Business Studies

Methods of payment through Commercial Banks

len Alfred Ajibola - Sat, 15th June, 2019 @ 16:17: PM

Topics in Business Studies

Advertising and Types of Advertising Land Mode of Transportation, its Advantages and Disadvantages Water and Air modes of transportation, its Advantages and Disadvantages Consumer Protection - Agencies of Consumer Protection Consumer Right and Protection Methods of payment through commercial Banks, Part 2 Methods of payment through Commercial Banks Meaning, Scope and Importance of Business Studies Meaning, Types, Advantages and Disadvantages of Business Structures Clerical Staff: Grades, Qualities and Functions of a Clerical Staff Characteristics, Examples, Advantages, Disadvantages and Principles of Double Entry Money, Disadvantages of Money Meaning, Importance, Characteristics and Elements of Business and Management Studies



Academic Questions in Business Studies

Please check out our Test Your Knowledge page to see all Questions and Answers

Which of the following is not a Right of Consumer Protection?

  • A. Right to Education
  • B. Right to Choose
  • C. Right to Safety
  • D. Right to the Good things of Life
  • E. Right to be Assured
  • F. Right to Compel

Which of the following is NOT a government agency of consumer protection?

  • A. Ministry of Sports
  • B. Ministry of Commerce
  • C. Consumer Protection Council
  • D. Ministry of Health
  • E. Ministry of Environment
  •  F. National Drug Law Enforcement Agent

Define Consumer Protection.

In buying and selling, the retailer will usually operate from the stall while the wholesaler operates from the _____.

  1. chain store
  2. hyper market
  3. hypo market
  4. warehouse
  5. mobile shop
  6. supermarket

Methods of Payment:

As students or workers, we may have carried out one or more transactions through commercial banks. Some of these transactions may include:

  • Payment of school fees.
  • Purchasing items from an online store.
  • Transfer of money into another’s account.
  • Payment of examination fee and so on.

Note: The above transactions can be done either physically or online.

An online transaction is done over the internet and as a result, we do not have to be physically present.

With regards to an online transaction; During the registration and payment procedures for an examination, let’s say JAMB for instance, we don’t necessarily need to go to a bank or a JAMB agent or to the JAMB office itself. All we need do is to connect to the internet where we can register, make payments and select our examination center (on JAMB's website).

The truth is: we live in a digital world where things are done online.

Below are some of the methods of making payments through commercial banks:

  • Bank Note and Coins

This is the most widely used form of payment in developing countries since it involves the direct exchange of currency (money).

It’s also frequently used in developed nations although the cashless policy is encouraged for security reasons.

Note: Bank notes are coins are generally accepted as legal tenders.

A legal tender is a recognized and valid medium of payment according to the legal and financial systems of a country.

Note: A legal tender is used as a valid method of meeting financial obligations.

Different countries have got their specific currency in circulation. The table below shows some of these circulating currencies within a country and their symbols:

Country

Currency value

Symbol

 Nigeria

Naira

N

 Unites States of America

Dollar

$

 United Kingdom

Pounds

£

 Japan

Yen

¥

 France, Spain, Italy, Estonia and Latvia

Euro

In Nigeria, the currency denominations are N1,000, N500, N200, N100, N50, N20, N10 and N5.

Please read on the Nigerian National Symbol here.

Note: Coins are no longer in circulation within Nigeria.

 

  • Cheques

A cheque is a written order to a bank to pay a specific sum of money to another person through the drawer's account.

A cheque owner will usually be given a cheque book by his or her bank.

Whenever the cheque owner (drawer) needs to make a payment, it is required that they tear out a cheque slip from the cheque book. They will be required to write the name of the payee in the cheque book along side the amount to be paid, the signature of the cheque owner (drawer) and date.

A drawer is a person who writes a cheque.

A payee is a person to whom a cheque is made payable. He is the person that cashes out the cheque.

The payee will be able to cash the cheque as indicated in the cheque slip. The payee will also need a valid identity card as a means of identification before they can cash the cheque.

Note: The amount to be paid on the cheque slip is entered twice. The first entry is made in words while the second entry is made in figures.

Types of Cheque

We have various types of cheque. Some of these include:

  1. Open Cheque or Uncrossed Cheque
  2. Crossed Cheque
  3. Bearer Cheque
  4. Order Cheque
  5. Stale Cheque
  6. Anti-Dated Cheque
  7. Post-Dated Cheque

 

Advantages of using Cheques for payment

  1. Cheque is a relatively safe method for payment since the recipient will need to present a valid identity card which must match the name written on the cheque.
  2. It is a simple method of cash transfer since it’s just a single slip.
  3. Payments can be stopped if needed (for security reasons).
  4. Since one does not need to count cash, there are little risks of making counting mistakes.
  5. It prevents the direct loss of a large amount of cash.
  6. A cheque can be post-dated which may be good for business.
  7. The risk of fraud is limited in business by the use of cheque.
  8. In case of fraud, the payee can still be discovered when cross cheque is used. Crossed cheques are traceable.
  9. Use of cheques automatically create proof of payment. As a result, no receipt is necessary.
  10. Constant use of cheque in an economy can reduce black money in the system.

For now, consider black money to be money earned through illegal activity.

 

Disdvantages of using Cheques for payment

  1. They are not legal tender and as such, creditors may choose not to accept them.
  2. Cheques may not be ideal for small amounts.
  3. They become deceitful and valueless when the drawer has no money in his or her account.
  4. Banks levy the drawee for cheque books.

Read on Debit Card, Credit Card, Travellers' Cheque and Bank Draft as methods of making payments through commercial bank.


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len

Alfred Ajibola is a Medical Biochemist, a passionate Academician with over 7 years of experience, a Versatile Writer, a Web Developer, a Cisco Certified Network Associate and a Cisco CyberOps Associate.



Amazing facts in Business Studies

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NOTABLE POINTS IN Business Studies

Consumer protection refers to the ways or methods through which consumers enjoy maximum satisfaction from the goods they buy and services rendered to them.

The agencies of consumer protection assists in protecting the consumer rights. These agencies may also be referred to as the organs of consumer protection. Basically, we have three of them, they are:

  1. Government agencies
  2. Independent agencies
  3. Legislation

Please read on Consumer Protection here

One of the responsibilities of the government of every nation is to set up agencies or organizations that will protect the interest of the consumers and invariably, the people.

Below are some of the Government Agencies of consumer protection

  • National Drug Law Enforcement Agency (NDLEA)
  • National Agency for Food, Drug Administration and Control (NAFDAC)
  • Consumer Protection Council (CPC)
  • Rent Tribunal
  • Ministry of Health
  • Ministry of Commerce
  • Ministry of Transportation
  • Ministry of Environment
  • National Wages and Salaries Commission

Please read on the Government Agencies of consumer protection here

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