@ Ways to Pay

Question 1

List all the methods of payment

Answer 1

• Cash
• Debit Card
• Credit Card
• Cheque
• Direct Debit
• Standing Order
• Electronic Transfer
• Prepaid Cards
• Charge Cards
• Mobile Banking
• CHAPS
• BACS and Faster Payments
• Store cards
• Contactless Cards

Question 2

Cash

Answer 2

Notes and coins

Question 3

Debit Card

Answer 3

Issued by banks with payments for goods and services being deducted directly from a current account

Question 4

Credit Card

Answer 4

Issued by financial institutions and banks allowing holders to delay payments for goods and services

Question 5

Cheque

Answer 5

A written order to pay a sum of money from a bank customer’s account to another person or organisation

Question 6

Direct Debt

Answer 6

An agreement made with a bank allowing a third party to withdraw money from an account on a set day to pay for goods or services received. E.g Electricity bill

Question 7

Standing Order

Answer 7

An agreement made with a bank to transfer a fixed sum of money to a third-party account on a set date on a regular basis. E.g fixed loan repayment

Question 8

Electronic Transfer

Answer 8

Payment is transferred directly from one bank account to another

Question 9

Prepaid Cards

Answer 9

Money is uploaded onto a card with transactions then being withdrawn to reduce the balance

Question 10

Charge Cards

Answer 10

Issued by financial institutions allowing customers to delay payments for goods and services for a short period of time with the balance being paid off in full at each statement date

Question 11

Mobile Banking

Answer 11

The ability to carry out financial transactions using mobile devices such as phones or tablets

Question 12

CHAPS (Clearing House Automated Payment System)

Answer 12

A system that allows the transfer of payments directly from one bank account to another usually on the same day

Question 13

BACS (Bankers Authorised Clearing Service) and Faster Payments

Answer 13

A system that allows the transfer of a payment directly from one bank account to another in 3 working days (unless faster payment is available)

Question 14

Difference between CHAPS and BACS

Answer 14

• CHAPS has same day transfer

- BACS takes three days to transfer payment

Question 15

Store Cards

Answer 15

Only accepted by stores that issues it

Question 16

Contactless Cards

Answer 16

Cards with an embedded chip and antenna that enables consumers to wave their card over a reader at the point of sale for an automatic transaction

Question 17

Ad of Cash

Answer 17

• Most widely accepted form of exchange

- Makes budgeting easier- dont overspend or evelope planning

Question 18

Dis of Cash

Answer 18

• Can be lost or stolen

- Cannot be used for online purchases

Question 19

Ad of Credit Card

Answer 19

• Allows a period of credit that is interest-free- usually one month
• Suitable for online transactions

Question 20

Dis of Credit Card

Answer 20

• Interest is charged on balances not cleared at the end of the month
• Can encourage customers to overspend and get into debt

Question 21

Ad of Debit Card

Answer 21

• Secure method- no need for cash

- Widely accepted

Question 22

Dis of Debit Card

Answer 22

• Can be used for online purchases which may encourage overspending
• Short time lapse between making the transaction and the money being drawn from the customer’s account

Question 23

Ad of Cheque

Answer 23

• Low risk form of payment as the cheque can only be cashed by named payee
• Widely accepted for face-to-face or postal transactions

Question 24

Dis of Cheque

Answer 24

• Viewed as old fashioned

- Easy to make errors when writing the cheque which can cause problems for both the consumer and the recipient

Question 25

Ad of Direct Debit

Answer 25

- An easy way to make regular payments, e.g household utility bills - Reduces admin time- payments can automatically be taken and tracked each month so reduce time managing them

Question 26

Dis of Direct Debit

Answer 26

- If the payer makes a mistake and takes too much, it is the payee's responsibility to claim the money back - The payer determines the amount to be paid each time which can make it difficult to budget

Question 27

Ad of Standing Order

Answer 27

- The same amount is paid each time, allowing person to plan their expenditure - Easy to set up and to cancel as required

Question 28

Dis of Standing Order

Answer 28

- Payments are taken regardless of the customer's balance which could lead to the unplanned use of an overdraft - Payments will continue unless cancelled

Question 29

Ad of Electronic Transfer

Answer 29

- Transfer is instant | - Provides a record of payment

Question 30

Dis of Electronic Transfer

Answer 30

- Bank details of third party must be correct- transfer will not take place - Not appropriate for face-to-face transactions

Question 31

Ad of Prepaid Cards

Answer 31

- Can set a budget in advance to avoid overspending | - If lost or stolen the loss is limited to the remaining balance on the card

Question 32

Dis of Prepaid Cards

Answer 32

- No protection if lost | - Sometimes requires an initial fee to purchase or set up the card. E.g Oyster travelcards

Question 33

Ad of Charge Cards

Answer 33

- Can buy goods and services without paying for them immediately - Allows a short period of credit

Question 34

Dis of Charge Cards

Answer 34

- Must be paid in full each month | - Failure to repay results in very high late payment fee, usually much higher than a standard credit card

Question 35

Ad of Mobile Banking

Answer 35

- Convenient to use as they can be accessed and at any time and in any place - More secure and risk free than online/ internet banking

Question 36

Dis of Mobile Banking

Answer 36

- May not be able to access the full range of banking services - Regular use of mobile banking can lead to extra charges by the bank

Question 37

Ad of CHAPS

Answer 37

- Guaranteed same-day transfer as long as bank instructed by a certain time - There is no limit to the amount of money that can be sent

Question 38

Dis of CHAPS

Answer 38

- Usually fixed charge for each transaction regardless of amount transferred - Not a common payment method used by consumers unless it is for a large payment. E.g buying a house

Question 39

Ad of BACS and Faster Payment

Answer 39

- Faster payment allows almost instant transfers that are guaranteed within two hours - No fee

Question 40

Dis of BACS and Faster Payment

Answer 40

- A limit is set on the amount that can be transferred in a single transaction - Faster payment is not offered by all banks and branches and therefore BACS may have to be used which takes three days to clear

Question 41

Ad of Store Cards

Answer 41

- Allows a short period of interest free credit- usually one month - Benefit from discounts and loyalty schemes

Question 42

Dis of Store Cards

Answer 42

- Only accepted in the store or stores specified | - Annual fee is payable- charge card companies require customers to have a certain level of annual income

Question 43

Ad of Contactless Cards

Answer 43

- Secure method of making a payment | - Fast and efficient to make a transaction

Question 44

Dis of Contactless Cards

Answer 44

- Can lost track of how much they are spending | - Only accepted for relatively small transactions