Payment Methods

Question 1

Cash

Answer 1

Notes & Coins.

Question 2

Debit Card

Answer 2

Issued by banks with payments being deducted directly from a current account.

Question 3

Credit Card

Answer 3

Issued by financial institutions allowing customers to pay by card & delay payment.

Question 4

Cheque

Answer 4

A written order to a bank to make a payment from one person to another.

Question 5

Electronic Transfer

Answer 5

Payment is transferred directly from one bank to another.

Question 6

Direct Debit

Answer 6

Agreement made with a bank to transfer a fixed sum of money

Question 7

Pre-paid Card

Answer 7

Money uploaded onto a card with transactions then deducted.

Question 8

Contactless Card

Answer 8

Allows money to be transferred if card touches contactless point.

Question 9

Charge Card

Answer 9

Allows money to delay payment for goods & services & pay-off in full.

Question 10

Store Card

Answer 10

Issued by a retail outlet, so that customers can delay payment.

Question 11

Mobile Banking

Answer 11

Ability to carry out financial transactions using mobile devices.

Question 12

Bankers Automated Clearing Service (BACS) Faster Payment

Answer 12

Allows transfer of payments from one bank account to another.

Question 13

Clearing House Automated Payments (CHAPS)

Answer 13

Allows the transfer of payments directly from one bank account to another.

Question 14

Advantage of Cash

Answer 14

Widely accepted, physical not virtual.

Question 15

Disadvantage of Cash

Answer 15

Easily lost/stolen, unsuitable online.

Question 16

Advantage of Debit Card

Answer 16

No need to carry cash, widely accepted secure method of payment.

Question 17

Disadvantage of Debit Card

Answer 17

Short time lapse, not accepted for small transactions.

Question 18

Advantage of Credit Card

Answer 18

Allows period of credit, widely accepted with loyalty schemes.

Question 19

Disadvantage of Credit Card

Answer 19

Interest is charged on balances not paid off, may encourage consumer debt.

Question 20

Advantage of Cheque

Answer 20

Low risk form of payment, widely accepted and the exact amount is specified.

Question 21

Disadvantage of Cheque

Answer 21

Time delay, viewed as old fashioned and bounced cheque is expensive.

Question 22

Advantage of Electronic Transfer

Answer 22

Almost instantaneous, record of payment.

Question 23

Disadvantage of Electronic Transfer

Answer 23

Risk of loss if incorrectly set up, not suitable for face-to-face.

Question 24

Advantage of Direct Debit

Answer 24

Easy way to make regular payments, amount paid can vary and it is easy to set up.

Question 25

Disadvantage of Direct Debit

Answer 25

Payer may make a mistake & this becomes payees responsibility, may make budgeting difficult.

Question 26

Advantage of Standing Order

Answer 26

Same amount paid each time, easy both to set up & cancel

Question 27

Disadvantage of Standing Order

Answer 27

Payments are taken regardless of the customers balance.

Question 28

Advantage of Pre-Paid Card

Answer 28

Can set a budget to prevent overspending.

Question 29

Disadvantage of Pre-Paid Card

Answer 29

No protection if lost, may require an initial set-up fee.

Question 30

Advantage of Contactless Card

Answer 30

Gaining in popularity, secure method of making payments.

Question 31

Disadvantage of Contactless Card

Answer 31

Not as widely available, generally for small transactions.

Question 32

Advantage of Charge Card

Answer 32

Reduces risk of running up debt, allows a short period of credit and avoids the need to carry cash.

Question 33

Disadvantage of Charge Card

Answer 33

Must be paid off in full every month.

Question 34

Advantage of Store Card

Answer 34

Allows a period of credit, often offer loyalty schemes.

Question 35

Disadvantage of Store Card

Answer 35

Interest is payable on outstanding balances.

Question 36

Advantage of Mobile Banking

Answer 36

Convenient & Secure.

Question 37

Disadvantage of Mobile Banking

Answer 37

Features are still limited & does not offer full banking facilities.

Question 38

Advantage of Bankers Automated Clearing Service (BACS) Faster Payment

Answer 38

Faster payments allow almost instant transfers, no additional costs.

Question 39

Disadvantage of Bankers Automated Clearing Service (BACS) Faster Payment

Answer 39

Limit set on maximum transfer.