Payment Methods

Money= 'Anything that is widely accepted as a means of making payments'

People tend to use cash for every day, low-value transactions when they are in face-to-face situations with the sellers.

Examples include paying for:

• a short bus or train journey
• coffee/tea and snacks in cafes
• tickets and drinks at a cinema
• DVDs and CDs in a shop

Advantages of using cash

• No need to remember a pin
• Helps people with budgeting - controls the amount they spend as you know what you can afford by checking how much cash you have.
• Readily accepted by people selling goods and services.

Disadvantages of using cash

• If you lose cash, anyone can use it whereas with a card people don't have easy access to it.
• It's impractical if you carry around a lot of money
• You cannot make big purchases e.g car with cash

Current Accounts

Current accounts offer easy access to cash - transaction account. It also allows you to set up automated payments e.g standing order, direct debits etc.

Current accounts are the only type of account that allows you to apply for an overdraft.

Things you should consider when choosing a current account:

• High-interest rate and opportunity to earn cashback. However, this may require a minimum deposit of up to £1000.
• Packaged accounts offer a significant discount. Packaged accounts- a current account that comes with other goods/ services but you usually have to pay a monthly fee for these. And make sure you are eligible to use any add ons you're paying for.

There are a number of different types of electronic payments that can be made, designed to meet different requirements:

Standing orders- Instructions to pay a fixed amount every month to another account.

These can be set up and cancelled by giving instructions to the current account provider in writing, over the phone or online. - free of charge 

Direct debits- Type of automatic payment that can be set up for a current account. Companies can take money straight out of your bank account directly e.g water, gas, electricity etc

This is done by giving permission to your provider to pay the regular bills, meaning payments can be of different amounts each time.

These can also be set up and cancelled by giving instructions to their provider in writing, over the phone or online. 

Direct debits are protected by a guarantee which implies that should there be an error with a transaction, the provider must refund the current account holder.

Online banking- Online system where the account holder can transfer money/ make transactions from one account to another via the internet. The account holder must register for this service to access online banking e.g online form

Faster payments- An electronic payment service that allows payments to arrive within 2 days in the destination bank account.

Before May 2008, electronic payments used to be made by a system called Bacs which would take approx. 3 business days to transfer money electronically.

CHAPS(Clearing House Automated Payment System)- Payments that…