Payment MethodsThere are many ways to pay for goods and services.

Cheques

Current account holders can use cheques to make payments.

A cheque is written permission to a bank to pay someone a certain amount of money.

Cheques are a safe way to pay for goods and services.

Complete the stub/counterfoil to keep a record.

Bank draft

Usually used for a one-off payment, for larger sums of money

Similar to paying cash: the person it is made payable to will have no difficulty obtaining payment for the draft.

You pay a small fee.

The bank prints a one-off cheque.

A safe payment method

Your receipt is a record for you to keep.

Standing order

In most cases you need a current account

An agreement between a customer and their bank – the bank sends money from your account to a third party at your request.  It may be a one-off payment or a regular monthly amount.

Eg insurance premiums

Direct debit

In most cases you need a current account

Gives permission for a company to withdraw a variable amount on variable dates from your current account – eg a mortgage repayment each month to the bank

Eg utility bill payments, monthly mortgage repayments, car or other loan repayments

The company must warn you in advance of each payment. This may be done in a number of ways including letter, payment schedule, email and online.

Bank Giro/credit transfer

You don’t need a current account.

It lets you transfer money to another person’s bank account.

Complete a form with their name, account details and the amount.

Pay the amount you want to transfer, plus a fee.

Eg can be used to pay a credit card bill

Postal/money order

A written instruction from one post office to another

Asks it to pay a certain sum to a named person

Pay a small fee

Safe

Not used very much now

A useful payment method for people who don’t have bank accounts

Payment/plastic cards

Pay for goods and services without using notes, coins or cheques

Eg Visa, Access, Master Card, Maestro

Online/mobile payments

Online banking is available via computers, laptops, tablets and mobile phones.

Make payments, make transfers, set up standing orders and direct debits

PayPal and Google Checkout are popular with online retailers.

Mobile apps let you transfer money using mobile devices.

Use a credit card or debit card to make a payment by typing in your card number in a secure payment system, and giving the security number on the back of the card.

How might you pay for these?

Monthly mobile bill

Present to someone in the USA

Monthly insurance premium

Online purchase

Weekly grocery shopping

Petrol

College fees