Methods of payments

• What are the 14 methods of payment

  • Cash
  • Credit
  • Debit card
  • Cheque
  • Direct debit
  • Charge card
  • Store card
  • Standing order
  • Contactless card
  • Mobile banking
  • BACS
  • CHAPS
  • Pre-paid card
  • Electronic transfer
• Advantages of credit card

  • Goods and services paid for by card issuer
  • Short interest-free period
• Disadvantages of credit card

  • Interest is charged on balance outstanding
  • Risk of overspending and getting into debt
  • Details may be hacked
  • Some may charge a fee for any payments made
• What is electronic transfer

  A payment made directly between bank accounts
• What is a standing order

  An instruction to a bank from an account holder to make regular set payments to a person/organisation
• Advantages of standing order

  • Fixed amount each time
  • Payments made automatically
• Disadvantages of standing order

  • Lack of flexibility with payments
  • Possible delays/failures
• What is a direct debit

  An instruction to a bank to allow a third party to collect varying amounts of money from the person's bank account
• Disadvantages of direct debit

  • Difficult to plan expenditure around it
  • Must have sufficient funds to pay it
• Advantages of direct debit

  • Simple way to pay
  • Don't forget to pay certain things
• What is BACS (Bankers' Automated Clearing System)


  Electronic payment from one bank account to another
• What is CHAPS (Clearing House Automated Payment System)


  A faster electronic payment from one bank account to another
• Advantages of BACS

  • Cheapest way to send payments
  • Supported by every accounting software
• Disadvantages of BACS

  • Takes 3 days
  • Have cut off times and only clear on working days
• Advantages of CHAPS

  • Guaranteed same day transfer
  • Safe and secure
• Disadvantages of CHAPS

  • Expensive
  • Cost makes them unsuitable for bulk payments
  • Cannot be used for international payments
• What is a store card?

  Similar to a credit card but only accepted by the store who issued it
• What is a charge card?

  A short-term, interest-free loan - similar to credit card has to be paid back in full end of each month
• Advantages of a store card

  • Benefits and loyalty schemes
  • Earn rewards
  • Can build a good credit rating
• Advantages of a charge card

  • Avoid debt as its paid back each month
  • No spending limit
  • No interest paid
• Disadvantages of a store card

  • Interest payable on balance if not paid each month
  • Risk of overspending - debt
  • High interest rates
• Disadvantages of a charge card

  • May charge annual fees
  • Late payments affect credit history
  • Late fees are issued
• Advantages of electronic transfer

  • Direct payment
  • Straightforward to set up
• Disadvantages of electronic transfer

  • Risk of fraud
  • May have technical issues
• Disadvantages of cheque

  • Not legal tender - can be refused
  • Time consuming - have to travel to branch
  • Takes a while to transfer into account
• Advantages of cheque

  • Secure method
  • Low risk of fraud
• Advantages of pre-paid card

  • Widely accepted by retailers
  • Can't spend more than the amount set on card - control costs
• Disadvantages of pre-paid card

  • If lost or stolen, cash on card is gone
  • Some have set-up and transaction fees