Payment Methods

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Cash

The most common payment.

Advantages:

  • When a business uses cash, they will recieve the money straight away. This means that they don't have to wait for the money to flow into the business. Improved cash flow.
  • It can be used by all ages

Disadvantages:

  • Although the business doesn't have to pay for processing charges, they will need to purchase equiptment like safes and tills to store the money.
  • Any cash will need to be taken to the bank to keep it safe
  • It is dificult to carry around large amounts- it can be heavy and dangerous
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Cheques

Advantages:

  • More secure/ safer than cash
  • More convienitent than large amounts of cash
  • Cheques are easier to trace if it gets lost
  • It can be posted trough unsecure methods, since only the person adressed on the cheque can claim it

Disadvantages:

  • Cheques take 3 working days to clear
  • Admin time is spent to fill out the cheque
  • Banks may charge businesses to process the cheque
  • Less secure than credit transfer- Can get lost
  • Cheques can 'bounce' if there is no money in the person's bank
  • Cheques must be paid to the bank within 6 months, otherwise it becomes invalid
  • Since they're handwritten, they can be altered to comit fraud
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Credit cards

Allows the user to borrow money and then pay it back later or in installments.

Advantages:

  • Enables the business to accept lots of different currencies
  • Risk of fraud is reduced- pin
  • Payments can be made online
  • Cash can be borrowed

Disadvantages:

  • Interest rates can be high, especially when using credit cards to borrow money
  • The person could be fined if they don't pay back in time
  • Can encourage people to purchase items that they don't have the money for
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Debit Cards

Similar to a credit card but instead of money being borrowed, it is taken out of the person's account.

Advantages:

  • The payment is guarenteed- the payment can't 'bounce' like a cheque
  • The business will be able to accept diffenent currencies
  • The payments can be made online
  • It is safer- chip and pin

Disadvantages:

  • They may be charges to process the card by the bank
  • Can take up to 3 days for the money to reach the businesses bank account
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Credit Transfer

Allow the business to move money from one account to another

Advantages:

  • They are able to move funds between accounts and gain interests on the money while waiting to pay thier bills
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