Different Ways to Pay: Pros and Cons

In our modern world, there are endless ways to pay for goods and services. In the past, cash and cheques were king. Today, debit and credit cards, in their many forms, are used most often. But there’s still a place for different options as each one has its advantages and disadvantages. If you’re on the fence about the best ways to pay, here’s a round-up of the most common methods.

Cash

Pros

• Cash is an instant payment method with no need to wait for processing.
• Most venues accept cash and some small businesses prefer this as they can avoid costly fees.
• There are no transaction fees with cash which is beneficial for buyer and seller.
• Cash payments leave no digital trail so they are more private and secure.

Cons

• Holding onto cash can be a security risk as it’s easily lost or worse, stolen.
• Cash payments can be harder for businesses to track when it comes to bookkeeping.
• Businesses need to hold onto different monetary denominations to give the right change.

Debit cards: Chip and pin

Pros

• Using a unique password means transactions are more protected and secure.
• Most businesses, especially larger ones, accept chip and pin technology.
• Payment is immediately taken from the buyer’s account with limited processing time.
• There’s no need for the buyer to carry around cash at the risk of losing it.

Cons

• Having to enter a pin takes more time which could slow down queues during busy periods.
• Chip and pin is still susceptible to fraud if someone gets hold of your details.
• This payment method is reliant on your bank’s system and having sufficient funds.
• Card owners can easily forget their pins which means they can’t purchase goods.

Debit cards: Contactless

Pros

• Simply tapping a card is extremely quick and convenient for fast checkouts.
• Most venues accept contactless payments, especially businesses with basic card readers.
• There’s less contact which is good for avoiding the spread of germs and illnesses. 
• You don’t need to remember a pin (which is great if you're forgetful).

Cons

• Criminals who steal cards can make small payments without a PIN.
• There are caps on how much can be spent in contactless transactions, preventing big purchases.
• Although unlikely, cards can be unintentionally read if they’re too close to a payment terminal.

Credit cards

Pros

• Credit cards allow people to temporarily borrow funds which can help with cashflow.
• Most credit cards offer rewards programmes like points, cashback or discounts.
• Using one helps to establish and build your credit score which is vital for any lending.
• They typically offer better buyer protection meaning you get your money back if fraud occurs.

Cons

• Depending on the type, interest rates can be high and late-payment charges rack up.
• It’s easy to spend beyond your means which could result in financial difficulty.
• Some cards require an annual fee and you may be charged for using them abroad.
• They are still susceptible to fraud in the same way as other payment cards.

Fuel cards

Pros

• Business owners can use these to manage, restrict and track fuel expenditure
• There’s no need to collect paper receipts and manually input expenses.
• Employees don’t need to use personal funds for fuel as it’s covered by the business.
• Employers can set spending limits and restrict cards to a person or registration to avoid fraud.

Cons

• These are typically only suitable for business use, not individual people.
• Fuel cards are often restricted to certain petrol stations so can’t be used everywhere.
• Some fuel card providers include additional costs like surcharges or fees.

Android or Apple pay

Pros

• Much like contactless, mobile payments are completed quickly with a tap.
• They are often secured with fingerprint or facial recognition and encryption.
• Often contactless caps don’t apply to mobile payments.
• You don’t need to carry cash, card or even a wallet.

Cons

• They rely on your phone so if you run out of battery or it breaks, you can’t pay.
• Although most places offer mobile payments, they aren’t yet universally accepted.
• Your data is stored electronically by tech companies which could be a privacy concern.
• Technical issues or malfunctions could mean transactions fail.

Buy now, pay later

Pros

• Borrowing temporarily or paying in instalments benefits people without the full funds.
• There are plenty of interest-free plans, if payment is made on time.
• Businesses which offer this could increase sales by appealing to people who can’t pay upfront.
• The approval process is faster than traditional credit cards.

Cons

• Regularly using these services could lead to overspending and debt.
• Late fees and interest rates can be high and unmanageable.
• Missing payments could negatively impact your credit score.
• Business owners may be charged fees to offer this service.

Conclusion

Now you can see clearly that all payment types have their strengths and weaknesses. When paying with funds from your bank, a contactless debit card or mobile payment is likely the most convenient and secure. If borrowing funds or paying in instalments is necessary, look for an interest-free credit card that offers perks and a loyalty scheme to get the most out of it. Remember to always be wary of overspending, hidden fees, and the security of whichever method you choose. Similarly, when managing a business fleet, making informed decisions—such as choosing the best engine type—is crucial for optimising fuel efficiency and controlling costs, ultimately benefiting your bottom line.