Instruments of exchange

• Instruments of exchange are:

  • Barter
  • Bills of exchange
  • elctronic transfer
  • Tele-banking/e-commerce
  • Cheques
  • Money Order
  • Debit cards
  • Credit cards
  • Bank draft
  • Telegraphic Money Transfers
  • Bank transfers
  • Mobile money
• Instrument of exchange means when a payment is made
• A drawer is a person making out a bill of exchange
• A drawee usually the bank responsiblity for the following the drawer instruction to transfer funds
• A paybee is a person entitled to the payment by the drawee as a result of instructions made by the drawer
• A bill of exchanged is a written order binding one party to pay a fixed sum of money to another party on demand or at some point in the future
• Tele-banking or e-commerce transfers the money from one account to another using telephone communication. They person making the payment will intruct the bank to make a payment to the another account
• Cheques are a written instruction to a bank to make a payment on behalf of a bank account holder. The drawer writes an instruction to the bank which s named the drawee then the person that the cheque is given too is the payee
• The three main types of cheques are:

  1. Crossed cheque
  2. Open cheque
  3. A/c payee only cheque
• A crossed cheque is a cheque that has two crossed parallel lines either on the whole cheque or the top left hand corner on the cheque. The double line signifies that the cheque may only be deposited directly into a bank account
• An open cheque which has been signed but does not have the amount of money written on it. they is no limits to the amount of money given to this person
• An A/C payee only cheque can only be paid into the account of the person whose name appears as the payee
• A money order is a check that is drawn on a bank and is guaranteed by the bank.

  The two parts are:

  • The money order
  • a payment stub that is kept as a record
• A debit card is a card that allows you to make purchases and withdraw cash from an ATM. via eletronic transfer
• A credit card is a plastic card that allows the holder to make purchases and pay for them later. Credit cards enable cedit payments
• A bank draft is a written order from a bank to pay a specified amount of money to a specified person on a specified date.
• A telegraphic money transfer is a transfer of money from one bank account to another overseas