3.1 MEANS OF PAYMENT
It can be referred to as the various ways or methods by which settlement of transaction or debts can be affected between people who are engaged in financial or business transactions e.g Transactions between a debtor and a creditor. It also includes documents that acknowledge indebtedness e.g promissory notes. The various means of payment through banks and post office are explained below.
- Cheque: This is an order, written by the drawer to a bank to pay on demand a specified sum of money to the person named as payee on the cheque.
- Bank drafts: These are issued by a commercial bank for payment to a specified payee at another bank and it is sure guarantee of payment. They are cheques paid by a bank to another bank or to a particular person or an organization.
Note: They are cheques drawn on a bank, when a creditor is unwilling to accept a personal cheque for payment.
- Standing order: This is an instruction given by the account holder to hisbank to make a regular payments on his behalf.
- Credit transfer: It involves payments made on instructions to a bank to credit customers of the same and other banks.
- Credit cards: These are cards issued by reputable stores to their approved customers which enable them to purchase goods on credit and settle their indebtedness through their banks monthly.
- Direct debits: This is an arrangement whereby the bank debits the account of a customer with a sum of money at the instance of a creditor.
POST OFFICE SYSTEM OF PAYMENT
- Postage stamps
- Postal order
- Money order
- Telegraphic money order
- Postal gird
BUSINESSMEN SYSTEM OF PAYMENT
- Bill of exchange
- Promissory note
- I owe you (IOU)
This is money which by law must be accepted in payment for goods and services and in the settlement of debts. It has the backing of law
(i) Coins and
(ii) Bank notes.