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| Question | Answer |
| Lesson Objective: To investigate various methods of payment. | Success criteria: • I can name various payment methods C-D • I can identify suitable payment methods in most situations C_B • I can explain the benefits and drawbacks of each payment method A _B |
| Cash is a popular form of payment with customers because: | Transactions are completed immediately Cash can be reused for othertransactions immediately |
| What are the advantages of using cash | Payment is made straightaway Ideal for small purchases Convenient |
| Disadvantages of cash | Cash has to be counted Has to be locked away for security Can be Stolen |
| A paper based form of payment? | cheque |
| Effectively a promise to pay the amount stated | cheque |
| Must be presented to a bank in order toobtain the payment | cheque |
| It usually takes at least 3working days for a chequeto “clear” – i.e. payment to be received | cheque |
| Advantages of cheques | Safer than cash Better for large amounts Cheaper than cash to operate with |
| Disadvantages of cheques | Takes time to clear It can “bounce” Errors can result in bank refusing cheque |
| A plastic card, issuedby the bank, which allows payment tobemade without writing a cheque or carrying cash | Debit card |
| Advantages of Debit cards | Guaranteed payment can be used for mail order or online purchases Cheaper than cash to operate with |
| Disadvantages of Debit cards | 3 days for money to be received Fee must be paid to the bank danger of fraud hence chip and pin |
| It looks just like a debit card –and is also issued by banks | Credit card |
| It allows payment to be made without the needfor cashor cheques | Credit card |
| The money does not come out of your bank account –you are borrowing it! | Credit card |
| You have to pay some off each month | Credit card |
| You pay interest onany amount left | Credit card |
| Advantages of credit card | Guaranteed payment Enables card holder to borrow money |
| Disadvantages of credit cards | takes 3 days for money to be received A fee must be paid to the bank High interest rates so expensive to borrow |
| BACS | This stands for: Banking Automated Clearing System. It is a way oftransferring money between accounts without exchanging cash or cards There are 3 types of transfers: Credit transfers ,Direct Debits,Standing Orders |
| Advantages- Credit transfers | Fewer security problems as no cash involved. Record kept through bank statements Cheaper and quicker than writing out lots of cheques |
| Disadvantages of Credit transfer | The bank needs notice before releasing wages of 1000s of people. They need checking before being processed.Errors cost money |
| Direct Debit | Money is transferred automatically. The Business requiring payment must ask the customer’s bank for payment Can be used for paying different amounts so is useful for paying regular bills |
| Advantages : Direct debit | Businesses are guaranteed payment. Customers don‛t have to remember payment dates Customers don‛t have to write out cheques and post them |
| Disadvantages : Direct debit | Money is still taken, even if there is no money in the customer‛s account. Customer‛s may fail to check price increases and budget accordingly |
| Standing Orders | Money is transferred automatically .Customer instructs their bank to make a regular payment .Can only be used for paying the same amount |
| Standing Orders advantages | Customers don‛t have to remember payment dates. Customers don‛t have to write out cheques and post them |
| Disadvantages of standing orders | Payment may not be made if there is not enough money in the account. Customer‛s may forget to cancel the order, and go on paying for services they aren‛t receiving |
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