Money Advice Service

The right way to handle a problem with payments or transfers depends on how the payment is made. This guide covers the full range of payment methods, with advice on how to handle problems that arise and what you can do to prevent problems in the first place.


Cash is a simple, straightforward way to pay. But, you should always ask for a receipt – otherwise there might be no record of the transaction if there’s a problem and you need to prove payment or get a refund.

If you’re buying something for your business and want to reclaim VAT, make sure the receipts you get show:

  • Whether VAT is included in the price
  • The seller’s VAT number


When someone pays you by cheque

If someone pays you by cheque and it bounces, you may find it difficult to reclaim your money.

When you get a cheque, don’t hand over the goods right away. Pay the cheque into your account first and wait for the funds to clear – it should take less than six working days.

When you pay by cheque

When writing a cheque, always make sure you draw a line through any unused space on the payee and amount lines, and don’t leave any space before you start writing. That way the names and the amount of money can’t be altered.

Also, make sure you keep enough money in your account to cover the full amount of the cheque. Otherwise:

  • Your cheque may bounce, or
  • Your bank may pay out the cheque, but charge you fees and interest on an overdraft

Credit and debit cards

Credit cards are covered by the Consumer Credit Act 1974 – if you buy something for between £100 and £30,000, both your credit card company and the seller are responsible for your purchase. If you pay by card and something goes wrong – for example, if the seller goes bust or if the goods are defective and the seller won’t refund them – contact your card company to see about getting your money back.

Debit cards aren’t covered by the Consumer Credit Act, but most cards come with a chargeback scheme. These schemes allow you to get a refund if the goods you bought don’t work, don’t arrive or if the seller goes bust. Contact your bank if you need a chargeback on a debit card purchase. There is a time limit on claims so it’s best to take action immediately (usually 120 days or 540 days for Visa chargeback).

Direct Debits

If something goes wrong with a Direct Debit payment – either because the organisation you are buying from or your bank made a mistake – you are covered by the Direct Debit Guarantee. Once you notify your bank of the error, you should get a full refund, immediately. However if the mistake turns out to be your fault the bank may ask you to repay the refund.

The Direct Debit Guarantee also protects sellers. So, if you’re given a Direct Debit refund by mistake and the organisation asks for its money back, you’ll need to return the funds.

Standing orders

If you make a mistake with a standing order, there’s no guarantee that you’ll get your money back. So, it’s doubly important to make sure the payment dates and amounts are correct when you set up a standing order.

If the bank has made an error, such as not cancelling the standing order, then it’s likely the bank will be responsible.

Overseas transfers

If something goes wrong when you send money overseas from the UK, the first step is to contact the firm that helped you with the transaction. They can usually help you sort out the problem.

If you’re unhappy with how the firm handles your complaint, you can take the issue to the Financial Ombudsman Service.

This article is provided by the Money Advice Service.