Methods Of Payment

Question 1

Cash ?

Answer 1

Cash - notes and coins

Question 2

Debit card ?

Answer 2

Debit card - issued by banks with payments for goods and services being deducted directly from a current account

Question 3

Credit card ?

Answer 3

Credit card - issued by financial institutions allowing customers to delay payments for goods and services ( buy now , pay later )

Question 4

Cheque ?

Answer 4

Cheque - a written order to a bank to make a payment for a specific amount of money from one persons account to another

Question 5

Electronic transfers ?

Answer 5

Electronic transfers - a system that allows the transfer of payments directly from one bank account to another

Question 6

Direct Debit ?

Answer 6

Direct debit - an agreement with a bank allowing a third party to withdrawer money from an account on a set day to pay for goods and services eg electricity bill

Question 7

Standing order ?

Answer 7

Standing order - an agreement made with the bank to transfer a set fixed amount to a third party on an agreed date on a regular basis eg a phone contract

Question 8

Pre paid card ?

Answer 8

Pre paid card - money is uploaded onto a card and then money is deducted from the balance to reduce the amount

Question 9

Contactless card ?

Answer 9

Contactless card - cards contains antenna allowing money to be transferred when touching a payment terminal

Question 10

Charge card ?

Answer 10

Charge card - issued by financial institutions which allows you to delay payments for a short time . Is then paid back in full when issued with a statement

Question 11

Store card ?

Answer 11

Store card - issued by a retail outlet to be used for purchases and delay payments for a later date

Question 12

Mobile banking ?

Answer 12

Mobile banking - the ability to carry out financial transactions through the online banking portal

Question 13

Bankers automated clearing service (BACS) ?

Answer 13

Bankers automated clearing service (BACS) - payment is transferred directly from one bank account to another

Question 14

Clearing house automated payment system (CHAPS) ?

Answer 14

Clearing house automated payment system (CHAPS) - a system that allows the transfer of payments directly from one bank account to another

Question 15

Advantages of cash ?

Answer 15

• accepted in most places

Question 16

Disadvantages of cash ?

Answer 16

• can be stolen
  -cannot be used for online purchases

Question 17

Advantages of debit cards ?

Answer 17

• secure method as no need for cash
  -can be used for small amounts
• used for online purchases

Question 18

Disadvantages of debit cards ?

Answer 18

-small risk of card holder overspending
-used for online purchases which can encourage overspending
-risk that the card details may be hacked

Question 19

Advantages of credit card ?

Answer 19

-cardholder receives a short interest free period usually a month on the amount borrowed
-used for online purchases

Question 20

Disadvantages of credit cards ?

Answer 20

-card issuers charges interest on the balance outstanding after the interest free period
-risk of cardholder overspending and getting into debt
-used for online purchases which can encourage overspending
-risk that the card details can be hacked
-some retailers charge a fee for payments made by credit card

Question 21

Advantages of cheques ?

Answer 21

-fairly secure method as only the payee can cash the cheque

Question 22

Disadvantages of cheques ?

Answer 22

-once the payee cashes the cheque it takes at least 3 days for the amount to be available in their account
-some retailers no longer accept cheques

Question 23

Advantages of electronic transfer ?

Answer 23

-easy to set up and use
-transfer is instant

Question 24

Disadvantages of electronic transfer ?

Answer 24

-bank details of third part must be correct , otherwise transfer will not take place

Question 25

Advantages of direct debit ?

Answer 25

-simple way to pay regular bills - the amount is deducted automatically from the payers bank account

Question 26

Disadvantages of direct debits ?

Answer 26

-payee may vary amounts making it difficult for the payer to plan expenditure
-payer must have sufficient funds in their bank account to cover the payment

Question 27

Advantages of standing orders ?

Answer 27

-payments do not change , allowing the payer to plan their expenditure
-payments are made automatically and continue until cancelled making them convenient

Question 28

Disadvantages of standing orders ?

Answer 28

-payer must have sufficient funds in their bank account to cover the payment

Question 29

Advantages of prepaid cards ?

Answer 29

-widely accepted by retailers

Question 30

Disadvantages of pre paid cards ?

Answer 30

• cannot spend more than the amount of cash on the card - however may help control spending
  -if lost or stolen , the cash on the card is lost
• some cards have se up and transaction fees

Question 31

Advantages of contactless cards ?

Answer 31

• fast ,easy , secure

Question 32

Disadvantages of contactless cards ?

Answer 32

-usually for amounts less than £30
-cardholder can lose track of how much they are spending

Question 33

DisAdvantages of charge cards ?

Answer 33

-annua fee is payable
-charge card companies require customers to have a certain level of annual income

Question 34

Advantages of store cards ?

Answer 34

-cardholders may benefit from discounts and loyalty schemes

Question 35

Disadvantages of store cards ?

Answer 35

-interest is payable on balance unless paid off in full each Month
-risk of cardholder overspending and getting into debt

Question 36

Advantages of mobile banking ?

Answer 36

-allows account holder to check balances , make payments and transfers
-secure
-can be used wherever the account holder has access to the internet

Question 37

Disadvantages of mobile banking ?

Answer 37

-service limited compared with internet banking
-may not be able to access the full range of banking services

Question 38

Advantages of BACS ?

Answer 38

-faster payments - transfers take place Within 2 hours
-usually no fee

Question 39

Advantages of CHAPS ?

Answer 39

-guaranteed Same day transfer as long as bank is instructed by a certain time

Question 40

Disadvantages of CHAPS ?

Answer 40

-A Fee is charged