METHODS OF PURCHASING GOODS
AND SERVICES:
CASH TRANSACTIONS
Grade 11 Term 3 Week 6 Lesson 3
CASH TRANSACTIONS
Cash transactions involve a direct exchange of
money for goods.
When you make cash purchases you are entitled to
ask for a cash discount
ADVANTAGES OF CASH TRANSACTIONS
You are free to shop at any store and not only where you have an account
You think twice before making a purchase as the impact of the purchase is felt immediately
Stores that sell only for cash can charge less for their goods so you can save
You can save your credit for emergencies
DISADVANTAGES OF CASH TRANSACTIONS
Carrying large amounts of cash can be unsafe
You need to be disciplined about keeping track of all your expenses
Some shops are unwilling to refund cash for returns
You do not build up a credit record, which can be vital in emergencies
If cash is lost, it cannot be replaced
TYPES OF CASH TRANSACTIONS AND MEANS
OF PAYMENT
Notes and coins
Cheques
Postal orders
Cash with order (CWO)
Cash on delivery (COD)
Debit cards
Internet payments
NOTES AND COINS
You can use notes and coins to settle almost any
transaction.
It is impractical to pay large amounts with cash.
It is unsafe to carry large amounts of cash
CHEQUES
A cheque is a promise from a bank to pay money
from the account holder’s bank account to the
person who has been given the cheque
The person writing the cheque is called the drawer
The drawer writes the transaction details on the
cheque and signs it
WRITING CHEQUES
Many businesses do not accept cheques or they
insist on proof of identity when payment is made by
cheque
This is because of so much fraud committed using
cheques
A cheque will not be accepted if any changes are
made on it
A bank will not release cash until it has received the
money from the drawer’s bank
By crossing a cheque you can ensure that the
funds are paid directly into the account of the
payee, nobody else can cash the cheque
POSTAL ORDERS
Postal orders are purchased at a post office for a
specific amount of money
It is payable to a specific person or company and
can only be redeemed at a post office or bank
It can be posted to the receiver, but can be lost or
stolen in the post
CASH WITH ORDER (CWO)
CWO is when the money for a product or service is
paid when the order is placed
Business can plan it’s production according to the
orders received
There is a possibility that the order may not be
delivered if it is a scam
Payment is made without seeing the product so you
may not want it when it arrives
CASH ON DELIVERY (COD)
COD is when the money for the goods is paid
when they are delivered at the customer’s
door or store
Goods can be ordered by telephone or post.
This type of payment allows the seller and buyer
to reduce the risk of fraud or non-payment
DEBIT CARDS
A debit card /bank card/cheque card allows a
customer access to his/her bank funds immediately
through electronic means
The bank immediately deducts the amount from
your account and gives it to the business where you
made the payment
A debit card can also be used to draw cash from an
ATM
ADVANTAGES AND DISADVANTAGES OF DEBIT
CARDS
Business is guaranteed payment once the card has
been accepted
Debit cards can be used for mail-order or online
purchases
It is cheaper than withdrawing cash
Fraud is a problem. New cards have a chip and a
pin number to try to solve this
INTERNET PAYMENTS
If you have access to the Internet your account can
be linked so that you can make payments from the
security of your home at your leisure
The service can be used to pay accounts
Goods and services can be purchased and paid for
using electronic financial transactions (EFT’s)
ADVANTAGES AND DISADVANTAGES
Payments can be made at any time of the day or
night
Goods can be purchased over the Internet and be
delivered to your home
Disadvantage: Phishing schemes occur where
criminals use the Internet to obtain private
information that they use to commit crime