One of the main functions of money is as a means of exchange. This means we can pay for goods and services. There are a number of different ways of paying for things and they are all classes as money.

This is notes and coins and there are a range of denominations.

Advantages

• Widely Accepted

• Physical item

• High consumer confidence

• Helps budgeting

Disadvantages

• Can be stolen/lost

• Counterfeit

• Cannot be used online

• Only appropriate for small/medium value purchases

• Cannot be tracked so difficult evidence spending

• Some retailers may not accept cash (COVID 19)

Issued by banks for payments of goods and services which are directly deducted from a current account.

Advantages

• No need to carry cash

• Secure with less risk of theft

• Widely Accepted

• Degree of Purchase protection

• Online Transactions

Disadvantages

• Short time difference between transaction and account update

• Sometimes not accpeted for small transactions

Issued by financial institutions allowing customers to delay payment for goods and services.

Advantages

• Interest free period

• Widely accepted

• Loyalty schemes

• Degree of Purchase protection

• Online Transactions

Disadvantages

• Interest charged on balance 

• Can encourage customer to overspend

• Interest charged on cash withdrawals

• Limit 

A written order to a bank to make a payment of a specific amount from one account to another.

Advantages

• Low risk as payee named on cheque

• Widely accepted 

• No change required

• Money stays in account longer as takes a few days to clear

• Not reliant on internet or technology

• Lost or stolen cheques can be cancelled

• No limit on how much you can write a cheque for

Disadvantages

• Old fashioned 

• Can cause problems/expense if cheque bounces

• Easy to make errors when writing

• Time delay between writing and cashing of cheque

• Easily damaged/lost

Payment is transferred directly from one account into another

Advantages

• Instantaneous 

• Provides record of payment

• No costs incurred

• Easy to use for one off and more frequent purchases.

Disadvantages

• Risk of loss if incorrect details entered

• Not appropriate for face to face transactions

An agreement made between a business and a bank to withdraw money from a customers account on a set day to pay for a bill

Advantages

• Convenient

• Amount charged can vary if necessary

• Easy to setup

Disadvantages

• If the company makes a mistake it can be difficult for the customer to claim back

• Varying amount can make it difficult to budget

An agreement made with a bank to transfer a fixed amount to a third party on a set date on a regular basis.

Advantages

• Same amount paid each time helping budgeting

• Easy to setup and cancel

• Automatic so no need to remember to make regular payments and less missed payments

• Choose suitable time and date

• Consumer has to authorise

• Consumer can easily cancel

• Usually same day transfer

Disadvantages

• Payments taken regardless of customers balance can lead to overdraft charges

• Payments continue to be made unless cancelled

The money is paid onto a card and it can be used in the future to make payments until the balance is cleared. These are typically used when gifting vouchers or for some utility bills.

Advantages

• No need for cash

• Can only spend the value on the card

• Cards can be given to other people as gifts

Disadvantages

• The often have a time limit in which the must be used

• They can only be used in a specific store/stores

• If they are lost they cannot be replaced.

An application on a mobile phone linked to a current account to facilitate the sending and receiving on money for goods or services.

Advantages

• Convenient

• Fairly secure

Disadvantages

• User needs to follow good E-Safety standards

Cards containing antennae allow money to be transferred when the card touches a contactless terminal.

Advantages

• Becoming increasingly popular as convenient

• Secure

• No need to remember pin

• Less likely to close card as won't leave in pin reader.

Disadvantages

• Often only accepted for small transactions

These are issued by banks and allow the payment to be delayed for a short period of time. When the statement is issued the balance must be paid off in full.

Advantages

Reduces risk of running up debts

• Allows a short period of credit

• No need to carry cash

• Can have additional perks

Disadvantages

• Must be paid in full each month

• Often have an annual fee for usage

The ability to carry out banking transactions using mobile devices such as smart phones or tables.

Advantages

• Convenient access even from rural areas

• Secure

• Can easily check balance 

• Make transfer to other accounts quickly

• Added security with biometrics

• Help features and trouble shooters to help use

Disadvantages

• Does not offer all of the functionality of internet banking

A system that allows the transfer of payments directly from one bank account to another can take up to 3 days.

Advantages

• Can be accessed in a number of ways (in bank, over the phone or online)

• No additional costs

Disadvantages

• Not offered by all banks

• Often limit on transactions

This allows payments to be made between banks on the same day.

Advantages

• Delivered almost immediately although can take up to 2 hours.

Disadvantages

• Receiving bank must also use FPS.

• Limit on the transfer amount.

A system that allows  the transfer of payments directly from one account into another

Advantages

• Transfers can be made the same day providing they are received before a certain time

• Unlimited transfer

• Can be processed online/branch/telephone 

• Fixed fees possible

• Guaranteed against fraud so safe/secure

Disadvantages

• Fixed charge per transaction

Issued by retailer so that customers can delay payments for goods and service (similar to a credit card but only accepted by the issuing store)

Advantages

• Allows a short period of credit that is interest free e.g. 1 month

• Offer loyalty schemes, discounts and special promotions or privileges.

• Can help build credit history positively affecting credit rating.

Disadvantages

• Only accepted in issuing store

• Interest is paid on outstanding balanced

• Can result in overspending and lead to unmanageable debt if not used correctly

• Penalties for missed payments

• Multiple store cards could prove difficult to manage