Banking: Cashless Settlements

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Cashless settlement
Nowadays, a lot of settlements are being made without using any coins or paper money. With the increasing progress of technology, goods and services can be paid with cash cards or over the internet. There are several options the costumer can use to pay for a purchase. Credit cards

A credit card is a card issued by a financial company giving the holder the opportunity to borrow money or buy products or services on credit. The credit card provider sets a credit limit after approving the account. There are advantages and disadvantages for both customers and retailers. First of all, convenience and security are some of the advantages. A credit card is convenient because it enables online shopping or, for example, to purchase some goods or services over the phone. In addition you do not have to carry much cash around and worry about loses or robberies. On the other hand, disadvantages might be high-cost fees, interest charges and overuse. A lot of people spend more than their situation allows since they do not need to pay with cash in the same situation. Finally, credit card thefts also belong to the disadvantages unless the loss is reported immediately. Security is also an advantage for retailers since there is less cash on the premises. Furthermore, credit cards increase sales as well. However, the retailer has to pay a 4 per cent fee to the credit card company and handle more administration work. Debit cards

Debit cards are similar to credit cards. The big difference is that debit cards take money from the bank account and therefore, offer the same convenience as credit cards without borrowing any money.

Direct Debits
Another way of cashless settlements is the direct debit system. The creditor is authorized to draw money directly from the bank account. The advantages are mainly to the payee rather than to the account holder. The biggest advantage is that companies, for instance telephone or insurance companies can reduce their operating...
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