Opening A Payment Account in the UK

Having access to the right financial services is essential for any business and a payment account can give you the flexibility you need when you’re transferring funds. In this article, we’ll take a closer look at what a payment account is, why you need one, and how to go about opening a payment account in the UK.

What Is a Payment Account?

In simple terms, a payment account is an account that allows you to make payments and transactions at any time with enhanced flexibility. It’s easy to assume that every bank account is a payment account, but this isn’t the case.

Many types of accounts are set up to discourage account holders from making frequent transactions. In fact, you’re likely to incur penalties or be prevented from making regular transactions with some types of non-payment accounts, such as:

• Fixed-term accounts
• Savings accounts
• Investment accounts

In contrast, payment accounts offer more flexibility and are designed to allow account holders to make payments and transfers at will.

Why Do You Need a Payment Account?

A payment account can offer a variety of benefits to both personal and business account holders alike, including:

Instant Access to Funds

With most types of payment accounts, you won’t be required to wait extended periods to access your funds or make transfers. In fact, some payment accounts are designed to facilitate superfast transactions that enable you to do business quickly and efficiently. If time is of the essence or you simply want to increase the efficiency of your financial management, a payment account can be the ideal option.

Fast Transfers

In today’s digital environment, creditors are rarely happy to wait lengthy periods to receive funds they are owed, which is why fast transfer options are essential for account holders. Being able to make secure yet high-speed transfers enables payments to be sent or received in seconds.

Range of Transfer Options

A flexible payment account gives you the option to make payments in a variety of different ways. This enhances your control over your funds and allows you to fulfil your financial obligations in a way that best suits your needs.

When you’re opening a payment account UK, for example, you may want to choose an account that facilitates SEPA, BACS, Faster Payments, and/or CHAPS transfers.

Single Euro Payments Area (SEPA) transfers enable account holders to make cross-border payments within the European Union, so it’s ideal for individuals or businesses that regularly do business with entities based within the EU. With the option to make a SEPA Credit Transfer, an Instant Credit Transfer, or Direct Debit Transfer, you can make a one-off or recurring payment at fast speeds.

Alternatively, CHAPS transfers offer a same-day transfer option, with many transfers actually taking place in real time. Although there is a fee of £25 per transfer, the CHAPS payment method is often used for one-off, high-value transfers and can be well-suited to urgent and significant transactions.

In addition to this, BACS and Faster Payment transfers can also be used for efficient financial management. Despite having a £250,000 limit and longer processing times, BACS remains a popular option when payments don’t need to be made in real-time, while Faster Payments offers accelerated transfers up to £250,000 at a cost of just £0.20.

High Liquidity

Businesses need to make frequent payments and transactions to facilitate their operations, which means liquidity is a top priority for business account holders. Rather than being limited to making a maximum number of transfers or paying high fees alongside every payment transfer, businesses can benefit from increased flexibility and low-cost or no-cost transfers by opening a payment account UK.

Multicurrency Functionality

A multicurrency payment account lets you transfer funds in a range of currencies, which can reduce fees, protect the value of your funds, and speed up transaction times. As currencies are relatively volatile, being able to make swift payments can give you an advantage when it comes to protecting your assets and making transfers when the exchange rate works in your favour.

Despite this, many standard accounts don’t offer multicurrency functionality. By choosing a multicurrency payment account, however, you can ensure that you’re able to make payment transfers to individuals or businesses all over the world with fewer intermediaries and lower costs. Furthermore, using a multicurrency account gives greater transparency over your financial affairs, thus simplifying your financial management and streamlining operations.

Opening a Payment Account in the UK: What to Do Next

Every account provider has their own protocols to follow when you’re applying to open a payment account. However, there are some generic steps you can take to accelerate the process and ensure there is no delay to gaining access to your new account, such as:

1. Research Your Options

Before you begin applying for a specific account, be sure to scour the market to find the best option to suit your needs. Although many institutions and companies offer payment accounts, they don’t all provide the same terms and charges can vary. Due to this, it’s advantageous to compare the accounts that are available to find one that offers the best terms for you.

Similarly, payment account functionalities can vary from one company to another, so be sure to compare the options and make sure that your preferred account has all the features you’ll need, both now and in the future.

2. Ensure You Meet the Criteria

Opening a payment account UK can be a simple and straightforward process, providing you meet the eligibility criteria. Again, this will differ between institutions, so it’s worth checking each company’s eligibility rules before you start making an application.

Often, applicants will need to be aged over 16 or 18 years, depending on the terms set out by the account provider, and they will typically need to be a UK resident also. When you’re applying for a specific type of business account, there may be specific eligibility criteria regarding the business entity, such as being a limited company or partnership, having been operational for a minimum amount of time, and/or having a minimum amount of funds to open the account.

3. Read the Terms and Conditions

Reading the terms and conditions is considered essential before signing any agreement, yet few people actually read the small print before entering into a contract. When it comes to financial matters, however, it pays to be vigilant, so it’s certainly worth taking the time to scrutinise the T&Cs before you make your application.

While it may seem overcautious, the terms and conditions will set out your rights, as well as any obligations you have as an accountholder and any fees you may be charged. They will give you a good overview of how the account will work for you and provide the detailed information you need to confirm it’s the right type of account for you.

4. Prepare Your Documentation

When you’re opening a payment account UK, you may be asked to provide documentation that confirms you meet the eligibility criteria. If so, it’s beneficial to have this documentation available, so that your application is not delayed.

Traditionally, banks and financial firms required you to present original or copied documents in physical format but, fortunately, digital versions can now be used to process your application. This accelerates the application process and means you won’t spend as much time opening a payment account UK as you might have thought. Instead, you can usually verify your identity online and supply relevant documentation instantly via digital uploads or email.

5. Start Your Application

Similarly, you no longer need to visit a bank or financial institution when you’re opening a payment account UK. In fact, many reputable financial firms operate completely online, so starting your application and opening an account couldn’t be easier.

Every financial company that offers payment accounts will have their own application process but, in most instances, you can complete your application online, via their website. You’ll need to input personal details, such as your name, date of birth, and address, as well as relevant company information if you’re opening a business payment account.

Once you’ve completed the process, you may be asked to upload relevant documentation before your application is finalised. Then, your application will be reviewed and approved.

6. Begin Using Your Payment Account

With your application successfully completed, you’ll be notified that your account has been opened and given relevant information, such as login details. Now, you can access your account and begin using its features to carry out financial transactions, such as payments and transfers.

Is a Payment Account Right for You?

The flexibility and functionality of a payment account mean they are a great option for a significant number of people and businesses. If you’re looking for an account that allows you to make payments quickly and securely or you want an account that simplifies your financial management, a payment account could be just what you’re looking for.

To find out more or to learn about the types of accounts that are available to you, contact PayAlly now and talk to our team of relationship managers today.