Topic 3 - Payment Methods Flashcards
what is cash used for?
everyday, low value transactions in face to face situations with sellers
4 advantages of using cash in transactions
- convenient for the payers (as long as they have enough notes and coins with them
- readily accepted by people selling the food or the service
- instant transaction (doesn’t need to be processed
- low rush at low values
-easier to budget
why is budgeting an advantage of using cash payment?
- u r able to withdraw a certain amount of cash per week and stick to that amount
- east to see how much cash is left
what are 5 disadvantages of using cash payment?
- the transaction must be made face to face with the seller not online
- the transaction must be made on the same or similar dates every month
- paying by cash is less convenient than other methods
- carrying large amounts of cash can be risky
- some sellers prefer other payment methods
how can electronic payments from current accounts be instructed to take place?
these are called mandates
instruction can be given by:
-on paper
-on the phone
- online
what is the electronic payment standing orders?
instruction to pay the same amount of money to another account on a regular basis.
standing order can be set up and cancelled by informing the current account provider in writing over the phone or online.
what is direct debit?
another type of automatic payment that can be set up for a current account.
when set it up it gives permission to the provider to pay regular bills that an organisation will present - thus the payment can be for different amounts of money each time
what is online banking?
when an account holder has the ability to give instructions through the internet to there provider to make transactions or set up new accounts
what are faster payments?
an electronic payment service provided by all banks that garuntees the destination bank account receives their money within two hours
What does the electron payment method CHAPS stand for?
clearing house automated payment system
What is the payment method Chaps?
same day automated payment system used for very high value payments
- eg when buying a house you would want ure transaction to be secure as it is a large sum of money, banks may charge extra for this however it is usually deemed worth it by the payer
what is the electronic payment method - mobile banking?
account holders can download a mobile banking app from their leo oder thay includes security measures where they can carry out any actions they please
what are online payment services?
payment services such as paypal allow people to pay eachother without exchanging bank account details
protects users from any unauthorised payments from their accounts
what are advantages of electronic payments?
-they are fast, safe, convenient to most
- free of charge
what are disadvantages of electronic payments?
- security, knline fraud and identity theft mean that account holders must be very careful to follow security procedures and keep their passwords and pass numbers safe
- account holders will make mistakes, paying the wrong amount of money or too the wrong person
What are Cheuques?
payment mechanism that allows account oldest to instruct there provider to pay a specific amount of money to a specific person or organisation
checkbooks are provided for by their bank
what are advantages of using cheques?
they are a secure way of paying money
easy to carry and use
what are disadvantages of cheques?
cheques may bounce when the payer does not have enough money in there account to honour the payees cheque
- provides huge risk as people may use this as a mean payments then later not be able to honour it
what has happened with the use of cheques in modern day society?
the use of cheques has declined
there are other safer methods of transaction
what is a bankers draft
similar to a cheque, however there is proof that there is money in the account thus companies can trust immediatly
normally used for large summs of money, eg buying a car
what are payment cards?
enables account holders to give their provider instructions to pay money from an account.
what are cash cards?
allow account holders to withdraw cash from their account at a branch or using an atm
not to be used to pay sellers face to face or via the internet or by phone
often used by young people
What criteria do you have to meet to be able to claim a cash card?
- under 18
- on low income to enable them to access cash easily
What is a debit card
Ability to access accounts and pay for goods in stores over the internet by telephone and by post.
Payment its made immediately
