Chapter 9~Making Payments

Question 1

Cheque?

Answer 1

A written instruction to your bank to pay a sum of money from your current account to another person

Question 2

Dishonoured cheque?

Answer 2

A cheque which the bank refuses to cash because there is not enough money in the account. It is sent back to the payee marked ‘R/D- refer to drawer’

Question 3

Endorsing a cheque?

Answer 3

When the payee passes their right to the cheque to another party by signing their name on the back of the cheque

Question 4

Crossing a cheque?

Answer 4

Drawing two parallel lines across the face of the cheque in order to make it safer. A crossed cheque must be lodged into the bank account of the person named on the face of the cheque and it will be as least three days until it is turned into cash

Question 5

Special crossing?

Answer 5

Includes special instructions between parallel lines drawn across the face of the cheque
E.g ~ ‘a/c payee only’. In this case, the cheque can only be paid into the payees bank account.

Question 6

Postdated cheque?

Answer 6

A cheque that is dated for sometime in the future

Question 7

Antedated cheque?

Answer 7

A cheque that contains a date that is sometime in the past

Question 8

Blank cheque?

Answer 8

A signed cheque that has some relevant piece of information omitted
E.g ~ date

Question 9

Stale cheque?

Answer 9

A cheque that is more than six months old and therefore is worthless

Question 10

Banker’s/Cheque guarantee card?

Answer 10

Guarantees the payee that they will receive the amount of the cheque even if there’s no money in the drawers account, up to a maximum of €130

Question 11

Debit card?

Answer 11

An electronic payment card that allows a current account holder to withdrawal monte from their account and to pay for goods without having to use cheques or cash

Question 12

Smart card?

Answer 12

A card which is preloaded with cash from a current account. It can be topped up at ATM’s. It is then used to purchase goods in a similar way to a debit card

Question 13

EFTPOS?

Answer 13

Electronic Funds Transfer at Point Of Sale is the use of Laser Cards and Smart Cards(but NOT credit cards) to pay for goods and services.

Question 14

Paypath?

Answer 14

The electronic transfer of wages, by an employer, directly from their bank account, into the employees

Question 15

Travellers cheques?

Answer 15

Cheques that come printed in various amounts of a foreign currency. They are paid for at the bank when they are purchases and can be turned into cash in a bank or bureau de change in the foreign country you are visiting

Question 16

5 ways to make payments

Answer 16

1) cheque/bank draft
2) laser card/credit card(visa)/smart card
3) thought ATM
4) direct debit/standing order/credit transfer
5) paypath

Question 17

4 ways of paying for goods and services in a foreign country

Answer 17

1) travellers cheque
2) foreign currency notes and coins
3) foreign currency bank draft
4) credit cards

Question 18

Who are the 3 parties to a cheque?

Answer 18

• drawer ~ the person who writes the cheque
• payee ~ the person to whom the money is being paid
• drawee ~ the bank of the person writing the cheque

Question 19

3 reasons why a bank can refuse to cash a cheque

Answer 19

• information missing (the amount)
• suspicious of the signature
• not enough to money in the drawers account

Question 20

2 advantages of cheques

Answer 20

• no need to carry cash

* proof of payment due to stub/counterfoil

Question 21

What is a bank draft?

Answer 21

It is similar to a cheque in that it is made out to the person you want to pay the money to. A customer buys the draft from the bank, and gives the bank the amount of money of the bank draft. It is a safer option than a cheque for the payee given that the bank has already received the money.

Question 22

How does a debit/laser card work?

Answer 22

1) the card is swiped through a terminal at cash desk
2) amount of transaction is keyed in
3) customers will be asked to type in their PIN
4) receipt is printed and a copy is given to customer
5) amount is taken electronically from the consumers current account and transferred to the retailers account

Question 23

How does a credit card work?

Answer 23

1) card is swiped through a terminal at cash desk
2) amount of transaction is keyed in
3) customer will be asked to type in their pin
4) receipt is printed and a copy is given to customer
5) amount is NOT taken directly from customers account
6) credit card company pays seller at end of month
7) customers get sent bill from credit card company at the end on the month
8) customer must pay within 19 days or charged hit rate of interest

Question 24

3 advantages of a debit card

Answer 24

• can be used to buy goods online
• no bills built up as it comes directly from account
• cheaper than writing cheques

Question 25

Direct debit(DD) ?

Answer 25

When an account holder gives permission to a business or company to request variable amounts of money to be paid out of the persons account on a regular basis. The amount taken out varies
E.g ~ telephone, electricity bills

Question 26

Standing order(SO) ?

Answer 26

When an account holder tells their bank to pay a fixed amount of money from their bank account to another on a regular basis. This is used for paying bills where the amount doesn’t vary
E.g ~ rent

Question 27

Credit transfer(CT) ?

Answer 27

Money is transferred from ones bank account directly into another’s bank account.

Question 28

3 advantages of paypath

Answer 28

• safer as you aren’t caring cash
• it cuts down on time spent by bank employees on the processing of cheques
• more convenient