Payment Methods Flashcards
Cash
Notes & Coins.
Debit Card
Issued by banks with payments being deducted directly from a current account.
Credit Card
Issued by financial institutions allowing customers to pay by card & delay payment.
Cheque
A written order to a bank to make a payment from one person to another.
Electronic Transfer
Payment is transferred directly from one bank to another.
Direct Debit
Agreement made with a bank to transfer a fixed sum of money
Pre-paid Card
Money uploaded onto a card with transactions then deducted.
Contactless Card
Allows money to be transferred if card touches contactless point.
Charge Card
Allows money to delay payment for goods & services & pay-off in full.
Store Card
Issued by a retail outlet, so that customers can delay payment.
Mobile Banking
Ability to carry out financial transactions using mobile devices.
Bankers Automated Clearing Service (BACS) Faster Payment
Allows transfer of payments from one bank account to another.
Clearing House Automated Payments (CHAPS)
Allows the transfer of payments directly from one bank account to another.
Advantage of Cash
Widely accepted, physical not virtual.
Disadvantage of Cash
Easily lost/stolen, unsuitable online.
Advantage of Debit Card
No need to carry cash, widely accepted secure method of payment.
Disadvantage of Debit Card
Short time lapse, not accepted for small transactions.
Advantage of Credit Card
Allows period of credit, widely accepted with loyalty schemes.
Disadvantage of Credit Card
Interest is charged on balances not paid off, may encourage consumer debt.
Advantage of Cheque
Low risk form of payment, widely accepted and the exact amount is specified.
Disadvantage of Cheque
Time delay, viewed as old fashioned and bounced cheque is expensive.
Advantage of Electronic Transfer
Almost instantaneous, record of payment.
Disadvantage of Electronic Transfer
Risk of loss if incorrectly set up, not suitable for face-to-face.
Advantage of Direct Debit
Easy way to make regular payments, amount paid can vary and it is easy to set up.
Disadvantage of Direct Debit
Payer may make a mistake & this becomes payees responsibility, may make budgeting difficult.
Advantage of Standing Order
Same amount paid each time, easy both to set up & cancel
Disadvantage of Standing Order
Payments are taken regardless of the customers balance.
Advantage of Pre-Paid Card
Can set a budget to prevent overspending.
Disadvantage of Pre-Paid Card
No protection if lost, may require an initial set-up fee.
Advantage of Contactless Card
Gaining in popularity, secure method of making payments.
Disadvantage of Contactless Card
Not as widely available, generally for small transactions.
Advantage of Charge Card
Reduces risk of running up debt, allows a short period of credit and avoids the need to carry cash.
Disadvantage of Charge Card
Must be paid off in full every month.
Advantage of Store Card
Allows a period of credit, often offer loyalty schemes.
Disadvantage of Store Card
Interest is payable on outstanding balances.
Advantage of Mobile Banking
Convenient & Secure.
Disadvantage of Mobile Banking
Features are still limited & does not offer full banking facilities.
Advantage of Bankers Automated Clearing Service (BACS) Faster Payment
Faster payments allow almost instant transfers, no additional costs.
Disadvantage of Bankers Automated Clearing Service (BACS) Faster Payment
Limit set on maximum transfer.
