Topic 3 - Payment Methods

Question 1

what is cash used for?

Answer 1

everyday, low value transactions in face to face situations with sellers

Question 2

4 advantages of using cash in transactions

Answer 2

• convenient for the payers (as long as they have enough notes and coins with them
• readily accepted by people selling the food or the service
• instant transaction (doesn’t need to be processed
• low rush at low values
  -easier to budget

Question 3

why is budgeting an advantage of using cash payment?

Answer 3

• u r able to withdraw a certain amount of cash per week and stick to that amount
• east to see how much cash is left

Question 4

what are 5 disadvantages of using cash payment?

Answer 4

• the transaction must be made face to face with the seller not online
• the transaction must be made on the same or similar dates every month
• paying by cash is less convenient than other methods
• carrying large amounts of cash can be risky
• some sellers prefer other payment methods

Question 5

how can electronic payments from current accounts be instructed to take place?

Answer 5

these are called mandates
instruction can be given by:
-on paper
-on the phone
- online

Question 6

what is the electronic payment standing orders?

Answer 6

instruction to pay the same amount of money to another account on a regular basis.

standing order can be set up and cancelled by informing the current account provider in writing over the phone or online.

Question 7

what is direct debit?

Answer 7

another type of automatic payment that can be set up for a current account.
when set it up it gives permission to the provider to pay regular bills that an organisation will present - thus the payment can be for different amounts of money each time

Question 8

what is online banking?

Answer 8

when an account holder has the ability to give instructions through the internet to there provider to make transactions or set up new accounts

Question 9

what are faster payments?

Answer 9

an electronic payment service provided by all banks that garuntees the destination bank account receives their money within two hours

Question 10

What does the electron payment method CHAPS stand for?

Answer 10

clearing house automated payment system

Question 11

What is the payment method Chaps?

Answer 11

same day automated payment system used for very high value payments
- eg when buying a house you would want ure transaction to be secure as it is a large sum of money, banks may charge extra for this however it is usually deemed worth it by the payer

Question 12

what is the electronic payment method - mobile banking?

Answer 12

account holders can download a mobile banking app from their leo oder thay includes security measures where they can carry out any actions they please

Question 13

what are online payment services?

Answer 13

payment services such as paypal allow people to pay eachother without exchanging bank account details
protects users from any unauthorised payments from their accounts

Question 14

what are advantages of electronic payments?

Answer 14

-they are fast, safe, convenient to most
- free of charge

Question 15

what are disadvantages of electronic payments?

Answer 15

• security, knline fraud and identity theft mean that account holders must be very careful to follow security procedures and keep their passwords and pass numbers safe
• account holders will make mistakes, paying the wrong amount of money or too the wrong person

Question 16

What are Cheuques?

Answer 16

payment mechanism that allows account oldest to instruct there provider to pay a specific amount of money to a specific person or organisation
checkbooks are provided for by their bank

Question 17

what are advantages of using cheques?

Answer 17

they are a secure way of paying money
easy to carry and use

Question 18

what are disadvantages of cheques?

Answer 18

cheques may bounce when the payer does not have enough money in there account to honour the payees cheque
- provides huge risk as people may use this as a mean payments then later not be able to honour it

Question 19

what has happened with the use of cheques in modern day society?

Answer 19

the use of cheques has declined
there are other safer methods of transaction

Question 20

what is a bankers draft

Answer 20

similar to a cheque, however there is proof that there is money in the account thus companies can trust immediatly

normally used for large summs of money, eg buying a car

Question 21

what are payment cards?

Answer 21

enables account holders to give their provider instructions to pay money from an account.

Question 22

what are cash cards?

Answer 22

allow account holders to withdraw cash from their account at a branch or using an atm
not to be used to pay sellers face to face or via the internet or by phone

often used by young people

Question 23

What criteria do you have to meet to be able to claim a cash card?

Answer 23

• under 18
• on low income to enable them to access cash easily

Question 24

What is a debit card

Answer 24

Ability to access accounts and pay for goods in stores over the internet by telephone and by post.
Payment its made immediately

Question 25

What must happen when paying by debit card via chip and pin?

Answer 25

Authorisation meaning sellers are garunteed to receive the payment

Question 26

What else is possible with debit cards?

Answer 26

Cash back for up to £50

Question 27

What are pre payment cards?

Answer 27

Electronic purses, cardholders load card with miney then use it to pay for goods and services

• e.g. an Oyster card

Question 28

What is a contactless card?

Answer 28

Asking a payment by tapping a screen of a card rather than entering it into a maching

Question 29

What is a pre-paid travel card?

Answer 29

A card with loaded money on in local currency of your destination that can be used as a debit card

Question 30

What is a traveller cheque?

Answer 30

A cheque purchased in your home country for a certain amount of money in another currency.
- can be used to exchange for cash in local currency
- or used in hotels or restaurants

Question 31

What is the most convenient mean of payment?

Answer 31

Direct debit cards