Methods of Payment Cash Cheque – A written instruction to a bank to transfer a certain sum to the account of the payee or pay in cash. The payer must have a chequing account and cheque books. Types of cheques 1. Open cheque – a cheque in which the bearer can cash. 2. Crossed cheque – a cheque with two lines across the face which instructs the bank that the sum must be deposited into an account. 3. Post dated cheque – A cheque made out to a future date.

Methods of Payment 4. Stale dated cheque – an uncash cheque for more than 6 months. Money Order – guaranteed instrument for making payment issued by banks or post office. Bank Draft – looks like cheques but are drawn on one bank and paid to another bank or branch. Used when payment of a specific sum is required to a known payee and personal cheque is not acceptable such as with international payments. Bill of Exchange – A type of note drawn up by the exporter with the amount and date of payment and is sent to the importer for acceptance and signature. The exporter keeps the bill until payment or can get payment ( discounted) from the bank.

Methods of Payment Debit card – issued by the banks or credit unions to account holders to allow them to make immediate payments for purchases by transferring money from the account holder’s account to that of the trader. Credit card – issued by the bank and other financial institutions to account holders to enable them to buy goods from traders. It is a type of revolving loan. Once repayment is made within a specific time there is no interest charged. Standing Orders – A payment instruction given to the bank to make regular payment of a specific sum at a specific time. Direct Debit – similar to a standing order but money is deducted directly from the salary and not from the bank.

Methods of Payment Electronic Fund Transfer –payments are made via the internet between banks to various account holders locally and internationally. Internet banking – account holders can access their accounts via the internet. Documentary Credit – a letter from the buyer’s bank which guarantees that payment will be made to the seller. Used mainly for international trade. It reduces the risk of dealing with buyers whose creditworthiness is not known.