Topic 3 - Payment Methods Flashcards
1
Q
Advantages of cash
A
- convenient for payer/ for low value transactions
- readily accepted by ppl selling goods + services
- quick
- some retailers only accept cash (e.g. for low value transactions)
- some believe it helps ppl budget
2
Q
Disadvantages of cash
A
- can’t use cash when buying online, by mail order or telephone
- cash not convenient when transactions must be paid on same/similar dates each month (standing order/direct debit more convenient)
- carrying large amounts of cash = risky (lost/stolen)
- some sellers don’t like to receive cash due to responsibility of looking after it
3
Q
How does online banking help account holders?
A
- make one off transfers to organisations + others using online banking
- set up a standing order
- set up a direct debit
4
Q
Types of electronic payments
A
- standing order
- direct debit
- one off online transfers to individual/organisations
- faster payments
- CHAPS
5
Q
What is a standing order?
A
- instructions for a regular payment (same amount) to another account
6
Q
What is a direct debit?
A
- gives bank permission to pay regular bills (different amounts)
- payments covered by a guarantee
7
Q
What is mobile banking?
A
- account holders download an app from their provider: gives access to services + includes security
8
Q
What is an advantage of online payment services?
A
- enables ppl to pay others w/o exchanging current account details (more secure)
9
Q
Advantages of electronic payments
A
- fast, safe + convenient
- standing orders/direct debit can be set up: helps bills be paid on time w minimal effort from account holder
10
Q
Disadvantages of electronic payments
A
- security
- problems of fraud
- account holder may make a mistake (amount for a transfer, account number, sort code)
11
Q
Advantages of cheques
A
- secure way of paying money
- easy to carry + use
- suitable where speed of payment not important
12
Q
Disadvantages of cheques
A
- usually takes 3 business days for cheque to clear
- if sender of check not got sufficient funds, cheque gets sent back by the bank to account holder
- receiver has to pay money into their account (trip to bank)
13
Q
What are bankers drafts?
A
- look similar to cheques + processed through clearing system but signed by provider rather than an individual
- payment guaranteed
14
Q
What are cash cards?
A
- allows account holders to withdraw money from an ATM
- given to young ppl who can’t borrow
15
Q
What are debit cards?
A
- money instantly taken from account holders account
- branded as Visa Debit, MasterCard or Solo
