Section A Methods of payment

Question 1

Give 2 advantages of using a debit card as a method of payment

Answer 1

ADVANTAGES:
- No need to carry cash

• Widely accepted &a secure method of payment

Question 2

Give 2 disadvantages of
using a debit card as a
method of payment

Answer 2

DISADVANTAGES:
Short time lapse between making the transaction and the money being drawn from
the customer’s account

Not accepted or appropriate for small transactions

Question 3

Give 2 advantages of using cash as a method of payment

Answer 3

ADVANTAGES:
Most widely accepted form of exchange

Makes budgeting easier

Question 4

Give 2 disadvantages of
using cash as a method
of payment

Answer 4

DISADVANTAGES:
Can be lost or stolen

Cannot be used for online purchases

Question 5

Give 2 advantages of using a credit card as a method of payment

Answer 5

Allows a period of credit that is interest free - usually 1 month

Suitable for online transactions

Question 6

Give 2 disadvantages of using a credit card as a method of payment

Answer 6

Interest is charged on owed balances if not paid back within a month

Can encourage customer to overspend and get into debt

Question 7

2 advantages of cheques as payment

Answer 7

low risk for of payment as can only be cashed by named payee

widely accepted for face to face or postal transactions

Question 8

2 disadvatages of chques as payment

Answer 8

veiwed as old fashioned

Easy to make erros when writing check resulting in disruptions

Question 9

2 advatages of electronic transfer

Answer 9

Almost instant transfer of money

Provides a record of payment

Question 10

2 disadvantages of electronic transfer

Answer 10

risk of loss if transfer is set up or addressed incorrectly

not appropriate for face to face transactiosn

Question 11

2 advs of direct debit

Answer 11

Easy way to make regular payments e.g household utilites shopping etc

no limit on how much can be paid at once

Question 12

2 dis advs of direct debit

Answer 12

payer dermines the ammount to pay each time which can make budgeting difficult

Question 13

2 advs of standing orders

Answer 13

the same amount is paid each time making it easier for payee to budget

easy to set up and cancel as required

Question 14

2 dis advs of standing orders

Answer 14

Payments are taken regardless of balence - can lead to unplanned overdraft

payments will continue unless cancelled

Question 15

2 advs of pre-paid card

Answer 15

Can set a budget in advance to avoid overspending

if lost or stolen loss is limited to remaining card balence

Question 16

2 dis advs of pre-paid card

Answer 16

no protection if lost

can required initial fee to purchase / set up card e.g oyster travel cards

Question 17

2 advs of contactless

Answer 17

secure method of payment

fast and efficent transactions

Question 18

2 dis advs of contactless

Answer 18

only accepted for relatively small transactiopns

not widely accepted at outlets

Question 19

2 advs of store cards

Answer 19

Allows short period of intrest free credit - typically 1 month

offers cardhlders specific loyalty schemes incentives and discounts

Question 20

2 dis advs of store cards

Answer 20

Only accepted in specified stores

Interest on balences is often high

Question 21

2 advs of mobile banking

Answer 21

convenient to use as access any time any place

more secure than online banking

Question 22

2 dis advs of mobile banking

Answer 22

no available on all phones and require specific apps to use service

regular use of mobile banking can lead to extra charges from bank

Question 23

2 advs of Bankers Automated Clearing Service BACS payments

Answer 23

Faster payment allows almost instant transfers - within 2 hrs

no additional costs

Question 24

2 dis advs of BACS payments

Answer 24

limit on the ammount that can be transferred at once

?

Question 25

2 advs of Clearing house automated payment systems CHAPS

Answer 25

Transfers can be made on the same day providing instructions are recived in time

No limit on ammount of money that can be sent

Question 26

2 dis advs of CHAPS

Answer 26

Fixed charge for each transaction regardless on the ammount

Not a common payment method - unless large purchases - buying a house