Payment Methods

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Advantages/Disadvantages of Cheque

An immediate record of the payment Little safer as no cash needs to be carried Money spent can be tracked by completing the cheque book stub Useful for paying large amounts of money Many businesses may be charged by the bank for processing cheques. Funds need to be cleared. There is often a time delay of around 3 days Cheques can bounce if there is no money in a person’s account Must be paid into a bank within six months of completing a cheque.

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Advantages/Disadvantages of Cash

Money is paid directly into a business No time delays between paying and receiving More easily stolen Old paper notes can tear and rip

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Advantages/Disadvantages of Credit Cards

Enables businesses to accept different currencies Risk of fraud is reduced – needs a PIN Can offer insurance protection to the business if something goes wrong A credit card receipt is guaranteed Payments can be made online Cash can be borrowed – may not have it Interest rates can be high Businesses may be fined if payments are late

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Advantages/Disadvantages of Debit Cards

Payments can be made in different currencies Secure if a Chip and PIN is used – reduced fraud Payment is not immediate – takes up to three days Charges may occur when using debit cards, so these costs need to be taken into account

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Advantages/Disadvantages of Credit Transfer

Easily move funds between accounts, and gain interest on the money while waiting to pay their bills Transfers can be done online at the press of a button International payments in other currencies can be made Repeat payments are easier, and payment information does not need to be set up again Real time processing can detect fraud or payments where there are problems Can take time to clear unless extra payment is made for real time processing

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Advantages/Disadvantages of 3rd Party

Quick and simple – payment details don’t have to be repeatedly inserted Payment is instant, but may take up to 3 days to clear No transaction fees You need to have an account on third party site Takes time to reach the seller

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Advantages/Disadvantages of E-Cheques

Quick and easy to do over the Internet May take around seven – ten days to clear They can bounce if customer’s don’t have money in account Not common in the UK May have to wait longer for goods an services bought

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Advantages/Disadvantages of Direct Debit

Discounts may be offered to the business for using direct debits They are guaranteed payments Automatic – so do not have to remember to pay them Cannot get lost in the post Relatively simple to set up May cost the business more than accepting payments in other ways Business will be charged when receiving direct debits Interest rates may be high

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