Methods of Payment Flashcards
Cash
Notes and coins.
Cheque
Document that authorises a bank to transfer money from one persons account to that of another.
drawee: pays a person the money
payee: receives the money
drawer: authorises the transaction
Direct Debit
A form of payment with a card issued with a bank, transfers money from ones bank to the account of the seller. EFTPOS advertises acceptance of direct debit payments.
Credit Card
Allows a consumer to purchase accessing banks own money. Interest charged if consumer does not repay this within 55 days. e.g. VISA, American Express
Lay-by
Allows for a consumer to pay for a good over a period of time. Once it is fully paid off, the consumer gets the good.
Electronic Funds Transfer - B Pay
Using the telephone or internet to transfer funds from their bank account to pay common household expenses. Telstra, vodafone accept B-pay
Book Up
When a store keeps record of all the purchases a consumer makes and then receives payment within a period of time.
When is cash commonly used?
Small purchases e.g. food from supermarket
When is cheque commonly used?
When credit or cash is not accepted, or the consumer does not have the money on them.
When is direct debit commonly used?
Purchases where you have the money in your bank account, no interest charged
When is credit card commonly used?
When you don’t currently have the money, or want to maintain the money in your bank account. Can be used globally.
When is lay-by used?
When a consumer doesn’t have the money but will make it up eventually
When is B-pay commonly used?
To pay for house expenses
When is book up commonly used
Consumers that live in rural and remote Australia
Advantages and disadvantages of credit card
A: secure, efficient, wide use, earns points
D: Pay interest
Advantages and disadvantages of debit card
A: earns points, can keep a record of your spendings
D: takes money out of your bank account
Advantages and disadvantages of cash
A: accepted everywhere
D: frustrating to carry, inefficient
Advantages and disadvantages of cheque
A: useful to those without a method of payment
D: No longer common, inefficient
Advantages and disadvantages of lay-by
A: makes product affordable, can make money over time
D: lock in contracts, too many lay-bys become expensive,
Advantages and disadvantages of B pay
A: pay from home
D: easily be scammed into giving your details
Advantages and disadvantages of book up
A: pay in your own times
D: easily overspend, needs lots of security,
What is the barter system
Trading of goods paying with other goods
Key characteristics of any form of money
Durability, divisibility, portability, uniformity, acceptability.
