There are many different ways of making and receiving payments. Method Definition Advantage Disadvantage Cash Cash is the most commonly used form The business receives sums of money of payment day to day. payment immediately would have to be Notes and coins are a quick and easy Not as open to fraud as a taken to the bank way to pay for goods. cheque Can only sell direct Once cash is handed over for goods or to the customer and services transaction is complete. not by mail order or the internet Cheque A cheque is an instruction to a bank to Banks will guarantee a A cheque takes 5 take money out of the drawer’s account cheque up to a certain working days to clear and put it into the payee’s account. amount via a cheque so the business does guarantee card. not receive the A cheque takes money immediately approximately 5 working If inadequate funds days to clear. are in the account the cheque could “bounce” Some banks charge businesses for paying cheques into their account. Credit Plastic payment cards that allows the Easy method of borrowing Sellers have to pay a Cards cardholder to make payments. The money fee for each cardholder borrows money up to a limit Accepted by many customer that pays agreed. Interest is charged on money businesses in UK and by credit card that is borrowed some charge an annual abroad (approx 2%) fee. Cardholders have to make a
There are many different ways of making and receiving payments. Method Definition Advantage Disadvantage Cash Cash is the most commonly used form of payment day to day. Notes and coins are a quick and easy way to pay for goods. Once cash is handed over for goods or services transaction is complete. The business receives payment immediately Not as open to fraud as a cheque sums of money would have to be taken to the bank Can only sell direct to the customer and not by mail order or the internet Cheque A cheque is an instruction to a bank to take money out of the drawer’s account and put it into the payee’s account. Banks will guarantee a cheque up to a certain amount via a cheque guarantee card. A cheque takes approximately 5 working days to clear. A cheque takes 5 working days to clear so the business does not receive the money immediately If inadequate funds are in the account the cheque could “bounce” Some banks charge businesses for paying cheques into their account. Credit Cards Plastic payment cards that allows the cardholder to make payments. The cardholder borrows money up to a limit agreed. Interest is charged on money that is borrowed some charge an annual fee. Cardholders have to make a Easy method of borrowing money Accepted by many businesses in UK and abroad Sellers have to pay a fee for each customer that pays by credit card (approx 2%)
Unit_2_Revision_Booklet.docx