Chapter 9~Making Payments Flashcards
Cheque?
A written instruction to your bank to pay a sum of money from your current account to another person
Dishonoured cheque?
A cheque which the bank refuses to cash because there is not enough money in the account. It is sent back to the payee marked ‘R/D- refer to drawer’
Endorsing a cheque?
When the payee passes their right to the cheque to another party by signing their name on the back of the cheque
Crossing a cheque?
Drawing two parallel lines across the face of the cheque in order to make it safer. A crossed cheque must be lodged into the bank account of the person named on the face of the cheque and it will be as least three days until it is turned into cash
Special crossing?
Includes special instructions between parallel lines drawn across the face of the cheque
E.g ~ ‘a/c payee only’. In this case, the cheque can only be paid into the payees bank account.
Postdated cheque?
A cheque that is dated for sometime in the future
Antedated cheque?
A cheque that contains a date that is sometime in the past
Blank cheque?
A signed cheque that has some relevant piece of information omitted
E.g ~ date
Stale cheque?
A cheque that is more than six months old and therefore is worthless
Banker’s/Cheque guarantee card?
Guarantees the payee that they will receive the amount of the cheque even if there’s no money in the drawers account, up to a maximum of €130
Debit card?
An electronic payment card that allows a current account holder to withdrawal monte from their account and to pay for goods without having to use cheques or cash
Smart card?
A card which is preloaded with cash from a current account. It can be topped up at ATM’s. It is then used to purchase goods in a similar way to a debit card
EFTPOS?
Electronic Funds Transfer at Point Of Sale is the use of Laser Cards and Smart Cards(but NOT credit cards) to pay for goods and services.
Paypath?
The electronic transfer of wages, by an employer, directly from their bank account, into the employees
Travellers cheques?
Cheques that come printed in various amounts of a foreign currency. They are paid for at the bank when they are purchases and can be turned into cash in a bank or bureau de change in the foreign country you are visiting
5 ways to make payments
1) cheque/bank draft
2) laser card/credit card(visa)/smart card
3) thought ATM
4) direct debit/standing order/credit transfer
5) paypath
4 ways of paying for goods and services in a foreign country
1) travellers cheque
2) foreign currency notes and coins
3) foreign currency bank draft
4) credit cards
Who are the 3 parties to a cheque?
- drawer ~ the person who writes the cheque
- payee ~ the person to whom the money is being paid
- drawee ~ the bank of the person writing the cheque
3 reasons why a bank can refuse to cash a cheque
- information missing (the amount)
- suspicious of the signature
- not enough to money in the drawers account
2 advantages of cheques
- no need to carry cash
* proof of payment due to stub/counterfoil
What is a bank draft?
It is similar to a cheque in that it is made out to the person you want to pay the money to. A customer buys the draft from the bank, and gives the bank the amount of money of the bank draft. It is a safer option than a cheque for the payee given that the bank has already received the money.
How does a debit/laser card work?
1) the card is swiped through a terminal at cash desk
2) amount of transaction is keyed in
3) customers will be asked to type in their PIN
4) receipt is printed and a copy is given to customer
5) amount is taken electronically from the consumers current account and transferred to the retailers account
How does a credit card work?
1) card is swiped through a terminal at cash desk
2) amount of transaction is keyed in
3) customer will be asked to type in their pin
4) receipt is printed and a copy is given to customer
5) amount is NOT taken directly from customers account
6) credit card company pays seller at end of month
7) customers get sent bill from credit card company at the end on the month
8) customer must pay within 19 days or charged hit rate of interest
3 advantages of a debit card
- can be used to buy goods online
- no bills built up as it comes directly from account
- cheaper than writing cheques
Direct debit(DD) ?
When an account holder gives permission to a business or company to request variable amounts of money to be paid out of the persons account on a regular basis. The amount taken out varies
E.g ~ telephone, electricity bills
Standing order(SO) ?
When an account holder tells their bank to pay a fixed amount of money from their bank account to another on a regular basis. This is used for paying bills where the amount doesn’t vary
E.g ~ rent
Credit transfer(CT) ?
Money is transferred from ones bank account directly into another’s bank account.
3 advantages of paypath
- safer as you aren’t caring cash
- it cuts down on time spent by bank employees on the processing of cheques
- more convenient