name the three major paper-based payment mechanisms and explain each. (150 words)
Thank youin advance!
Solution
1) Check: The entity or person making the payment, payor is referred to as the maker of the item. The maker mail or otherwise convey the check or draft to the payee. The payee deposits the check in his bank then it’s up to the bank to determine how it will receive value from maker’s Bank. The maker’s Bank debits the amount in the check from the makers account after accounting for the payment in the check.
2) Demand Drafts: Demand drafts are used when a person wants to transfer money to another person’s account. The person(sender) wanting to send money deposits cash or a check with the issuing bank which issues a Demand draft to the person. The sender sends it to the receiver through mail or other means, finally the receiver gives it to the bank where he holds the account and receives the money.
3) Payment orders or Banker’s checks are similar to Demand drafts except that they are issued for payments within the city. These are usually valid for a shorter period of time compared to other instruments.
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name the three major paper-based payment mechanisms and explain each-.docx
1. name the three major paper-based payment mechanisms and explain each. (150 words)
Thank youin advance!
Solution
1) Check: The entity or person making the payment, payor is referred to as the maker of
the item. The maker mail or otherwise convey the check or draft to the payee. The payee
deposits the check in his bank then it’s up to the bank to determine how it will receive
value from maker’s Bank. The maker’s Bank debits the amount in the check from
the makers account after accounting for the payment in the check.
2) Demand Drafts: Demand drafts are used when a person wants to transfer money to
another person’s account. The person(sender) wanting to send money deposits cash or
a check with the issuing bank which issues a Demand draft to the person. The sender sends
it to the receiver through mail or other means, finally the receiver gives it to the bank
where he holds the account and receives the money.
3) Payment orders or Banker’s checks are similar to Demand drafts except that they
are issued for payments within the city. These are usually valid for a shorter period of time
compared to other instruments.
