Payment Methods Flashcards
What payment system has increased in use over recent years?
Electronic payments
What payment system has decreased over recent years?
Paper based payments eg Cheques
What is cash payments used for in businesses?
Cash wages or petty cash
What risk is associated with using a cheque?
It bouncing as it is incorrect
What type of card is commonly used for making purchases?
Debit card
What card is purchased by the user and has to have a preloaded balance in order for it to be used?
Prepayment card
What are credit cards used for?
They are used to make purchases which will be paid off partly or fully at the end of the month on receipt of a statement
What are charge cards?
Charge cards are a form of credit card popular with businesses; the amount spent on the card will need to be settled in full each month. (American Express is an example)
What is BACs does it stand for and what is it used for?
Bankers automated clearing services used for making direct payments between bank accounts by standing order, direct debit and direct credit. It takes three working days for the money to be transferred
What is faster payments?
Faster payments is a same day two hour computer payment service used by the banks for standing orders, telephone and online payments.
What system is used for same day payments for large amounts of money?
CHAPS (Clearing House Automated Payments System) - electronic
Bank draft (bank paper document, similar to a cheque, issued by the bank)
Define: cheque
A cheque is an instruction in writing, signed by the banks customer (who is paying the money) telling the bank to pay an amount to a named person or business
Define: debit card
Is a card which can be used for purchases and cash withdrawals; payment is taken from the bank account on the next working day
Define: pre-payment card
A card which can be purchased and is given a balance to spend, however it can be topped up when the balance is running low. (Preloaded card)
Define: credit card
A card issued on a ‘buy now and pay later’ basis; payment is made monthly in full or in part on receipt of the statement
Define: charge card
A card issued on a ‘buy now and pay later’ basis; payment is made monthly in full by the user. These are typically used in businesses, an example of a charge card would be American Express
Define: electronic bank transfer
A term used to describe the electronic transfer of funds through the banks computer system
Define: BACS
Bankers Automated Clearing System- a system set up by the banks to make computer based direct payments between bank accounts.
Define BACS direct credit
Direct BACS payments between bank accounts with a three working day clearance
Define: standing order
Regular (fixed date and amount) payment, set up with the bank by the business sending the money. They can be processed by BACS or by faster payment
Define: direct debit
Variable date and amount BACS payments, set up by the organization receiving the payment
Define: Faster Payments
Same day payment (usually 2 hours) between banks- the instructions can be given at the bank branch, by telephone or online
Define CHAPS
Clearing House Automated Payment System.
High value same day payment. Sent through the banks computer system. They can not be cancelled after they have been sent
Define: bank draft
A paper based document (similar to a cheque) issued by a bank- as good as cash- used for high value purchases, it can not be stopped or cancelled after it has been issued.
