Topic 3 Payment Methods

Question 1

What are the advantages of cash?

Answer 1

• readily accepted by people selling goods or service
• instant
• low risk at low values
• helps some people to budget (more aware they are spending money)

Question 2

What are the disadvantages of cash?

Answer 2

• you can only use cash in face-to-face scenarios
• less convenient than other methods
• carrying large amounts of cash can be risky
• some sellers prefer other payment methods

Question 3

What are standing orders?

Answer 3

Standing orders are instructions to pay the same amount of money to another account on a regular basis. These happen regularly and cost nothing.

Question 4

What are direct debits?

Answer 4

Direct debits are when you give permission to the provider to pay regular bills from an organisation. They can be different amounts of money each time. They are free of charge and unlike standing orders, direct debits are protected by a guarantee. They also require a mandate so standing orders are easier to set up.

Question 5

What are mandates?

Answer 5

Instructions given on paper or online involving the account holder completing a form for a one-off payment or to set up regular payments from their account.