Summary Methods of payment (NOTES)

CHAPTER 1: METHODS AND INSTRUMENTS OF PAYMENT


Choice of method depends on :




•
Amount


2 .
Relationship

3. Distance


4. convenience


5. RISK
security
6 .
Trust




MODERN METHODS OF PAYMENT


General features of modern
payment methods :
TYPES OF MODERN PAYMENT :



◦ QUICK } efficient ( instant) 1 .
EFT transactions


◦
cost effective 2 . Credit cards


time ) 3
convenient Larry place E- money
•

any
.


,




o secure and reliable 4 . Mobile payments
◦
Interoperable


Erroneous transfers made by customers :




> possible to claim from beneficiary on grounds Of unjustified

payment instructions for enrichment


>
the transfer of Funds
Generally transactions can
only be reserved with permission of


electronic
by means
beneficiary .




N ra
&
I made by : cell -

phone ,
CREDIT VS DEBIT INSTRUCTIONS :



internet , home banking > Credit instruction = to transfer funds

services , ATM EFT TRANSACTIONS from of mandatcr
.

electronically account


to account of beneficiary e- g- Pmt of salaries

^ '
customer carries risk of Take place through Bankserv system
any :




unauthorised use of card Until electronic facilities between banks .




notified ( bank
>
bank Is Isn't liable Debit instruction =
person to whom payment is made


for unauthorised transactions ) may claim amt from financial Institution where


debtor has an account e. g. stop orders ,
debit
the


Regulated by : ECTA ,
National credit Act , consumer orders


Protection Act
,
principles of law of contract & SA Code * same advantages 1- Disadvantages
for Banking Practice as credit cards

, of ADVANTAGES :
DISADVANTAGES :
Method payment t form

have
of credit
1 DO not to
carry 1 More easily spend money and


cash around
1 Issuer settles debt with incur large debts


> can be used Overseas
supplier card holder refunds
>
security risks can be stolen ,




&
•
> Used for Internet purposes lost cloned fraud ( internet
issuer ,
3
-


transactions )



TWO PARTY CARDS :

&
>
Issued by large chain THREE PARTY CARDS :


stores to an account
°
CREDIT CARDS ' Issued by bank Other financial

holder institution .




If
3

1 2 parties = issuer ( supplier ) } card * Not
negotiable
> 3 parties = Issuer ( bank / financial


holder ( customer ) instruments Institution ) , supplier } card holder

> '
To make purchases at the store 1
Regulated by To make purchases at
any place where


up to a certain credit limit National credit card is accepted up to a certain


credit Act & credit limit .




C- CTA .




Issued banks do a number of transactions
by
=




Electronic purse me until available balance is used
%

e. g. gift vouchers , loyalty cards
,



" "
su card =
money is loaded


onto the card
E-MONEY
A




payment intermediaries


> e.
g. PayPal ,
Apple Pay = consumer does not
divulge
M
virtual currencies e.
g. Bitcoin banking credit card details and
payment

( not yet considered legal payment is made through intermediary .




method in SA )




B.

Reserve Bank LSARB )
According to the SA ,
e-
money

E- function legal tender if issued
money monetary can only as it is by a bank
=




value that is stored on receipt of funds } can be redeemed for physical


electronically .
cash or a deposit into a bank account on demand