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payment methods - Coggle Diagram
payment methods
Cash
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disadvantages : can be lost or stolen, can not be used online,
threat of counterfeit
advantages: most widely accepted form of exchange ,makes budgeting easier
Debit card
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disadvantages: may not be accepted for small transactions, may result in overspending
advantages: widely accepted, suitable for online transactions
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credit card
issued by financial institutions allowing customers to delay payments for goods and services (borrowing money that is not in your current account)
disadvantages: interest is charged if not paid off within the month
can encourage customers to overspend and can lead to debt
a limit is set on the amount of credit that is allowed
advantages: allows a period of credit that is interest free normally for a month
most cards are widely accepted
offers a degree of protection on purchases
cheque
a written order to a bank to make a specific payment for a specific amount of money from one person's account to another account
disadvantages: there is a time delay between writing the the cheque and the cheque being chased in
viewed as old fashioned
easy for the customer to make errors when writing the cheque which creates problems for both the recipient and the person writing the cheque
advantages: a low risk form of payment because the cheque can only be chased is by the named recipient widely accepted as face to face transactions and postal transactions
electronic transfer
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disadvantages: not appropriate for face to face transactions
risk of loss if the transfer is not set up correctly
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direct debit
an agreement made with a bank allowing a third party to withdraw money from an account on a set day to pay for goods and services received e.g. electricity bills
disadvantages: the payer determines the amount being paid therefore makes it hard for the payee to budget
if the payer makes a mistake and takes too much money it is the payees responsibility to receive the money back
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