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Beware e-money

A new breed of mobile electronic wallets will allow mobile phone customers to dispense with cash and credit cards altogether by the end of this year.

Google launched Wallet in the States this week, an app that allows customers to pay for products using their mobiles.

But before we get too excited about its imminent arrival on our shores, watchdogs have warned that customers should use with care, as they will not receive the same level of protection using e-money than they would if they were shopping using their credit cards.

Neil Aitken, a spokesman for the Payments Council, warned : 'The consumer protections you are used to, such as money-back credit card guarantees, won't necessarily apply. Different providers may offer different safeguards. It is a case of buyer beware. You must read the terms and conditions carefully.'

Emma Parker, speaking on behalf of the Financial Ombudsman Service, said: 'We are not saying e-money is a bad thing. It can be very convenient. But we are seeing a steady stream of complaints, because people do not always understand what they are getting involved with. We fear this number could explode when the market opens up to the mobile companies later this year.'

Rob Skinner of PayPal added: 'We are dealing with buyers and sellers and have a duty of care to both. We are also dealing with people who have never run a business before, but are trading on the internet.

'If we see a large amount of cash suddenly going into an account, we are allowed, by our terms and conditions, to hold onto that, to make sure the customers are satisfied at the other end. In the case of theatre tickets, for example, you could have people selling tickets who didn't have any to sell, but that might not emerge until closer to the date.

'Anyone who buys something via PayPal has 45 days to make a complaint. If the complaint is justified we will reverse the payment.'

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