[Updated June 1st to correct ATM information and to add PayPal option]
Recently I had the need to buy and use a UK PAYG SIM card for my phone, so I could make calls and access the web in the UK without the gigantic costs involved with my US SIM card. As I am no longer a UK resident, this was surprisingly difficult, although I did succeed eventually. Although my experience was with Vodafone, a friend had similar issues with Orange.
Buying the SIM was the simplest part: went into Carphone Warehouse, gave them UKP10 and got a Vodafone�SIM with UKP5 worth of minutes on it. All I had to do was top it up with more money then add a �Web Pack� (cost: UKP7.50) which would get me data access for a month. I was told to do this online.
Got home to a web browser and went to register my new SIM so I could top it up online. This was not possible, as it requires a UK credit/debit card (which I actually do still have) registered to a UK postal code (which I do not: my card is registered to my US address). I called their phone support, spoke to a human being and was told the UK postcode was indeed required, so online top-up was not going to be possible.
The solution was to find an ATM (in English that�s a �hole in the wall�) with a green �Top-Up� logo, put a card with a chip on it�in there (see below), and top-up from that. I had to enter my SIM�s phone number (twice) and so I could add UKP10 to the account. That done I called �2345� which is the automated customer service number and turned UKP7.50 of that into a �web pack� so I was set for a month's worth of web access. Luckily I still have a UK card, else this option would have been unavailable to me: when I tried with my US card, all Top-Up options were absent from the list.
If you do not have a "chip" on your card then topping up can only be done in two ways: in a cellphone store, by handing them cash, or via a web site that will take something other than UK cards. I found this site that claims to accept PayPal for top-ups, but I have not personally verified it. Use at your own risk.
The lack of a smartcard (or "chip") on my US cards was not only a problem in the ATMs for top-up,�but was sometimes�a problem any time a human being was involved in a card transaction. The USA isn�t interested in reducing card fraud so our cards have no chips on them, but of course every card reader in the UK requires a chip. UK staff are often confused when handed a card with no chip, though they can usually find someone who knows what to do with it eventually. The only other places where my US cards didn�t work at all was at a petrol pump specifically marked as �chip&pin only� and a machines at cinemas to buy tickets.
Other things I learned: once back in the USA there is no way to top up the card (as no ATM offers it) and you can�t call �2345� to switch any outstanding balance from minutes to a web pack as that number doesn�t work when not on the Vodafone network. When I next visit to the UK I�ll know the drill to getting on the web a lot quicker than it took me this time.