Different Ways to Pay

?
  • Created by: zainb
  • Created on: 06-11-17 10:23

Cash

 - Notes and coins in a wide range of denominations.

+tives:

Most widely accepted form of exchange

Physical not virtual

Consumers feel confident when using

Makes budgeting easier

-tives:

Can be lost or stolen , Cannot be used online

Threat of counterfeit

Only really appropriate on purchases up to a certain amount

1 of 13

Debit card

- Issued by banks with payments for goods and services being deducted directly from a current account

+tives

No need to carry cash

Secure method of payment with low risk of theft, Widely accepted

Offers a degree of protection on purchases Suitable for online transactions

-tives

Short time lapse between making the transaction and the money being withdrawn may result in overspending

Not accepted or appropriate for small transactions 

2 of 13

Credit card -

Issued by financial institutions allowing customers to delay payments for goods and services 

+tives

Allows a period of credit that is interest free, e.g. one month

widely accepted

Offers a degree of protection on purchases , Suitable for online transactions

-tives

Interest is charged on balances not paid off within a month

Can encourage a customer to overspend and get into debt

Interest is charged on cash withdrawals, limited  amount of credit allowed

3 of 13

Cheque

A written order to a bank to make a payment for a specific amount of money from one person’s account to another account

+tives:

Low risk form of payment as the cheque can only be cashed by the named payee

Widely accepted for face-toface and postal transactions

No need to provide change as can be written for an exact amount

-tives:

The time delay between writing the cheque and it being cashed could cause a consumer to go overdrawn

Viewed as old fashioned

Easy for the consumer to make errors when writing the cheque which will create problems for both the consumer and the recipient

4 of 13

Electronic transfer

Payment is transferred directly from one bank account to another.

+tives:

Almost instantaneous

Provides a record of payment

No additional costs incurred

Easy to use for one-off and more frequent transactions

-tives:

Risk of loss if the transfer is incorrectly set up

Not appropriate for face-to-face transactions

5 of 13

Direct debit

An agreement made with a bank allowing a third party to withdraw money from an account on a set day to pay for goods or services received, e.g. pay a gas bill

+tives:

An easy way to make regular payments, 

Amount paid can vary to ensure the payment matches the amount required by the vendor

Quick and easy to set up

-tives:

If the payer makes a mistake and takes too much it is the payee’s responsibility to claim back the money

The payer determines the amount paid each time 

6 of 13

Standing order

An agreement made with a bank to transfer a fixed sum of money to a third party account on a set date on a regular basis, e.g. pay £30 for a phone contract each month

+tives:

The same amount is paid each time making it easier for the payee to plan and budget

Easy both to set up and to cancel

No need to remember to make regular, standard payments

-tives:

Payments are taken regardless of the customer’s balance which could lead to the unplanned use of an overdraft facility

Payments will continue to be made unless cancelled 

7 of 13

Con-tactless card

Cards containing antennae allow money to be transferred when the card touches a contactless terminal

+tives:

Gaining in popularity

Secure method of making payments

-tives:

Often only accepted for relatively small transactions

Still not widely accepted as seen as new technology

8 of 13

Charge card

Issued by financial institutions allowing customers to delay payments for goods and services for a short period of time;

+tives:

Reduces risk of running up debts

Allows a short period of credit Avoids the need to carry cash

Often offers additional perks

-tives:

Must be paid in full each month

Often an annual fixed fee is applied

9 of 13

Store card

Issued by a retail outlet so that customers can delay payments for goods and services (similar to a credit card but only accepted by stores specified)

+tives:

Allows a short period of credit that is interest free, e.g. one month

Often offer loyalty schemes, discounts and special promotions or privileges

-tives

Only accepted in issuing store or linked associations Interest is paid on outstanding balances

Can encourage overspending and result in a consumer getting into debt – particularly if they hold multiple cards

10 of 13

Mobile banking

The ability to carry out financial transactions using mobile devices such as phones or tablets

+tives:

Convenient as can be used at any time and place

-tives

Secure Features are still limited and hence mobile banking does not offer all of the functionality of Internet banking

11 of 13

Banker’s Automated Clearing Service (BACS)

A system that allows the transfer of payments directly from one bank account to another

+tives:

Faster payment allows almost instant transfers that are guaranteed within 2 hours

Can be accessed in a number of ways. i.e in a branch

No additional costs

-tives:

Faster payment is not offered by all banks or branches and the customer  not use BACs  which can take three days to transfer payments

Limited amount that can be transferred in any single transaction

12 of 13

Clearing House Automated Payment Systems (CHAPS)

A system that allows the transfer of payments directly from one bank account to another

+tives:

Transfers can be made the same day assuming instructions are received prior to a set time, e.g. 2 pm at Barclays

There is no limit on the amount that can be transferred in a single transaction

-tives:

Normally, there is a fixed charge per transaction regardless of the amount transferred

13 of 13

Comments

lanayaka

Report

Hello, thank you for the post. I just started ordering online and am having a hard time figuring out how to pay for a TV on credit. I wouldn't want to spend the whole amount at once, help with that!

cret5get

Report

Good afternoon! If you're interested in buying a monthly catalog, but you have a low credit rating it's no big deal. You just need to find out information about Best Catalogues for Bad Credit. You should be approved to apply for a monthly credit line. When you learn how to apply for these catalogues with no credit check, you can pay weekly for your TV or other appliances.

Similar Business resources:

See all Business resources »See all learning aim a resources »