Topic 3

Question 1

How do people tend to use cash?

Answer 1

for everyday, low-value transactions
when they are in face-to-face situations with the sellers.

Question 2

What are the advantages of using cash?

Answer 2

convenient for the payer (as long as they have enough notes and coins with
them);
readily accepted by people selling the goods or the service;
instant; and
low risk at low values.

Question 3

what are the disadvantages of using cash?

Answer 3

The transaction is not made face-to-face with the seller.
The transaction must be made on the same or similar dates every month

Question 4

What is a standing order?

Answer 4

Standing orders are instructions to pay the same amount of money to another
account on a regular basis

Question 5

What does a standing order do?

Answer 5

Standing orders can be set up and cancelled by giving instructions to the current account provider in writing, over the phone or online. They can be cancelled at any
time and cost nothing, as long as the account holder has enough money in their
current account to meet the payment

Question 6

What is a direct debit?

Answer 6

Direct debits are another type of automatic payment that can be set up for a current account

Question 7

How does a direct debit work?

Answer 7

When people set up Direct Debits, they are giving permission to their provider to pay the regular bills that an organisation will present for payment. This means that the payments can be for different amounts of money each time.

Question 8

What is online banking?

Answer 8

Online banking enables account holders to give instructions for account transactions via the internet

Question 9

How does online banking work?

Answer 9

Online banking enables account holders to set up regular payments such as Standing
Orders and direct debits, as well as making one-off transfers between their own accounts and paying organisations and individuals.

Question 10

What is faster payment service?

Answer 10

Faster Payments is an electronic payment service offered by all UK banks and building societies

Question 11

What was used before faseter payment service

Answer 11

BACS

Question 12

How does the faster payment service work?

Answer 12

The Faster Payments Service ensures that payment arrives in the
destination bank account within two hours of the provider receiving instructions, either online, by phone or by standing order.

Question 13

What is CHAPS?

Answer 13

CHAPS is a same-day automated payment system used for very high value payments.

Question 14

What does CHAPS stand for?

Answer 14

Clearing House Automated Payment System

Question 15

What is mobile banking?

Answer 15

Mobile banking enables account holders to give payment instructions on their mobile phone using the internet

Question 16

What is online payment service?

Answer 16

Online payment services, such as Paypal, enable people to pay each other without exchanging current account details

Question 17

What is a cheque?

Answer 17

A cheque is a payment mechanism that enables an account holder to instruct their provider to pay a specific amount of money to a specific person or organisation

Question 18

What is a bankers draft?

Answer 18

Banker’s drafts look similar to cheques and are processed through the clearing
system. However, they are signed by the provider rather than an individual

Question 19

What is a cash card?

Answer 19

Cash cards allow account holders to withdraw cash from their account at a branch or using an ATM

Question 20

What is a debit card?

Answer 20

Debit cards allow account holders to access cash from their accounts and also to pay for goods in stores, over the internet, by telephone and by post

Question 21

What is a prepaid card?

Answer 21

Pre-paid cards are like electronic purses. Cardholders load the card with money and then use it to pay for goods or services

Question 22

What is a contactless card?

Answer 22

Some debit or pre-paid cards can also be used for contactless payments of up to £30 per transaction. This service allows cardholders to make transactions by holding their card near a reader

Question 23

How would you use a debit card overseas?

Answer 23

The transactions will be made in the local currency and the provider will use an exchange rate to translate this amount into pounds. Cardholders may be charged a fee for using their debit cards abroad. Debit cards can also be used in ATMs to withdraw cash in the local currency.

Question 24

What is pre-paid travel card?

Answer 24

These are plastic payment cards that can be loaded with money and then used to
make payments in other countries

Question 25

What is an advantage of pre paid travel cards?

Answer 25

They are also a safe way of carrying money when travelling. If the card is lost or stolen the card can be blocked and the remaining balance refunded.

Question 26

What is a travellers cheque?

Answer 26

These are pre-printed cheques for set amounts of currency they can be used in shops and hotels