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Unit 1 - Topic 3: - Coggle Diagram

- - - - 3.1.2 Disadvantages of cash:
        Many situations where cash is disadvantage or is impossible, including the following example:
        
        The transaction is not made face-to-face with the seller – Internet services/goods, mail order/telephone.
        
        The transaction must be made on the same or similar dates every month – Rent/utility bills for example is possible to pay by cash but can be inconvenient to visit them each month and more likely to pay late which has serious consequences e.g additional charges, service being disconnected,etc.
        
        Carrying large amounts of cash can be risky – Most hate carrying large amounts due to losing it/being stolen. Payment method like cards/cheques allows people to access their money without the risks of carrying it.
        
        Some sellers prefer other payment methods – Sellers can prefer transactions made online, by card/cheque. Some offer incentives to people who use these methods: for example energy providers often give discounts to
        people who pay electronically.
        
        sellers prefer not to be paid in cash, when people pay cash seller has the responsibility of looking after it until it is deposited in bank account (risk of it being lost/stolen). sellers paid in cash need to pay employees therefore they need to count it, record it, put in bags/bundles and take to bank.Larger retailers employee security to transport cash. In contrast, electronic payment move money to sellers without the need for processing or security. Sellers suspicious of customers who pay cash for high valued items, suspecting the cash could be obtained illegally. This is unfair assumption, as people without current account have no choice but to pay in cash.
- - - - 3.2.3 Online banking:
        Enables account holders to give instructions via the internet. To access this first need to register first. (rest example).
        Online banking allows account holders to set up standing orders/direct debits, as well as making one-off transfers.
        
        3.2.4 Faster Payments:
        This is offered by all UK banks/building society. 2008 electronic payments made via payment system called Bacs, Can take up to 3 business days to transfer money electronically. Faster payment ensures payment arrives in destination bank account within 2 hours of receiving instructions. Free to use faster payment services and most online payments are sent via the service automatically.
        Providers set maximum value that can be transferred can be transferred using faster payments service, e.g. £10,000 per transaction although few allow up to £100,000.
        
        3.2.5 CHAPS:
        CHAPS (Clearing House Automated Payment System) a same-day automated payment system used for very high value payments, e.g. John used CHAPS when buying the family house because he had to pay £150,000 to solicitor so when to a branch and completed a form for the provider which costed £25 but was worth it since the money can be transferred securely guaranteed to be paid into the solicitor’s business account that same day.
        
        3.2.6 Mobile banking:
        Allows account holders to give payment instructions on their mobile phone using internet. Account holders install a app from provider which has security measures. Banking apps let people check balances, pay in cheques digitally, set up direct debits and standing orders and transfer money between account.
        Since 2014, customers can use faster payment service via phone, using a service called Paym, account holders nominate the account to which Paym services will be linked, and register their mobile phone number with their provider.
        
        3.2.7 Online payment services:
        Enables people to pay each other without the exchanging of current account details e.g. PayPal.
        (Read rest of the example paragraph)
        
        3.2.8 Advantages of electronic payments:
        
        Fast, safe and convenient to make.
        
        Free of charge as long as account holders have enough money in their current account for the transaction
        
        Automated transaction payment can be set up, lets recurring transaction; ensures transfers are made and bills are paid without anymore effort of the account holder.
        
        Also different electronic payments to meet different customer needs.
        
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- - - - 3.3.3 Decline in use of cheques:
        Disadvantages of cheques and advantages of other payment method meant that receiving/writing cheques has fallen every year since 1990. The Cheque & Credit Clearing Company (C&CCC) reports that 11 million cheques were written every day in 1990 and 2013 this number had fallen to
        2 million cheques each day.
        Due to the decline in the use of cheques, UK payment council announced in 2009 that cheques will be phased out by 2018. However individuals/organisations protested and was criticised by Parliament’s Treasury select committee. Critics argued they were still useful and important payment method e.g. those running small businesses, and older people who does not feel comfortable using electronic payments. In 2011 Payments Council decided that the use of cheques would continue for the foreseeable future.
- - - - 3.5.3 Pre-payment cards (eg Oyster card):
        These are like electronic purses. Cardholders load the card with money and then use it to pay for goods or services.
        (read rest of the example paragraph)
        
        3.5.4 Contactless cards:
        Some debit or pre-paid cards can be used for contactless payment for specified low limit transaction. Allows cardholders to make transactions by holding the card near the card reader, rather than inserting the card and writing the Pin. Advantage of contactless technology is transactions can be made quickly occasionally system may ask for Pin as security check to reduce fraud. Both Visa and MasterCard offer contactless service on their card.
        Contactless cards introduced as an alternative for cash. Smartphones can also be used to make contactless payments, e.g. apple pay uses mobile tech allowing customers with enabled iPhone to make contactless payments, in place of credit/debit cards. Smart watches can be set up to make contactless payments, such through apple pay or google pay.
- - - - 3.6.3 Travellers’ cheques:
        are pre-printed cheques for set amounts of currency, e.g. 50, 100 or 500 US dollars. Used to pay in shops, hotels, etc and can be exchanged at banks for local currency. When someone buys travellers’ cheques must sign each one. When they want to pay using a traveller’s cheque they counter sign the cheque. Sellers can make sure two signatures match before accepting the cheque.
        Travellers’ cheques easy to use, accepted by wide range of sellers and safe. If lost/stolen, issuing company (such as American Express) will replace them.
        People usually need to show photographic identification when buying travellers’ cheques. To guard against money laundering, as criminals could buy travellers’
        cheques with stolen banknotes which can be traced through their serial numbers, then exchange the travellers’ cheques for banknotes with different serial numbers.