PAYMENT SYSTEM Flashcards
TRUE OR FALSE. A loan that is considered low risk by the lender will have a lower interest rate.
TRUE
Who sets the interest rate?
The country’s central banks set the interest rate.
- It is valued because it is a legal tender authorized to be used as a form of payment, does not have intrinsic value but is used as a medium of exchange.
Paper money
It is an unconditional order in writing addressed by 1 person to another, signed by the person giving it, requiring the person to pay on demand, or at a fixed determinable future time.
Bill of exchange
What are the other forms of payment?
- Debit card
- Credit card
- Proximity mobile payment
- Automated cleaning house
- E-money
- Bitcoin
Who are the original parties of the bill of exchange?
Drawer
Drawee
Payee
It issued by a bank allowing the holder to transfer money electronically to another bank
debit card
It is the electronic clearing and settlement system used for financial transactions, examples are employers pay wages through direct deposit to their accounts.
Automated clearing house
It is a digital ledger where transactions are recorded publicly and chronologically and allows individuals and companies to make transactions without any middlemen if they are decentralized.
blockchain
It is an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins but rather through the transfer of digital information, usually an electronic presentation of money between the transacting parties.
Cashless society
The bank immediately credits the seller’s account and debits the buyer’s account.
debit card
It is the electronic store of monetary value on a technical device that is widely used for making payments.
E-money
Who regulates Bitcoin?
SEC
It allows you to spend on credit that you are then payback.
Credit card
It is the payment to a merchant initiated from mobile and uses near field communication (NFC) technology near a merchant’s point-of-sale.
Proximity mobile payments
It is a device act as a prepaid bearer instrument.
E-money
It is a digital currency or crypto-currency and not backed by any central bank or government but can be traded for goods and services that accept it.
bitcoin
What technology does bitcoin use?
Blockchain
It is issued by a bank allowing the holder to purchase goods against a line of credit
Credit card
It is attached to a bank account and allows you to spend the existing fund
Debit card
It is the one who issues and draws the order bill and does not pay directly
Drawer
TRUE OR FALSE. The fundamental idea is the drawer has funds in the hands of the drawee.
True
It is the one who originally issued
Payee
What are the 3 importance of checks?
- Checks are negotiable instrument - They can be used as a substitute for money.
- Constitute the medium of exchange for the most commercial transaction - it increases the purchasing medium in circulation and eliminates the need to count coins
- Serves as a medium of credit transaction - when cash is not available, a check can be issued payable until a future date.
What is the constraint on the use of checks?
it requires more trust on the part of the seller as compared with accepting bills.
It is a negotiable instrument in the form of a bill of exchange.
Checks
It is a system wherein BSP has the sole authority to issue paper currency
Fiat money system
It is the coins minted from the previous metals.
commodity.
It is the currency without intrinsic value that has been established as money.
Fiat money
It is recognized as means to settle a public or private debt or to meet financial obligations.
Legal tender
TRUE OR FALSE. Interest rate functions as the price in the money market.
TRUE
What is the relation between the interest rate and the cost of debt?
Direct proportional
How interest rates are determined in Keynesian theory?
- Investment fund
2. Liquid assets.
What is the function of the interest in the investment funds?
The rate balances the demand for funds and the supply of funds.
TRUE OR FALSE. Holding assets is readily available money.
TRUE
It consists of objects having value or use in themselves (intrinsic value) as well as their value in buying goods.
Commodity money
It is money that is often governed by government regulation and only has value because the government designed it as a legal tender.
Fiat money
It is the party to whom the bill is addressed and who is ordered and expected to pay
Drawee or bank
When the central bank sets interest rates at a high level, the cost of debt ____.
rises
What are the benefits of a cashless society?
- Lower crime
- Less money laundering
- Less time and cost associated with handling paper money
What are the disadvantages of a cashless society?
- Exposes your personal information
- No alternative source of money
- Technology problems can leave you with no access to your money
- Poor and those without bank accounts will have difficulty paying and receiving payments.
- Harder to find it harder to control spending when they don’t see physical cash leaving their hands.
