A) 2. Methods Of Payment

Question 1

Cash

Answer 1

Notes and Coin

Question 2

Debit card

Answer 2

Issued by banks with payments for G+s’s being deducted directly from currant account.

Question 3

Credit card

Answer 3

Issued by banks + financial companies, allowing customers to delay payments

Question 4

Cheque

Answer 4

A written order to a bank to make a payment for a specific amount from one person’s account to another.

Question 5

Electronic transfer

Answer 5

Payment is transfered directly fron one bank account to another

Question 6

Direct debit

Answer 6

An agreement made with a bank allowing a 3rd party to withdraw from an account on a set day.

Question 7

Standing order

Answer 7

Agreement made with bank to transfer a fixed sum to a 3rd party on a set date on a regular basis

Question 8

Pre-paid cards

Answer 8

Money is uploaded on to a card with transactions them being withdrawn to reduce balance

Question 9

Contactless card

Answer 9

Cards containing antennae allow money to be transferred when card touches contactless terminal

Question 10

Charge cards

Answer 10

Allow customers to delay payments for G+S’s for a short period of time

Question 11

Store cards

Answer 11

Issued by a retail outlet so customers con delay, payments for G+S’s

Question 12

Mobile banking

Answer 12

Online barking using mobile devices

Question 13

BACS + Faster payments

Answer 13

electronic payment from one bank account
to another

Question 14

CHAPS

Answer 14

electronic payment fron one bank account to another

Question 15

Advantages of cash

Answer 15

• mostly widely accepted
• makes budgeting easier

Question 16

Disadvantages of cash

Answer 16

• can be lost/stolen
• can’t be used online

Question 17

Advantages of Debit card

Answer 17

• secure method of payment
• widely accepted

Question 18

Disadvantages of debit card

Answer 18

• ## small risk of cardholder overspending

Question 19

Advantages of credit cards

Answer 19

• Allows a free period of credit that’s interest free
• offers a degree of protection on purchases

Question 20

Disadvantages of credit cards

Answer 20

• Interest is charged on cash withdrawals
• Can encourage customer to overspend and get into debt

Question 21

Advantages of a cheque

Answer 21

• low risk form of payment as can only be cashed by named payee
• widely accepted for face-to-face and postal transactions

Question 22

Disadvantages of a cheque

Answer 22

• although still widely accepted, some retailers no longer accept them
• once’s it’s been cashed, can take at least 3 days to be available

Question 23

Advantages of electronic transfer

Answer 23

• Almost instantaneous
• Provides a record of payment

Question 24

Disadvantages of electronic transfer

Answer 24

• Risk of loss if transfer is set up incorrectly
• Not appropriate for face-to-face transactions

Question 25

Advantages of direct debit

Answer 25

• easy to set up and cancel
• An easy way to make regular payments

Question 26

Disadvantages of direct debit

Answer 26

• Person paying must have sufficient funds in their bank to cover payments
• amount can vary making difficult to plan expenditure

Question 27

Advantages of standing order

Answer 27

• Payments don’t change so can plan expenditure
• easy to set up and cancel

Question 28

Disadvantages of standing order

Answer 28

• Payments will continue to be made unless cancelled
• Payer must have sufficient funds to cover payment

Question 29

Advantages of pre-paid cards

Answer 29

• Can set a budget in advance to avoid overspending
• If lost or stolen, the loss is only the remaining balance

Question 30

Disadvantages of pre-paid cards

Answer 30

• Sometimes require an initial fee to set up
• no protection if lost

Question 31

Advantages of contactless card

Answer 31

• Fast, easy and secure
• Gaining in popularity

Question 32

Disadvantages of contactless cards

Answer 32

• Usually for amounts for less than £30

Question 33

Advantages of charge cards

Answer 33

• Allows a short period of credit
• Often offers additional perks

Question 34

Disadvantages of charge cards

Answer 34

• Must be paid in full each month
• Often an annual fixed fee is applied

Question 35

Advantages of store card

Answer 35

• Often offer offers, loyalty schemes, discounts
• Allows a short period of credit that’s interest free

Question 36

Disadvantages of store cards

Answer 36

• Only accepted in the store it’s for
• Interest is paid on outstanding balances

Question 37

Advantages of mobile banking

Answer 37

• Convenient as can be used at any time or place
• Secure

Question 38

Disadvantages of mobile banking

Answer 38

• service is limited compared with internet banking

Question 39

Advantages of BACS and Faster Payments

Answer 39

• Faster payments - transfer takes place within 2 hours
• can be accessed in a number of ways including in a branch
• No fees

Question 40

Disadvantages of BACS and Faster Payments

Answer 40

• Faster payments is not offered by all banks so customer has to do BACS which can take 3 days to transfer payments

Question 41

Advantages of CHAPS

Answer 41

• Guaranteed same-day transfer as long as bank is instructed by a certain time
• No limit

Question 42

Disadvantages of CHAPS

Answer 42

• Fee is charged on every transaction