Methods Of Payment Flashcards
Ways to pay - cash
Accepted in most places
Can be stolen or counterfeited
Cannot be used for online purchases
Ways to pay - Debit Card
Payment is taken directly from the cardholder’s bank account
Secure method
Contactless cards
Small risk of cardholder overspending
Ways to Pay - Credit Card
Goods and services are paid for directly by the card issuer
Cardholder receives short interest-free period, usually a month on amount borrowed
Ways to Pay - cheque.
A written order to pay a sum of money from a bank customer’s account to another person or organisation
Fairly secure
Takes at least three days for the amount to be available in the payees account
Some retailers no longer accept cheques
Ways to Pay - Electronic transfer
Payment is made directly between accounts
Easy to set up and use
Transfer is instant
Bank details of third party must be correct
Ways to Pay - Standing Order
Instruction to a bank from an account holder to make regular set payments to a person or organisation.
Payments do not change.
Payer must have sufficient funds in their bank account to cover the payment.
Ways to Pay - Direct Debit
Instruction to a bank authorising a third party to collect varying amount of money from the person’s bank account.
Simple way to pay regular bills - the amount is deducted automatically from the payer’s bank account.
Payee may vary amounts making it difficult for payer to plan expenditure.
Payee must have sufficient funds in their bank account to cover the payment
Ways to Pay - Prepaid cards
Cash loaded into a card which can be used to make purchases.
Widely accepted.
Cannot spend more than the amount of cash in card.
If lost/stolen, the money is lost.
Some cards have set-up and transactions fees.
Ways to Pay - Contactless Cards
Payment is made when card touches terminal.
Fast, easy, and secure.
Usually for amounts less than £30.
Risk of overspending
Ways to Pay - Charge Cards
Issued by financial companies.
ST interest fee loan. Cardholder can but goods and services without paying for them immediately. Must be paid in full at the end of every month.
Annual fee is payable, certain level of annual income.
Ways to Pay - Store Cards
Issued by retailers.
Only accepted by store that issues it.
May benefit from discounts and loyalties schemes.
Interest payable on balance.
Risk of overspending.
Ways to Pay - Mobile Banking
Manages account through smartphone or tablet.
Allows holder to check balances. make payments and transfers.
Secure.
Service limited compared with internet banking.
May not be able to access the full range of banking services.
Ways to Pay - BACS and Faster Payments
Electronic payment from one bank account to another.
BACS - 3 days to transfer payment.
Faster Payments - 2 hours.
Usually no fee.
Ways to Pay - CHAPS
Electronic payment from one account to another.
Guaranteed same-day transfer as long as bank instructed by certain time.
A fee is charged.
