Chapter 9 - Making Payments

Question 1

Define a cheque.

Answer 1

A written instruction from your bank to pay a sum of money from your current account to another person.

Question 2

Define a dishonoured cheque.

Answer 2

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 - Return to Drawer.

Question 3

Define endorsing a cheque.

Answer 3

When the payee passes their right to the cheque to another party by signing their name on the back of the cheque.

Question 4

Define crossing a cheque.

Answer 4

Drawing two parallel lines across the face of a cheque in order to make it safer. A crossed cheque must be lodged into a bank account and it will be at least three days until it is turned into cash.

Question 5

Define special crossing.

Answer 5

Includes special instructions between parallel lines drawn across the face of a cheque. e.g. ‘a/c payee only’. In this case, the cheque can only be paid into the payee’s bank account.

Question 6

Define a postdated cheque.

Answer 6

A cheque that has a date on it sometime in the future.

Question 7

Define an antedated cheque.

Answer 7

A cheque that contains a date that is sometime in the past.

Question 8

Define a blank cheque.

Answer 8

A signed cheque that has some relevant piece of information omitted e.g. date.

Question 9

Define a stale cheque.

Answer 9

A cheque that is more than six months old and therefore is worthless. (Payee could contract drawer and ask for cheque to be reissued.)

Question 10

Define a cheque guarantee card.

Answer 10

Guarantees the payee that they will receive the amount on the cheque even if there is no money in the drawer’s account, up to a maximum of €130. (Requires payee to check signatures on card and cheque, check expiry date of card and write card number on back of cheque.)

Question 11

Define debit card.

Answer 11

An electronic payment card that allows a current account holder to withdraw money from their account and to pay for goods without having to use cheques or cash.

Question 12

Define smart card.

Answer 12

A card which is preloaded with cash from a current account. It can be topped up at ATMs. It is then used to purchase goods in a similar way to a debit card.

Question 13

Define EFTPOS.

Answer 13

Electron 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.

Question 14

Define paypath.

Answer 14

The electronic transfer of wages, by an employer, directly from their bank account, to the employees.

Question 15

Define traveller’s cheques.

Answer 15

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. (A passport must be presented when changing traveller’s cheques into cash.)

Question 16

Name three ways of paying for goods or services in a foreign country.

Answer 16

1. Traveller’s cheques
2. Foreign currency notes and coins
3. Credit cards

Question 17

List the parties to a cheque.

Answer 17

1. Drawer — The person who writes the cheque
2. Payee — The person to whom the money is being paid
3. Drawee — The bank of the person writing the cheque

Question 18

Define DD (Direct Debit).

Answer 18

An electronic method of making payments. Permission is granted, by an account holder, to a person or business to request variable amounts of money to be paid out of your bank account to their bank account on a regular basis. (Used for paying bills where the amount varies e.g. telephone, ESB bills.)

Question 19

Define SO (Standing Order).

Answer 19

Am electronic method of making payments. An account holder tells their bank to pay a fixed amount of money from their bank account to another bank account on a regular basis. (Used for paying bills where the amount does not vary e.g. rent/mortgage.)

Question 20

Define CT (Credit Transfer).

Answer 20

An electronic method of making payments. Money is transferred from one’s bank account directly into another’s bank account. Each time a person wishes to transfer money a new credit transfer must occur.

Question 21

Give two advantages of paypath.

Answer 21

1. Safer for the employee and employer as they are not carrying/holding the cash.
2. It is more convenient for employees as they do not have to get to a bank, in order to cash a cheque.