A3 Types of Transactions
Cash is money in its physical form. Cash can either be banknotes or coins. When making a cash transaction, the payment is made at the same time as goods are received. This is most commonly used in retail outlets.
Bank transactions refer to methods of payments when a customer instructs their bank to transfer payment to a recipient. This may include electronic transfers, payments through an ATM, credit and debit card payments or cheques.
Credit cards are issued by banks that customers can use to pay for goods and services. Each payment increases the balance owed and interest is paid. Users can choose to pay anything between a minimum payment and the full balance each month.
Debit cards are issued by banks for customers to use to pay for goods and services. The difference between a debit card and a credit card is that the payment amount is immediately deducted from the customer’s bank account.
Credit transactions refer to purchases when payment is made after the receipt of goods and services. The time between a customer receiving a product and making the payment is referred to as the credit period.
Automated payment methods are recurring payments made to a supplier that is automatically deducted from a customers bank account or credit card when payment is due. The customer gives the authorisation to make recurring payments at the start of the contract so does not need to authorise each time.
A direct debit is an agreement to allow an individual’s or business’s bank to make regular payments directly to a business to pay bills.
Internet banking refers to transactions and banking services that are carried out over the internet. Customers can use banking websites and apps for services such as making payments and checking statements for receipts. This allows customers to manage their finances without having to visit a branch.
Security implications for online transactions include the actions a business needs to take to protect data collected in the process of making and receiving payments. Security breaches may lead to hackers accessing a person’s financial information such as credit card details, passwords and addresses. This can allow a hacker to use a customer’s credit card to make purchases or use their personal data to commit identity theft.
