Methods of Payment Flashcards

1
Q

What is this method of payment?

Permission given to the bank to make regular payments to a third party (Utility bills, Netflix, Amazon, gyms etc)

A

Direct Debit

A standing order is also similar

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2
Q

Advantages of a Debit Card

A
  • 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
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3
Q

What are the features of a Pre-Paid Card?

A

Money is uploaded onto a card which then reduces each time a transaction takes place
e.g. school lunches or transport (oyster)

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4
Q

What are the features of a Charge Card?

A

Issued by financial institutions allowing customers to delay payments for goods and services for a short period of time; the balance must be paid off in full when a statement is issued

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5
Q

What are the features of a Store Card?

A

Issued by a retail outlet so that customers can delay payments for goods and services (similar to a credit card but only accepted by stores specified)

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6
Q

What is BACS?

Banker’s Automated Clearing Service

A

A system that allows the transfer of payments directly from one bank account to another

May take a few days
Larger payments

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7
Q

What is FPS?

Faster Payments Service

A

Direct transfer to another bank account

guaranteed within 2 hours but may be quicker

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8
Q

What is CHAPS?

Clearing House Automated Payment Systems

A

Same day transfer of funds from one bank account to another

Of any amount

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9
Q

The advantages of a Charge Card?

A
  • Reduces risk of running up debts
  • Allows a short period of credit
  • Avoids the need to carry cash
  • Often offers additional perks
  • No interest
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10
Q

The disadvantages of a Charge Card?

A
  • Must be paid in full each month
  • Often an annual fixed fee is applied
  • Overdraft could happen
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11
Q

The advantages of a Store Card?

A
  • Allows a short period of credit that is interest free, e.g. one month
  • Often offer loyalty schemes, discounts and special promotions or privileges
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12
Q

The disadvantages of a Store Card?

A
  • 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 –particularly if they hold multiple cards
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13
Q

The advantages of a Pre-Paid Card?

A
  • Can set 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
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14
Q

The disadvantages of a Pre-Paid Card?

A
  • No protection if lost

- Sometimes requires an initial fee to purchase or set up the card, e.g. Oyster travel cards

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15
Q

The disadvantages of BACS?

A
  • If branchessCan take three days to transfer payments

- A limit is set on the amount that can be transferred in any single transaction

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16
Q

The advantages of BACS and FPS?

A
  • Can be accessed in a number of ways including in a branch, over the telephone and online
  • No additional costs
17
Q

The disadvantages of CHAPS?

A
  • Normally, there is a fixed charge per transaction regardless of the amount transferred
18
Q

The advantages of CHAPS?

A
  • Same day transactions

- no limit on amount that can be transferred