Topic 3 - Payment Methods

Question 1

What are the advantages of using cash for low- value transactions?

Answer 1

1. convenient for the payer
2. Readily accepted by people selling the goods or the service
3. Instant and low risk at low values

Question 2

When is it a disadvantage paying in cash?

Answer 2

1. When the transaction is not made face-to-face with the seller (over the internet)
2. When the transaction must be made on the same or similar dates every month (paying for rent or utility bills)
3. Carrying large amounts of cash can be risky (it can be lost or stolen)
4. Some sellers prefer other payment methods.

Question 3

What is a standing order?

Answer 3

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

Question 4

How can standing orders be set up or cancelled?

Answer 4

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.

Question 5

What is a banker’s draft?

Answer 5

Similar to a cheque but payment is signed and guaranteed by the financial services provider that issues it rather than the individual

Question 6

What is CHAPS?

Answer 6

Clearing house automated payment system

Question 7

What is a mandate?

Answer 7

A paper or online instruction to a provider to make a payment from an account

Question 8

What is cashback?

Answer 8

When a retailer gives a customer Cush, debiting the amount from their payment card

Question 9

What is a cashcard?

Answer 9

A card used to withdraw cash from ATMs or branch counters

Question 10

Can a visa or Mastercard debit card issued in the UK be used to make payments in other countries?

Answer 10

Yes, the card can be used to make payments wherever the seller displays the card company’s logo

Question 11

What is the faster payments service?

Answer 11

Enables payment to arrive within two hours of instruction online, by phone or by standing order.