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Topic 3:, Electronic payments from current accounts:, Cash:
Used for…
Topic 3:
Payment cards:
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Debit cards:
Allow account holders to access cash from their accounts and also pay for goods in stores, and payment is made immediately.
Pre-payment cards (Oyster card):
Cardholders load the card with money and then use it to pay for goods or services.
Contactless cards:
Allows cardholders to make transactions by holding their card near a reader than inserting it into a device and entering a PIN.
Cheques:
Payment mechanism that enables an account holder to instruct their provider to pay a specific amount of money to a specific person or organization, where they need to hand it to a bank afterwards
Advantages:
- Secure way of paying money
- Easy to carry and use
- Most common way to receive payments for small businesses
Disadvantages:
- Providers cannot honor cheques if the person who wrote it doesn't have enough money
- Cannot be certain that money will be received immediately
- Large retailers refuse to accept cheques now because they might be returned "unpaid" because the cost of processing is far greater than using a card
Banker's drafts:
Similar to cheques, but signed by the provider, meaning that the payment is guranteed.
It is usually used for paying large sums of money.
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