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A2: different ways to pay - Coggle Diagram
A2: different ways to pay
BACS
Bankers' Automated Clearing System, is responsible for the clearing and settlement of UK automated direct debit and BACS Direct Credit and the provision of third-party services.
Advantages
Saves time and administration costs. Preparing, checking and collating cheques with the relevant remittance advice is a time consuming task.
Improved cash flow management.
Disadvantages
Bacs payments are not instant. BACS Direct Credit takes three working days to clear, with strict cut-off times for processing payments, so it is not suitable for immediate and same-day payments.
Unlike Direct Debit, Direct Credit is a push based payment method.
CHAPS
Clearing House Automated Payment System is real-time gross settlement payment system used for sterling transactions in the United Kingdom.
Advantages
Direct access to CHAPS supports secure and efficient provision of high value
Disadvantages
most banks charge £20-30 for the service
Store cards
A loyalty program is a marketing strategy designed to encourage customers to continue to shop at or use the services of a business associated with the program.
Advantages
Membership Perks
Low Fees. Many store credit cards come with no annual fees and useful welcome offers.
Disadvantages
Sometimes the interest rate and charges for having a store card can be higher than an ordinary credit card.
Contactless cards
Contactless payment systems are credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices, that use radio-frequency identification or near field communication for making secure payments.
Advantages
Ease of use
Disadvantages
It can create confusion and frustration among users
Standing Order
A standing order is an automated method of making payments, where a person or business instructs their bank to pay another person or business, a fixed amount of money at regular (fixed) intervals. The payer controls the standing order; they set it up themselves, and choose the amount and frequency.
Advantages
Easy and quick for payer to set up.
Usually free of charge for both payer and payee.
Disadvantages
No payment notifications.
Less flexibility.
Electronic transfer
Electronic funds transfer is the electronic transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems, without the direct intervention of bank staff.
Credit card
A credit card is a payment card issued to users to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt.
Disadvantages
Getting trapped in debt
Damaging your credit score
Advantages
Opportunity to build credit
No foreign transaction fees
Cash
cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and financial accounting, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately.
Advantages
Convenience.
No security breaches.
Disadvantages
Carrying Cash Makes You A Target For Thieves.
You Can Lose It.
Debit card
A debit card is a payment card that can be used in place of cash to make purchases. It is similar to a credit card, but unlike a credit card, the money for the purchase must be in the cardholder's bank.
Advantages
They have limited fraud protection
Your spending limit depends on your checking account balance
Disadvantages
Avoid fees and service charges
Stay accountable for your spending
Cheque
a document that orders a bank to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The person writing the cheque, known as the drawer, has a transaction banking account where the money is held.
Advantages
It is more convenient than carrying cash around
Payments can be stopped if necessary
Disadvantages
Cheques are not legal tender and other creditors may refuse to accept them
Cheques are not suitable for small amounts
Direct debit
A direct debit or direct withdrawal is a financial transaction in which one person withdraws funds from another person's bank account.
Advantages
No more late payments
Direct Debit is more cost effective than card payments
Disadvantages
reduce the possibility of being charged late fees and get you pay-on-time discounts
Pre-paid card
ou buy a card with money loaded on it. Then you can use the card to spend up to that amount. A prepaid card is also called a prepaid debit card, or a stored-value card. You can buy prepaid cards at many stores and online.
Advantages
Less risk of overspending. Prepaid cards offer less risk of overspending than credit cards
Safer than cash
Disadvantages
Application fees to open the account
Monthly or annual fees for using the card
Charge card
A charge card is a type of electronic payment card that charges no interest but requires that you pay the statement balance in full, usually monthly. They have an uncapped spending limit with generous reward benefits for the cardholder, but typically charge a high annual fee.
Advantages
provides the ability to make purchases and pay for them later
Disadvantages
tend to have very high or no spending limits
Mobile banking
Mobile banking is a service provided by a bank or other financial institution that allows its customers to conduct financial transactions remotely using a mobile device such as a smartphone or tablet.
Advantages
Strengthening security
Optimizing your money
Disadvantages
A transaction like transfer of funds is only available on high-end phones