Customers of high street banks like Lloyds, Natwest, Nationwide, Barclays and Santander have been warned they could lose out if they pay direct. Sky News reported that shoppers who pay retailers directly from their bank have been warned they have fewer protections against shoddy products or those that never arrive.

Consumer group Which? has said the payment option lacks the protections offered by Section 75 of the Consumer Credit Act, which means credit card companies can be held liable for purchases that go wrong and any associated refund.

People using a debit card or a credit card can also get money back via the chargeback scheme at participating shops.

Which? Money editor Jenny Ross said: “We’d urge consumers to think carefully before using [pay by bank] to book events or make substantial purchases – for now, your good old-fashioned credit or debit card may be the best option.

“Innovations like pay by bank present opportunities for businesses and consumers alike, but they’re not without risk, particularly as they lack the rigorous purchase protections you get when paying by card.”

Those using pay by bank do have general purchase rights under the Consumer Rights Act, which says goods must be fit for purpose, as described and of satisfactory quality. But Which? said these protections are not always easy to enforce, and in some cases, people may end up needing to go to a small claims court.

They may also face difficulties in the event of a business going bust, the consumer group said. Section 75 of the Consumer Credit Act 1974 offers protection for consumers who make purchases of £100-£30,000 with a credit card. If the goods or services are faulty, don’t arrive, or the seller breaches the contract, the credit card company can be held jointly liable with the seller. This means consumers can potentially claim their money back from the credit card provider, even if the seller is no longer in business or uncooperative.

The UK’s Financial Ombudsman Service said that each year it receives thousands of complaints from consumers who have their claims for reimbursement rejected by their credit provider.

Section 75 applies only to credit cards and not to debit cards or charge cards (where all charges must be settled at the end of the month).

Which? says if you use a debit card, it's possible that you may be able to use chargeback instead to get some or all of your money back - for more information read its guide to the chargeback system.

How does Section 75 work?

• Section 75 of the Consumer Credit Act allows you to make a claim against your credit card company to get your money back
• The price of the goods or services that you wish to claim for must have been between £100 and £30,000 
• Section 75 doesn't apply to debit cards, but you could use chargeback instead

Lloyds bank guide to Section 75 

When do I not have Section 75 rights?

You do not have Section 75 rights if:

• You change your mind about a purchase.
• Goods or services were bought with a money transfer or cash withdrawn from your credit card.
• Each single item purchased cost less than £100.

Transactions that do not have Section 75 rights:

• Using your available credit to obtain cash (e.g. at an ATM or at an over-the-counter service). 
• Gambling transactions, using your card to make transactions at casinos, betting outlets and bookmakers, and buying online lottery tickets or gaming chips, share trading or spread betting.
• Buying foreign currency.
• Sending money orders or wire transfers (other than balance transfers or money transfers).
• Buying coins, banknotes or digital currency.
• Paying government or court fines, enforcement penalties, fees or costs.
• Online trading such as share dealing or investments.
• Purchasing or topping up electronic money, payment cards, mobile wallets or account dashboard services.
• Please remember to always check whether your third-party provider has buyer protection