Payment Methods.

Payment Methods.

Cash
1. Most commonly used method of payment. This uses notes and coins to complete the transaction.
2. Advantages- for the customer, it is easy and simple method of payment. For the business, the payment is instant and there is less risk of fraud.
3. Disadvantage- for the customer, must get cash from bank, large amounts is risky, no receipt no proof.
Cheque
1. is an instruction to the bank to transfer money from one account to another.
2. Advantages-For the customers, no risk of carrying cash and can be sent by post. For the business, no need to carry large amounts of cash.
3. Disadvantages-for the customer it takes a few days to transfer, if there is not enough funds in the account the cheque will bounce. For BOTH any mistake on the cheque makes it invalid.
4. Disadvantages- For the business, cheques must be taken to the bank, some banks charge business for paying cheques, a cheque can take up to 5 working days.
Credit Card
1. Is a plastic payment cards that allows the cardholder to make payments. The cardholders borrows the money and pays it back.
2. Advantages- For the customer easy and convenient, it is ideal to use for internet and postal purchases, many businesses accept these, payment is delayed until payment is needed. For the business, money is transferred automatically, swipe and scan recognise stolen and invalid cards, corporate card can be used by staff.
3. Disadvantages- for the customer, monthly statements issued, interest paid if balance is not paid in full, interest charges can be high. For the business, have to pay a fee for each customer that pays by credit card, cost of installing the terminal..
Debit Card
1. Is similar to a credit card but it is linked to a bank account. so there must be funds before this can be used.
2. Advantages-no need to carry cash, simple and straightforward, money transferred automatically, instant payments no interest.
  1. Advantages- For the business, swipe systems check transactions is valid then payment is guarantee, same terminals as credit cards, handling charges are cheaper than credit cards, less prone to fraudulent use.
3. Disadvantages-for the customers, if there is no money in the account the payment will be rejected. this could be embarrassing. For the Business, cost of installing the terminal, charge of processing the transactions, money transferred into businesses account in 2-3 days.;
Credit Transfer
1. IS a transfer of money from the businesses account to one or more accounts. Used for salaries and wages.
2. Advantages-for the business, fewer security problems as no cash is involved, accurate record for all transactions by bank statements, cheaper to administer.
3. Disadvantages-For the business, bank needs a notice of when large number of payments are due, need careful checking as minor errors can be a serious problem.,
Direct Debit
1. Direct debit allows the customer to pay regular bills automatically. this is agreement in which the business can takes the money from the customer's bank account.
2. Advantages- For the customers, no action required after providing bank details, business must give advanced notice of payments due, arrangement can be cancelled at any time, direct debits are free they don't have to pay to use them, customers don't have to remember to pay bills.
  1. Advantages - For the business, allows automatic transfer of money from one account to another, amounts can be varied, businesses know payments will be received on time, businesses can save time and money.
3. Disadvantages-customers, run the risk of running out of money if too many direct debit are taken out, customer could fail to check notices from the business or to check price increases.

Next up

Description

Resource summary

Similar

	Created by jeavonsk over 10 years ago