Payment Methods

By : Naima Ashraf Rimsha Iqbal

PAYMENT METHODS

Instruments which are used by the account holders.

Include paper based, electronic based or combination of both.

CHEQUE :• Most popular payment instrument.• Order given by a customer to meet his payment

obligation to the banker.

Section 6 – a cheque is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise than on demand.

CHARACTERISTICS :

I. It must be drawn on a banker and

II. It must be payable on demand.

TYPES OF CHEQUE:

1. Open cheque: payable in cash

2. Crossed cheque: a cheque with two parallel lines on it, which is payable into a bank account.

3. Dating a cheque: there is no legal requirement that a cheque should be dated. A cheque is not invalid only for a reason that it is ante dated or post dated.

Parties to cheque:

• Drawer: the account holder

• Drawee: to whom the cheque is drawn i.e. bank.

• Payee: to whom a cheque is made payable

Component of a bill of exchange (includes a cheque)

Unconditional order: it does not contain request for payment. A cheque containing conditional order is dishonored by the bank.

It must be in writing: writing includes printing as well. Oral orders are not considered as cheque.

Addressed by one person to another: the name of the addressee person must appear on the instrument itself. The instrument drawn by a banker upon itself is not a bill of exchange.

It must be signed by a person giving it: an unsigned cheque will be refused by the bank for payment.

Pay on demand: a cheque is always payable on demand.

Amount certain in money: cheque must be for money only. The amount must be in words and figures.

Payable to specified person or bearer: The name of the payee must be written on the cheque or it can be made payable to bearer.

Payment In Due Cour

se

Proper Form

NotCrossed

Drawn On The Particular Branch

Payable To Bearer Or Order

Not Be MutilatedNo Unauthorized

Material Alterations

Sufficient Funds Available

Not Be Post Dated Or Stale

Presented During Banking Hours

No Legal Bar On Payment

Protection To The Paying Banker

Protection To The Collecting Banker

Negotiation Of Cheques

Signature forgery refers to the act of falsely

replicating the signature of another person

Payment Of A Cheque

Under Forged

Signatures

Dishonor of a cheque: when there is not enough money in the account.

Shall be punishable with imprisonment which may extend to one year or with fine or with both.

Credit card: allowing the holder to purchase goods and services on credit.

Charge interest, used for short term finance

Three contracts involve in the transaction

1) Issuer and card holder

2) Issuer and dealer

3) Dealer and card holder

Charge card: does not charge interest, higher spending limits.

Require user to pay his/her balance in full upon the receipt of the statement.

Cheque card or chaque guarantee card: issued by a bank to guarantee the honoring of cheques upon a stated amount.

Debit card: allows the customer to purchase goods and services. Charge no interest.

Cash card or ATM card: used by a customer to obtain cash from an automated teller machine.

Personal identification number (PIN)

PIN(secret code) is the authority for the transaction

1. Payment Methods

2. Chequei) Open Cheque

ii) Crossed Cheque

3. Components Of A Bill Of Exchange

4. Payment In Due Course

5. Protection To The Paying

Banker

6. Protection To The Collecting

Banker

7. Negotiation Of Cheques

8. Payment Of A Cheque Under

Forged Signatures

9. Dishonor Of A Cheque

10.Credit Card Charge

Card Cheque

Card Debit Card Cash Card

SUMMARY