A2 Methods of payments - advantages and disadvantages Flashcards
what are the 14 different payment methods
cash ,cheques, Debit cards , credit cards, Direct debit , standing order, Electronic transfer, pre - paid cards , contactless cards, charge card , store card, Mobile banking, Bacs , chaps.
what are the advantages of paying cash ?
- most widely accepted form of exchange.
- It is physical not virtual.
- consumers feel confident when using cash.
- makes budgeting easier.
what are the disadvantages of paying cash ?
- inconvenience of transactions.
- risk of counterfeiting.
- cash not always accepted.
what are the advantages of cheques ?
- enhanced security.
- cost -effective.
- cheques can be post dated to be used at later date.
what are the disadvantages of cheques ?
- not legal tender.
- outdated method of payments.
- risk of fraud and bounced checks.
what are the advantages of debit cards ?
- convenient and accessible.
- security and fraud protection.
- no debt accumulation.
what are the disadvantages of debit cards ?
- limited fraud protection.
- overdraft fees. -
- no rewards .
what are the advantages of credit cards ?
- credit card rewards.
- fraud protection .
- convenient.
what are the disadvantages of credit cards ?
- paying high rates of interest.
- credit damage.
- annual fees
what are the advantages of direct debit ?
- flexible.
- time - saving
- cost - effective.
what are the disadvantages of direct debit ?
- easily get into a financial trouble
- you can be charged overdraft or late fees.
- controlled by a third party
what are the advantages of standing order ?
- convenient.
- you can control the amount and frequency of payment’s.
- helps you manage budgeting.
what are the disadvantages of standing order ?
- lack of flexibility.
- payments delays and failures.
- high maintenance.
what are the advantages of electronic transfer ?
- safety and security.
- speed and convenient.
- instant access to funds or payments.
what are the disadvantages of electronic transfer ?
- high transaction fees.
- payment’s can get declined.
- risk of fraud.
what are the advantages of pre - paid card ?
- makes budgeting easier.
- no credit checks.
- travel - friendly.
what are the disadvantages of a pre - paid card ?
- certain locations do not accept.
- no interest on money .
- must pay a monthly maintenance fee.
what are the advantages of contactless cards ?
- faster and easier transactions
- increased fraud and security prevention.
- improved hygiene.
what are the disadvantages of contactless card ?
- security concerns .
- low spending limit.
- can lead to overspending.
what are the advantages of charge card ?
- financial discipline encourages responsible spending.
- offer generous rewards, especially for travel and dining.
- theft protection
what are the disadvantages of charge card ?
- not accepted everywhere.
- offer an annual fee.
- you can’t borrow for longer than a month.
what are the advantages of store cards ?
- exclusive discounts and vouchers.
- early access to sales.
- no annual fee.
what are the disadvantages of store cards ?
- you can only use the card with the particular store.
- there are high interest charges.
- may tempt you to overspend.
what are the advantages of mobile banking ?
- makes it easier to save money.
- strengthened security.
- you can check your account , any time and anywhere ?
what are the disadvantages of mobile banking ?
- risk of cybercriminals to attempting to breach the system.
- relies heavy on technology.
- extra charges for internet services.
what are the advantages of BACS ?
- safe and secure transactions.
- inexpensive payments.
- saves time.
what are the disadvantages of BACS ?
- slow processing time.
- costs for businesses including setup and transaction fees.
- inflexible timing.
what are the advantages of CHAPS ?
- highly secure
- no upper limit for the amount that can be transferred.
- guarantees same day payment
what are the disadvantages of CHAPS ?
- charge a fee
- not suitable for small transfers.
- limitied availability.
