Methods Of Payment Flashcards
Cash ?
Cash - notes and coins
Debit card ?
Debit card - issued by banks with payments for goods and services being deducted directly from a current account
Credit card ?
Credit card - issued by financial institutions allowing customers to delay payments for goods and services ( buy now , pay later )
Cheque ?
Cheque - a written order to a bank to make a payment for a specific amount of money from one persons account to another
Electronic transfers ?
Electronic transfers - a system that allows the transfer of payments directly from one bank account to another
Direct Debit ?
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
Standing order ?
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
Pre paid card ?
Pre paid card - money is uploaded onto a card and then money is deducted from the balance to reduce the amount
Contactless card ?
Contactless card - cards contains antenna allowing money to be transferred when touching a payment terminal
Charge card ?
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
Store card ?
Store card - issued by a retail outlet to be used for purchases and delay payments for a later date
Mobile banking ?
Mobile banking - the ability to carry out financial transactions through the online banking portal
Bankers automated clearing service (BACS) ?
Bankers automated clearing service (BACS) - payment is transferred directly from one bank account to another
Clearing house automated payment system (CHAPS) ?
Clearing house automated payment system (CHAPS) - a system that allows the transfer of payments directly from one bank account to another
Advantages of cash ?
- accepted in most places
Disadvantages of cash ?
- can be stolen
-cannot be used for online purchases
Advantages of debit cards ?
- secure method as no need for cash
-can be used for small amounts - used for online purchases
Disadvantages of debit cards ?
-small risk of card holder overspending
-used for online purchases which can encourage overspending
-risk that the card details may be hacked
Advantages of credit card ?
-cardholder receives a short interest free period usually a month on the amount borrowed
-used for online purchases
Disadvantages of credit cards ?
-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
Advantages of cheques ?
-fairly secure method as only the payee can cash the cheque
Disadvantages of cheques ?
-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
Advantages of electronic transfer ?
-easy to set up and use
-transfer is instant
Disadvantages of electronic transfer ?
-bank details of third part must be correct , otherwise transfer will not take place
Advantages of direct debit ?
-simple way to pay regular bills - the amount is deducted automatically from the payers bank account
Disadvantages of direct debits ?
-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
Advantages of standing orders ?
-payments do not change , allowing the payer to plan their expenditure
-payments are made automatically and continue until cancelled making them convenient
Disadvantages of standing orders ?
-payer must have sufficient funds in their bank account to cover the payment
Advantages of prepaid cards ?
-widely accepted by retailers
Disadvantages of pre paid cards ?
- 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
Advantages of contactless cards ?
- fast ,easy , secure
Disadvantages of contactless cards ?
-usually for amounts less than £30
-cardholder can lose track of how much they are spending
DisAdvantages of charge cards ?
-annua fee is payable
-charge card companies require customers to have a certain level of annual income
Advantages of store cards ?
-cardholders may benefit from discounts and loyalty schemes
Disadvantages of store cards ?
-interest is payable on balance unless paid off in full each Month
-risk of cardholder overspending and getting into debt
Advantages of mobile banking ?
-allows account holder to check balances , make payments and transfers
-secure
-can be used wherever the account holder has access to the internet
Disadvantages of mobile banking ?
-service limited compared with internet banking
-may not be able to access the full range of banking services
Advantages of BACS ?
-faster payments - transfers take place Within 2 hours
-usually no fee
Advantages of CHAPS ?
-guaranteed Same day transfer as long as bank is instructed by a certain time
Disadvantages of CHAPS ?
-A Fee is charged
