Commerce

Methods of payment
Commerce
Form V lower
3rd mid term

By Ms.Ashfa Ameen
 SOW References

3.2 Source of 3.3 Methods of

finance payment
YouTube link
https://youtu.be/4ktqyu-kaVw
METHODS OF PAYMENTS
Learning Objectives
Able to understand the methods of payment such as
 Cheques
 Standing order and direct debit
 Bank giro (credit transfer)
 Bank drafts
 Credit cards
 Debit cards
 Electronic transfers
 Cash on delivery
 Documentary credits
What is meant by methods of payment
The way one pays for a transaction.

Example:
Cheques
Standing orders and direct debit
Bank giro
Debit and Credit cards
Electronic transfers
Cash on delivery
Documentary credits
Cheques
 It’s a document that instructs a
bank to transfer money from
one bank account to another.
 Cheques are a flexible methods
of payment.

Mohamed Imran
Advantages of cheques

Flexible

Po r t a bl e

Secure
d o c um entary
Provide p a y ment
e o f
evidenc
Disadvantages of cheques

 Payments are delayed

 A stolen bank cheque might be used for theft
 Unsuitable for very small payment
Standing order and Direct debit
 A standing order is normally used to make
regular payments of the same amount, such
as loan repayment or a monthly insurance
premiums

 A direct debit is used when the timing of

payment and the amount different.
Bank giro (credit transfer)

 A system of payment which allows a payer to pay

money directly into a payee‘s bank account.
 It is a document that enables money to be paid
into a bank account.
 Businesses sometimes attach this to invoices to
send out customers.
 Bank drafts
 It is similar to the cheques.
 This method of payment is used for quite large payments and for
international trade transactions.
Credit Cards
 These are the types of cards issued by
commercial bank on credit basis.
 It is not essential for a customer to have a bank
account in order to obtain such a card.
Advantages Of Credit Card

 Convenience
 Buy now and pay
later
 Internationally
recognised
 Secure
 Disadvantages Of
Credit Card

High interest rate

May tempt uses to over spend

 Debit Cards
 Debit cards are the cards issued by
commercial bank to their customers
facilitating them to make payments directly
using the cash available in the bank
account.

 It is required to have a bank account to

obtain a debit card.
Advantages Of Debit Card
 Portable
 Secure
 Internationally recognised
 Disadvantages Of Debit Card

 They can not be used to borrow money

like credit cards
 Spending is limited to amount in
bank account
Electronic transfers
This method might be used to transfer money from a bank account
to another bank account.
Cash On Delivery
This method of
payment is long
established. It
involves making a
payment in cash
when goods are
delivered.
Documentary credits
A method used by exporters and
importers to make international
trade payments.
Subject vocabulary
 Drawer – The person or business making a payment
by cheque.
 Cheque crossing – Two parallel lines drawn across the
face of a cheque which means the cheque must be
paid into a bank account.
 Payee – The person or business receiving payment by
cheque.
 Bank draft – A document like a cheque but drawn on
the bank’s funds not the drawers.
Evaluation
Methods of Payment :01
Define the following methods of payment and transfer them
into an image to help you remember them.
Method of Transform into an
Definition
Payment image
Evaluation
Methods of Payment :02
Advantages and disadvantages for users of credit and
debit cards
Credit Cards Advantages Disadvantages

Debits Cards Advantages Disadvantages

There are also advantages and disadvantages of using card payments for the seller …
Debits Cards Advantages Disadvantages