Payment methods

Payment methods

Debit Card
1. Advantages
  1. Can only use money that is disposable in bank account, therefore you cannot overspend
  2. The transaction is completed in a short time
  3. Safer than using cash and cheques because there is no need to post
  4. Readily accepted by most businesses
2. Disadvantages
  1. The transaction cannot be completed if there are insufficient funds in the bank account
Direct Debit
1. Advantages
  1. Automatic payment so less likely to pay and incur late payment penalties
  2. Once set up, admin costs are lower
2. Disadvantages
  1. Setting up costs by bank
  2. Money might be taken from the bank account even if there are insufficient funds-bank charge and interest
Cash
1. Advantages
  1. Immediate payment
2. Disadvantages
  1. Have to take money to bank
Cheque
1. Advantages
  1. Easy way for businesses to pay, it is a traditional method.
  2. It can only be cashed by the person who is the payee
2. Disadvantages
  1. Cheques may bounce/take time to clear
  2. The bank charges business customers for each cheque they use
Credit Card
1. Disadvantages
  1. High interest rates if do not repay within one month of grace
  2. Not accepted by many businesses for low value payments
2. Advantages
  1. Possible to pay even if not valid funds available/allows cost to spread
  2. Deferred payment means you can buy immediately
  3. Might not otherwise have been able to afford when paying by an alternative method
  4. Can pay online or by phone

Resource summary

	Created by Sam Meaker almost 7 years ago