Methods of Payment 2

What is a charge card?

Similar to a credit card, but must be paid in full at the end of the month.

Usually for one retailer.

What are the advantages of using a charge card?

Can only be used for one store - can prevent poor spending decisions elsewhere.

What are the disadvantages of a charge card?

• Limited to one retailer.

• Must be paid in fully monthly otherwise suspension or extra fees.

What is mobile banking?

The ability to make financial transactions using mobile devices.

Easier for small businesses such as taxis and window cleaners - this includes PayPal.

What is a contactless card (debit/credit)?

Cards which can make a payment without a pin being entered when placed next to a contactless terminal.

What are the advantages of mobile banking?

• Convenient.

• Easier for small businesses such as taxis and window cleaners.

What are the disadvantages of mobile banking?

• May have security issues.

• Internet may fail - or have poor reception/signal.

• Can get hacked, but is becoming much more secure.

What are the advantages of a contactless card?

• Quick and convenient.

• Takes less time and you don’t have to remember a pin.

What are the disadvantages of a contactless card?

Security concerns - can be stolen and used by strangers.

What does BACs stand for?

Banker Automated Clearing Service.

What are BACs?

Most common method by businesses in the UK. Responsible for all Debit and Credit card transactions made, with transfers directly between bank accounts. Upper limit of £250,000 per transfer.

What are the advantages of BACs?

• Convenient as it is the standard, automated system for regular payments.

• Allows individuals and businesses to schedule their funds seamlessly.

What are the disadvantages of BACs?

• Payments can take up to 3 working days to clear.

• Human error - if payment details entered incorrectly, funds can be lost or sent to the wrong person. Difficult to reverse.

What does CHAPS stand for?

Clearing House Automated Payment System.

What are CHAPs?

Usually for large, one-off payments of sums over £10,000 but is no upper limit.

Individuals tend to be making time sensitive payments - e.g. buying a car or paying house deposit.

What are the advantages of CHAPs?

• Transfers arrive in account on the same day.

• No upper limit on a single transaction.

What are the disadvantages of CHAPs?

• Banks usually charge a fixed fee for every CHAPs payment, regardless of the amount being transferred.

• Not for daily use due to high fees and requires paperwork.

Give 2 benefits of using a store card

• May offer promotional discounts.

• Can offer an interest-free period e.g. one month.

Give an advantage of a credit card

Some protection occurs e.g. if a product is ordered using a credit card and it is not delivered, the credit card company may reimburse you.

Give a drawback of a credit card

Some credit cards charge a high level of interest especially on cash transactions so a customer can easily go into debt.