Methods of Payment
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- Created by: caitlynkrs1
- Created on: 17-11-20 09:59
Advantages of Cash
Most widely accepted form of exchange.
Physical not virtual.
Consumers feel confident when using.
Makes budgeting easier.
Physical not virtual.
Consumers feel confident when using.
Makes budgeting easier.
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Disadvantages of Cash
Can be lost or stolen.
Threat of counterfeit.
Only really appropriate on purchases up to a certain amount.
Cannot be used online
Threat of counterfeit.
Only really appropriate on purchases up to a certain amount.
Cannot be used online
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Advantages of Debit Card
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.
Secure method of payment with low risk of theft.
Widely accepted.
Offers a degree of protection on purchases.
Suitable for online transactions.
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Disadvantages of Debit Card
Short time lapse between making the transaction and the money being withdrawn from the customer's account may result in overspending.
Not accepted or appropriate for small transactions.
Not accepted or appropriate for small transactions.
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Advantages of Credit Card
Allows a period of credit that is interest free (one month).
Most cards are widely accepted.
Loyalty schemes are often offered.
Offers a degree of protection on purchases.
Suitable for online transactions.
Most cards are widely accepted.
Loyalty schemes are often offered.
Offers a degree of protection on purchases.
Suitable for online transactions.
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Disadvantages of Credit Card
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.
A limit will be set on the amount of credit allowed.
Can encourage a customer to overspend and get into debt.
Interest is charged on cash withdrawals.
A limit will be set on the amount of credit allowed.
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Advantages of Cheque
Low risk form of payment as the cheque can only be cashed by the named payee.
Widely accepted for face-to-face and postal transactions.
No need to provide change as can be written for an exact amount
Widely accepted for face-to-face and postal transactions.
No need to provide change as can be written for an exact amount
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Disadvantages of Cheque
Expensive for the consumer if the bank refuses to clear the cheque
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Advantages of Electronic Transfer
Almost instantaneous.
Provides a record of payment.
No additional costs incurred.
Easy to use for one-off and more frequent transactions.
Provides a record of payment.
No additional costs incurred.
Easy to use for one-off and more frequent transactions.
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Disadvantages of Electronic Transfer
Risk of loss if the transfer is incorrectly set up.
Not appropriate for face-to-face transactions.
Not appropriate for face-to-face transactions.
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Advantages of Direct Debit
An easy way to make regular payments (utility bills).
Amount paid can vary to ensure the payment matches the amount required by the vendor.
Quick and easy to set up.
Amount paid can vary to ensure the payment matches the amount required by the vendor.
Quick and easy to set up.
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Disadvantages of Direct Debit
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 making it difficult for the payee to plan and budget.
The payer determines the amount paid each time making it difficult for the payee to plan and budget.
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Advantages of Standing Order
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.
Easy both to set up and to cancel.
No need to remember to make regular, standard payments.
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Disadvantages of Standing Order
Payments are taken regardless of the customer's balance and which could lead to the unplanned use of an overdraft facility.
Payments will continue to be made unless cancelled.
Payments will continue to be made unless cancelled.
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Advantages of Pre-paid Card
Can set up a budget in advance to avoid overspending.
If lost or stolen, the loss is limited to the remaining balance.
An effective way of controlling the amount spent by children and where money is spent.
If lost or stolen, the loss is limited to the remaining balance.
An effective way of controlling the amount spent by children and where money is spent.
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Disadvantages of Pre-paid Card
No protection if it is lost.
Sometimes requires an initial fee to purchase or set up the card.
Sometimes requires an initial fee to purchase or set up the card.
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Advantages of Contactless Card
Gaining in popularity.
Secure method of making payments.
Secure method of making payments.
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Disadvantages of Contactless Card
Often only accepted for relatively small transactions.
Still not widely accepted as seen as new technology.
Still not widely accepted as seen as new technology.
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Advantages of Charge Card
Reduces risk of running up debts.
Allows a short period of credit.
Avoids the need to carry cash.
Often offers additional perks.
Allows a short period of credit.
Avoids the need to carry cash.
Often offers additional perks.
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Disadvantages of Charge Card
Must be paid in full each month.
Often an annual fixed fee is applied
Often an annual fixed fee is applied
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Advantages of Store Card
Allows a short period of credit that is interest free (one month).
Often offer loyalty schemes, discounts and special promotions or priviledges.
Often offer loyalty schemes, discounts and special promotions or priviledges.
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Disadvantages of Store Card
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.
Interest is paid on outstanding balances.
Can encourage overspending and result in a consumer getting into debt.
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Advantages of Mobile Banking
Convenient as can be used at any time and place.
Safe
Safe
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Disadvantages of Mobile Banking
Features are still limited and hence mobile banking doesn't offer all of the functionality of internet banking.
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Advantages of Banker's Automated Clearing Service (BACS) Faster Payment
Faster payment allows almost instant transfers that are guaranteed within 2 hours.
Can be accessed in a number of ways including in a branch, over the telephone and online.
No additional costs.
Can be accessed in a number of ways including in a branch, over the telephone and online.
No additional costs.
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Disadvantages of Banker's Automated Clearing Service (BACS) Faster Payment
Faster payment is not offered by all banks or branches and the customer may therefore have to defaults to BACs which can take 3 days to transfer payments.
A limit is set on the amount that can be transferred in any single transactions.
A limit is set on the amount that can be transferred in any single transactions.
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Advantages of Clearing House Automated Payment Systems (CHAPS)
Transfers can be made the same day assuming instructions are received prior to a set time.
There is no limit on the amount that can be transferred in a single transaction.
There is no limit on the amount that can be transferred in a single transaction.
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Disadvantages of Clearing House Automated Payment Systems (CHAPS)
Normally, there is a fixed charge per transaction regardless of the amount transferred.
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Other cards in this set
Card 2
Front
Disadvantages of Cash
Back
Can be lost or stolen.
Threat of counterfeit.
Only really appropriate on purchases up to a certain amount.
Cannot be used online
Threat of counterfeit.
Only really appropriate on purchases up to a certain amount.
Cannot be used online
Card 3
Front
Advantages of Debit Card
Back
Card 4
Front
Disadvantages of Debit Card
Back
Card 5
Front
Advantages of Credit Card
Back
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