Flashcards
Methods of Payment
Flashcards do conjunto (29)
- 1Lesson 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 - 2Cash is a popular form of payment with customers because:Transactions are completed immediately
Cash can be reused for othertransactions immediately - 3What are the advantages of using cashPayment is made straightaway
Ideal for small purchases
Convenient - 4Disadvantages of cashCash has to be counted
Has to be locked away for security
Can be Stolen - 5A paper based form of payment?cheque
- 6Effectively a promise to pay the amount statedcheque
- 7Must be presented to a bank in order toobtain the paymentcheque
- 8It usually takes at least 3working days for a chequeto “clear” – i.e. payment to be receivedcheque
- 9Advantages of chequesSafer than cash
Better for large amounts
Cheaper than cash to operate with - 10Disadvantages of chequesTakes time to clear
It can “bounce”
Errors can result in bank refusing cheque - 11A plastic card, issuedby the bank, which allows payment tobemade without writing a cheque or carrying cashDebit card
- 12Advantages of Debit cardsGuaranteed payment
can be used for mail order or online purchases
Cheaper than cash to operate with - 13Disadvantages of Debit cards3 days for money to be received
Fee must be paid to the bank
danger of fraud hence chip and pin - 14It looks just like a debit card –and is also issued by banksCredit card
- 15It allows payment to be made without the needfor cashor chequesCredit card
- 16The money does not come out of your bank account –you are borrowing it!Credit card
- 17You have to pay some off each monthCredit card
- 18You pay interest onany amount leftCredit card
- 19Advantages of credit cardGuaranteed payment
Enables card holder to borrow money - 20Disadvantages of credit cardstakes 3 days for money to be received
A fee must be paid to the bank
High interest rates so expensive to borrow - 21BACSThis 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
- 22Advantages- Credit transfersFewer security problems as no cash involved.
Record kept through bank statements
Cheaper and quicker than writing out lots of cheques - 23Disadvantages of Credit transferThe bank needs notice before releasing wages of 1000s of people.
They need checking before being processed.Errors cost money - 24Direct DebitMoney 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
- 25Advantages : Direct debitBusinesses are guaranteed payment.
Customers don‛t have to remember payment dates
Customers don‛t have to write out cheques and post them - 26Disadvantages : Direct debitMoney 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 - 27Standing OrdersMoney is transferred automatically .Customer instructs their bank to make a regular payment .Can only be used for paying the same amount
- 28Standing Orders advantagesCustomers don‛t have to remember payment dates.
Customers don‛t have to write out cheques and post them - 29Disadvantages of standing ordersPayment 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