Methods of Payment

Description

GCSE Unit 2
bchipungu
Flashcards by bchipungu, updated more than 1 year ago
bchipungu
Created by bchipungu about 10 years ago
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Resource summary

Question Answer
Lesson Objective: To investigate various methods of payment. Success criteria: • I can name various payment methods C-D • I can identify suitable payment methods in most situations C_B • I can explain the benefits and drawbacks of each payment method A _B
Cash is a popular form of payment with customers because: Transactions are completed immediately Cash can be re­used for othertransactions immediately
What are the advantages of using cash Payment is made straightaway Ideal for small purchases Convenient
Disadvantages of cash Cash has to be counted Has to be locked away for security Can be Stolen
A paper ­based form of payment? cheque
Effectively a promise to pay the amount stated cheque
Must be presented to a bank in order toobtain the payment cheque
It usually takes at least 3working days for a chequeto “clear” – i.e. payment to be received cheque
Advantages of cheques Safer than cash Better for large amounts Cheaper than cash to operate with
Disadvantages of cheques Takes time to clear It can “bounce” Errors can result in bank refusing cheque
A plastic card, issuedby the bank, which allows payment tobemade without writing a cheque or carrying cash Debit card
Advantages of Debit cards Guaranteed payment can be used for mail order or online purchases Cheaper than cash to operate with
Disadvantages of Debit cards 3 days for money to be received Fee must be paid to the bank danger of fraud hence chip and pin
It looks just like a debit card –and is also issued by banks Credit card
It allows payment to be made without the needfor cashor cheques Credit card
The money does not come out of your bank account –you are borrowing it! Credit card
You have to pay some off each month Credit card
You pay interest onany amount left Credit card
Advantages of credit card Guaranteed payment Enables card holder to borrow money
Disadvantages of credit cards takes 3 days for money to be received A fee must be paid to the bank High interest rates so expensive to borrow
BACS This stands for: Banking Automated Clearing System. It is a way oftransferring money between accounts without exchanging cash or cards There are 3 types of transfers: Credit transfers ,Direct Debits,Standing Orders
Advantages- Credit transfers Fewer security problems as no cash involved. Record kept through bank statements Cheaper and quicker than writing out lots of cheques
Disadvantages of Credit transfer The bank needs notice before releasing wages of 1000s of people. They need checking before being processed.Errors cost money
Direct Debit Money is transferred automatically. The Business requiring payment must ask the customer’s bank for payment Can be used for paying different amounts so is useful for paying regular bills
Advantages : Direct debit Businesses are guaranteed payment. Customers don‛t have to remember payment dates Customers don‛t have to write out cheques and post them
Disadvantages : Direct debit Money is still taken, even if there is no money in the customer‛s account. Customer‛s may fail to check price increases and budget accordingly
Standing Orders Money is transferred automatically .Customer instructs their bank to make a regular payment .Can only be used for paying the same amount
Standing Orders advantages Customers don‛t have to remember payment dates. Customers don‛t have to write out cheques and post them
Disadvantages of standing orders Payment may not be made if there is not enough money in the account. Customer‛s may forget to cancel the order, and go on paying for services they aren‛t receiving
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