A2 - Ways To Pay

Question 1

Examples of ways to pay

Answer 1

Cash
Debit card
Credit card
Cheque
Electronic transfer
Contactless card
Direct debt
Standing order
Prepaid cards
Store cards
Mobile banking
Charge cards

Question 2

Definition of cash

Answer 2

Notes and coins in a wide range of dominions

Question 3

Advantages of cash

Answer 3

No transaction fee
Immediate settlement
Widely accepted

Question 4

Disadvantages of cash

Answer 4

Lack of traceability
Can’t be used online
Limitations for international transactions

Question 5

Definition of debit card

Answer 5

A card issued by your bank, money spent of goods is deducted from your current account

Question 6

Advantages of debit card

Answer 6

Credit score doesn’t matter
Increased security

Question 7

Disadvantages of debit card

Answer 7

Limited fund protection
Reduced spending limits

Question 8

Definition of credit card

Answer 8

Issued by financial institutions, allows customers to delay payment

Question 9

Advantages of credit card

Answer 9

Boosts credit score
Borrow money without paying interest

Question 10

Disadvantages of credit card

Answer 10

Temptation to overspend
Potential to max out credit limit

Question 11

Definition of cheque

Answer 11

A paper transaction giving a bank permission to transfer payment from one account to another

Question 12

Advantages of cheques

Answer 12

Safer to carry then cash
Keeps a record of transactions

Question 13

Disadvantages of cheques

Answer 13

Cheques can be refused as not legal tender
Long processing time

Question 14

Definition of electronic transfer

Answer 14

Payment is transferred directly from one bank account to another

Question 15

Advantages of electronic transfers

Answer 15

Speed of transactions
Keeps record of transactions

Question 16

Disadvantages of electronic transfers

Answer 16

Risk of fraud
Technical issues

Question 17

Definition of direct debit

Answer 17

Permission given to the bank to make regular payments to a third party upon request

Question 18

Advantages of direct debit

Answer 18

Convenient for recurring payments
Protection incase of forgetting

Question 19

Disadvantages of direct debit

Answer 19

Can be charged overdraft
Late fees

Question 20

Definition of standing order

Answer 20

A fixed amount of money is taken out of your bank account on a specified date

Question 21

Advantages of standing order

Answer 21

Free of charge
Quick to set up

Question 22

Disadvantages of standing order

Answer 22

Pay,ents are customer dependent
Lack of flexibility

Question 23

Definition of prepaid cards

Answer 23

Upload money to the card and spending reduces the balance

Question 24

Advantages of prepaid cards

Answer 24

No credit check
More secure than cash

Question 25

Disadvantages of prepaid cards

Answer 25

Do not help you build credit Charge fees

Question 26

Definition of contactless cards

Answer 26

Payment made by swiping a contactless terminal

Question 27

Advantages of contactless cards

Answer 27

Hygiene Fast transactions

Question 28

Disadvantages of contactless cards

Answer 28

If lost or stolen can be used to make fraudulent transactions Do not require a PIN

Question 29

Definition of charge cards

Answer 29

Issued by financial institutions, buy now pay later

Question 30

Advantages of charge cards

Answer 30

No preset credit limit Does not apply interest

Question 31

Disadvantages of charge cards

Answer 31

High annual fees Late payments damage credit history

Question 32

Definition of store cards

Answer 32

Issued by a retail outlet, buy now, pay later

Question 33

Advantages of store cards

Answer 33

Discounts Free shipping

Question 34

Disadvantages of store cards

Answer 34

Low credit limits Easily lost or stolen

Question 35

Definition of mobile banking

Answer 35

Use a tablet or smartphone to manage your bank accounts

Question 36

Advantages of mobile banking

Answer 36

24/7 Accessibility Quick & Easy transactions

Question 37

Disadvantages of mobile banking

Answer 37

Data usage concerns Possible security vulnerability

Question 38

Definition of BACS and FPS

Answer 38

Payments transferred from one account to another

Question 39

Advantages of BACS & FPS

Answer 39

Reduces administration Speedy transactions

Question 40

Disadvantages of BACS & FPS

Answer 40

Limited flexibility Security risks

Question 41

Definition of CHAPS

Answer 41

Electronic bank to bank technology that enables payments to be made

Question 42

Advantages of CHAPS

Answer 42

Safe and secure Require very little effort from businesses

Question 43

Disadvantages of CHAPS

Answer 43

Very expensive Cannot be used for international payments