How taking it slow could help protect our money

May is a month loaded with bank holidays, but while the institutions may take a break, our financial lives never stop.

A few extra days off will have no impact on our ability to search, order and buy, as well as receive deliveries. Our requirements as consumers are satisfied almost in an instant, without the need to leave the sofa.

But is this "everything now" culture leaving us exposed to bad choices, to fraud, and to stress? For better or worse, would slowing down payments tip the balance away from convenience and towards security?

For Emma Quinn, the implications are serious. As someone with bipolar disorder, periods of mania can be accompanied with spending sprees. She has ordered everything from takeaways for comfort eating, to furniture and flights she did not need or had any intention to use.

During periods of depression and stress, emotional buying can fulfil a need - a bit like gambling - and she has bought "whatever has come into my head".

"You just click, and do not think of the consequences," the 30-year-old says.

Emma Quinn says safeguards are not always easy to locate

To combat the resulting problems, she does everything she can, when she can, to make the buying process as slow as possible. Her willingness to talk about these issues also reveals an admirable wish to help others do the same.

Her own safeguards include removing any saved records of her card details on retailers' or marketplaces' websites. She has set up an alert on her banking apps that requires her to confirm payments and adds another barrier to swift payments. Her parents also have some back-up control over her finances.

Sometimes banking technology helps her. At other times, like when she is offered automatic credit limit extensions, it is a hindrance.

Retailers could do more to help people like Emma, according to Conor D'Arcy, head of research and policy at the Money and Mental Health Policy Institute.

"Targeted adverts, pushy nudges and the expansion of frictionless ways to pay have made it easier than ever to spend money on things that we might not need, and sometimes can't afford," he says.

"For people who struggle with things like impulsivity or comfort spending, that can escalate very quickly and become a pathway into debt."

The situation is all the more acute at a time when the cost of living is so high, he says.

Fraud concerns

So what about adding some friction into our payments? Technology has meant we, as consumers, can now transfer large amounts of money swiftly and easily.

Fraudsters have taken advantage to an eyewatering degree. Scams can range from fake delivery texts asking for payment, which were common during the pandemic, to higher-value losses when fraudsters pretend to be solicitors during a house purchase.

People are tricked into sending money to someone they believe to be a genuine trader, or even a genuine lover. Collectively, these payments - which may appear to be perfectly valid transactions - hit seven-figure sums every day. So-called authorised push payment fraud losses totalled £249m in the first six months of last year, figures from the banking trade body UK Finance show.

Would slowing these payments down allow more time for everyone to identify the risk of fraud? There are some mixed views in the finance sector.

"Unfortunately, the genie has been let out of the bottle and consumers, banks and regulators all want and expect increasingly faster payments," says Mark Crichton, from Outseer, which provides anti-fraud products to businesses.

"It might not be a popular decision, but whilst consumers are getting up to speed [through fraud education], slowing down some payments with more intervention from banks and regulators could help to prevent fraudulent transactions in the short term."

His argument is for banks who are unable to prove they have advanced ways of spotting fraud to be forced by regulators to slow down the payments process.

But Jim Winters, director of economic crime at Nationwide Building Society, says fraud starts long before any payment is made, such as snaring a victim on social media. Shared information between the retail, tech and banking sectors would be a particularly effective weapon against fraud, he says.

"While slowing payments down might enable a greater number of scam payments to be retrieved, it would not stop economic crime from occurring and would delay legitimate payments. Ideally, we would find a solution which balances consumer convenience with the ability to stop fraud and scams in their tracks," he says.

The near-instant payments system in the UK is literally called Faster Payments. Direct debits operate under a different system, which does take a break for bank holidays - something businesses need to be alive to during May.

While Faster Payments makes shifting money simple and swift for consumers and businesses at all hours of every day, the mechanics behind it are complex.

Ultimately, more friction could be included in the whole process, but lots can be done to detect and prevent fraud long before a payment is actually made.

Pay.uk is the operator and standards body for payments between banks and, in 2020, it launched what it calls a "key tool" in the fight against fraud.

Confirmation of Payee is the process that checks the sort code and account number against the name of the intended recipient. If the name on the account is different to the person you think you are paying, then there is an alert, and you can stop the payment being completed.

This should help stop fraudsters who pretend to be somebody trustworthy or known to you from getting hold of your money.

And, like so many other elements of payments nowadays, the check is instant.