Payment Methods Flashcards
When would you use cash? What effect does it have on the bank balance?
Used for low value transactions.
When cash is withdrawn it will immediately reduce the bank balance
When writing out a cheque who is the drawee payee and drawer?
Drawee - Bank has issued the cheque and will have to pay it
Payee - The person who is receiving the cheque
Drawer - person who is writing up the cheque (customer)
What is a dishonoured cheque?
What effect does a cheque have on the bank balance?
Cheques which are sent back to the payee because there is a problem eg insufficient funds
Balance is reduced after the payment date
What is a debit card?
Electronic payment allows someone to make transactions in person or remotely, immediately reduces the bank balance.
What is a Credit card
Business pays for goods and services with a credit card. Reduces the bank balance after the payment date
What is a bank draft?
Non cancellable cheque, used for large payments especially overseas or foreign countries. Bank balance is reduced at that point of the bank agreeing to it.
What is a Standing order?
method of making the same regular payment, FIXED amount, bank balance is reduced on the date of the payment
What is a direct debit?
Mehtod of making a payment from a business bank account to another third party, however direct debit allows the payments to vary in amount. Bank balance is reduced on the date of the payement.
What is a direct credit?
Deposit of money by payer into payees bank, usually to pay salaries and suppliers. Bank balance is paid on date of payment.
What is CHAPS?
Instruction by a business to its bank to move money to recpeints bank funds available that working day. Commonly used for large amounts such as transferring solicitors for the purchase of property. Bank balance is reduced on the date of payment.
What is faster payments?
Allows customers to make small and medium sized payments via the internet. Payment is deducted immediately but paid on the date of payment.
Which methods of payments reduce the bank balance at a later date?
Cheque, Credit Card
