Topic 3 Flashcards
How do people tend to use cash?
for everyday, low-value transactions
when they are in face-to-face situations with the sellers.
What are the advantages of using cash?
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.
what are the disadvantages of using cash?
The transaction is not made face-to-face with the seller.
The transaction must be made on the same or similar dates every month
What is a standing order?
Standing orders are instructions to pay the same amount of money to another
account on a regular basis
What does a standing order do?
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
What is a direct debit?
Direct debits are another type of automatic payment that can be set up for a current account
How does a direct debit work?
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.
What is online banking?
Online banking enables account holders to give instructions for account transactions via the internet
How does online banking work?
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.
What is faster payment service?
Faster Payments is an electronic payment service offered by all UK banks and building societies
What was used before faseter payment service
BACS
How does the faster payment service work?
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.
What is CHAPS?
CHAPS is a same-day automated payment system used for very high value payments.
What does CHAPS stand for?
Clearing House Automated Payment System
What is mobile banking?
Mobile banking enables account holders to give payment instructions on their mobile phone using the internet
What is online payment service?
Online payment services, such as Paypal, enable people to pay each other without exchanging current account details
What is a cheque?
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
What is a bankers draft?
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
What is a cash card?
Cash cards allow account holders to withdraw cash from their account at a branch or using an ATM
What is a debit card?
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
What is a prepaid card?
Pre-paid cards are like electronic purses. Cardholders load the card with money and then use it to pay for goods or services
What is a contactless card?
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
How would you use a debit card overseas?
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.
What is pre-paid travel card?
These are plastic payment cards that can be loaded with money and then used to
make payments in other countries
