Recap: Payment methods

A bank transfer moves money straight from one bank account to another. There are three main kinds in the UK.

BACS

takes three working days. It is cheap, and is used for wages and for paying many suppliers at once

Faster Payments

usually arrives within minutes, at any hour on any day. Each bank sets a limit on the amount

CHAPS

arrives the same working day, with no upper limit. The bank charges a fee for each one

A cheque is a written instruction to a bank to pay someone. It is rare now, but some customers still pay this way.

Drawer

the person or business that writes and signs the cheque

Payee

the person or business to be paid

Drawee

the drawer's bank, which pays the money

A bank will only pay a cheque that is signed, has the same amount in words and in figures, and is dated within the last six months.

A cheque is not money straight away. It has to clear, which normally takes until the end of the next working day. If the drawer does not have enough money, the bank returns the cheque unpaid, and the debt is still owed.

A standing order never changes by itself. If the amount goes up, the payer must tell its bank.

With a direct debit, the payee must tell the payer in advance before it changes the amount or the date.

If a direct debit is taken by mistake, the payer's own bank refunds it at once. This promise is called the Direct Debit Guarantee.

The card provider charges the seller a fee on every card sale. It is usually a percentage of the sale.

Fernhill's provider charges 1.5% here. A customer pays £240 by card for a repair.

The sale is still recorded in full. The fee is a separate expense, and only the rest reaches the bank.

The card provider charges the seller a fee on every card sale. It is usually a percentage of the sale.

Fernhill's provider charges 1.5% here. A customer pays £240 by card for a repair.

The sale is still recorded in full. The fee is a separate expense, and only the rest reaches the bank.

A standing order never changes by itself. If the amount goes up, the payer must tell its bank.

With a direct debit, the payee must tell the payer in advance before it changes the amount or the date.

If a direct debit is taken by mistake, the payer's own bank refunds it at once. This promise is called the Direct Debit Guarantee.