Personal Payment: Methods & Types

Instructor: LeRon Haire
In this lesson, we will discuss several types of personal payment methods including but not limited to mobile and online payments, debit/credit card transactions, and person-to-person payments.

The World of Personal Payments

Before we take a look at some of the various types of personal payments that are accessible today, let's first take a glance at some of the methods that were more prevalent in the past. For example, similar to pay phones once ruling every street corner and lamppost, checks were once the king of the alternative payments (besides cash). And although store charge cards still exist, they are not nearly as many available today as there were just a few decades ago. However, as time evolved, other types of personal payments began to emerge. Let's now take a look at some of the various personal payment methods of today and compare their likenesses and/or differences.

Debit Card Transactions

Perhaps the most popular form of personal payment today is the debit card transaction. Debit card transactions are transactions that include the use of a debit card, which is linked to a personal account to access the funds electronically. The debit card transactions are very useful and popular for a number of reasons.

First, carrying a debit card is considered safer as opposed to carrying cash. As we all know, carrying cash typically also carries along with it a higher risk for it being stolen. Debit cards do not carry that same risk due to the fact that they cannot be used if stolen because they are only accessible through a four-digit pin code that only the card carrier knows. This option allows users to make payments while maintaining some sense of security, particularly during the holidays.

Secondly, debit cards access funds which are directly linked to a personal account. In other words, the user does not have to physically make a trip to the bank to make a cash withdrawal in order to make a purchase. The purchases and payments are made directly from the debit card.

Mobile payments require the use of a Smartphone.

Mobile Payment Option

Due to the ever-changing technology of today, Smartphones are equipped with capabilities that may have once seemed like something from a futuristic movie. However, the progression of technology has allowed for people with Smartphones to be able to access their personal banking accounts and make personal payments with a touch of their fingers. Mobile payments describes when users are able to make some of the everyday banking transactions and interactions with their Smartphones. Those that have this capability are able to perform tasks such as checking their account balance and transferring funds from one account to another. One of the greatest advantages of mobile payments is the ease of accessing the account from your Smartphone at any time or place.

Smartcards have chips, or microprocessors, that are used to enhance the protection of users.

Smart Card

Many people may have encountered or used a smart card, but may have been unaware of its name or its purpose. A smart card is similar to a credit card with the exception of having a chip, or microprocessor, on it instead of the typical magnetic strip. A smart card is also able to be used in most stores and locations just as a normal credit or debit card. The chip is on the smart card for additional protection against things like fraud or theft. The strip of a credit card is able to be read by another person or even erased or deleted by a professional. The chip is designed to increase security for the user by protecting some of the most vital information.

Online payments are able to be accessed via desktop computer or a laptop computer.

Online Payments

Online payments are a form of personal payment that requires the use of a computer or laptop along with an internet connection. These payments are helpful because similar to mobile payment options, online payments can be made at times that are outside the normal banking hours. Online payments can also provide convenience because if a customer makes more than one payment online, his information is typically stored in a database for that particular service or business.

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