U3 Different ways to pay Flashcards
Cash
Definition: Notes and coins in a wide range of denominations
Adv: Widely accepted form of exchange
Dis: Can get lost or stolen
Dis: Can’t be used online
Pre-paid card
Definition: Money uploaded onto a card, withdrawn to reduce balance.
Adv: Can set a budget in advance to reduce overspending
Dis: No protection if lost
Dis: Required initial fee to purchase card
Charge card
Definition: Allows customers to delay payments for a short period of time.
Adv: Reduces risk of running up debt
Dis: Must be paid in full each month
Electronic transfer
Definition: Payment transferred directly from one account to another.
Adv: Instant
Adv: No extra costs
Dis: Risk of loss if transfer is set up incorrectly
Debit card
Definition: Issued by banks to pay for goods and services. Money deducted from account.
Adv: Low risk of theft
Adv: No need to carry cash
Dis: Not excepted for small transactions
Dis: Can result in over spending.
Credit card
Definition: Allows customers to delay their payments
Adv: Allows period pf interest free credit
Dis: If not paid off in a month, interest is added
Cheque
Definition: A written order from the bank to make payments from one person’s account to another
Adv: Low risk of theft as has to be checked in by the named payee
Dis: Easy to make mistakes when writing a cheque
Clearing House Automated Payments Systems (CHAPS)
Definition: Transfer of payments directly from one account to another
Adv: No limit on amount that can be sent at once
Dis: Fixed fee per transaction
Banks automated clearing service (BACS)
Definition: Transfer of payments directly from one account to another
Adv: Instant transfers guaranteed within 2 hours
Dis: Limit set on the amount that can be set at one time
Contactless card
Definition: Allows money to be transferred when card touches contactless terminal
Adv: Gaining popularity. secure, convenient
Dis: Only accepted for relatively small transactions.
Store card
Definition: Similar to a credit card, but only accepted in specific stores
Adv: Often offer loyalty schemes or special promotions
Dis: Only accepted in issuing store or linked association
Mobile banking
Definition: Financial transactions carried out by mobile
Adv: Can be used anytime or place
Dis: Limited features
Standing order
Definition: Agreement made with mank to transfer a fixed amount to a 3rd party account.
Adv: Same amount taken on a regular basis, makes it easier to budget
Dis: Payment taken regardless of balance, could lead to overdraft
Direct debit
Definition: Agreement made by bank that allows 3rd party to withdraw
Adv: Easy way to make regular payments
Dis: If payer takres to much its payees responisility to claim back
