN due to a disability or impairment. If this is the case for you then you should speak to your card issuer about alternatives to chip and PIN.

See Pay UK or for more information on debit or credit cards.

Contactless Payments
Contactless is a way to pay by card for purchases costing £100 and under, without having to enter a PIN. This technology is becoming increasingly common. Contactless is available on debit, credit, charge and pre-paid cards.

Visit UK Finance for further information.

Store Cards
A store card works in exactly the same way as a credit card, but can only be used for purchases made in a shop (or group of shops under the same ownership) associated with that card.


Cheques used to operate within a clearing cycle known as 2-4-6 (or 2-6-6 for savings accounts). These set the maximum timescales (in working days) for when customers will start earning interest on the money paid into their accounts, when it will be available for withdrawal and when they can be sure that the money is theirs.

Cheques now clear through an image-based cheque clearing system that speeds up cheque processing significantly. Typically, if a customer pays in a cheque on a weekday (before their bank or building society’s advertised cut-off time) they will be able to withdraw the funds by 23.59 on the next weekday (bank holidays excluded and provided the cheque doesn’t bounce). However, some banks and building societies may allow their customers to access their funds earlier than this.

The advertised cut-off time will vary and will be affected by how the cheque is paid in - for example: over the counter, by post, through an ATM or by mobile banking app or desktop scanner linked to online banking.
Customers should talk to their bank or building society for more details.

More information on image-based cheque clearing is available from Pay UK

Automated payments

Direct Debits
A Direct Debit is an instruction from a customer to their bank or building society authorising an organisation to collect varying amounts from their account, as long as the customer has been given advance notice of the collection amounts, dates and frequency of payment. All banks and building societies that operate the Direct Debit Scheme are committed to provide the Direct Debit Guarantee for customers.

Direct Credits
A direct credit payment is an electronic payment straight into a business or individual’s bank account. 90% of UK salaries are paid in this way and funds are cleared and available the day they are credited to the account.

Standing Orders
A standing order is an instruction you give to your bank or building society to make payments, usually on a regular basis, to a specified third party’s UK bank or building society account.

Faster Payments
All UK banks and building societies are now able to send and receive Faster Payments. You can use the service to make electronic payments via internet or phone banking, or at a bank branch. Faster Payments enables you to transfer money between accounts, pay a bill, a business or another person almost instantaneously - seven days a week, 24 hours a day.
Each bank or building society has a limit on the amount of money that can be sent using Faster Payments

See Pay UK or www.bacs.co.uk for more information on automated payments.


Several UK banks and building societies offer Paym. This allows you to make payments using just a mobile telephone number. If you and the person you wish to make a payment to have both registered to use this service you will not need to know their account number or sort code.Paym will close permanently on 7th March 2023.

See Paym for more details of the decision to end this payment method.


Simon Rex