O-LevelCommerceBanking7100/22 · Oct/Nov 2023 · Q516 Marks

Fig. 5.1 shows payment methods used in a country in 2017 and 2022. [Figure 5.1] Use Fig. 5.1 to help you answer the following questions.

(a)Suggest one payment method not named in Fig. 5.1.[1]
(b)Define debit card.[1]
(c)Explain one reason why mobile wallet has become more popular.[2]
(d)Do you think it is preferable to have a cashless society? Give reasons for your answer.[3]
(e)Which of these statements about internet banking are true and which are false? Tick (✔) true or false in the correct column. Cash can be obtained at all times. Customers log on by using their date of birth. Electronic payments can be made at any time.[3]
(f)Discuss two advantages to consumers of using credit cards when buying goods. Which is the more important advantage? Give reasons for your answer.[6]

This question uses a diagram from the original paper, which isn't shown here. Open the full paper from the past papers archive to see it.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2023). The mark or mark type is shown in brackets.

[1] Credit transfer/bank giro/bank transfer / standing order / direct debit / documentary credit/letter of credit / bank draft / store card
[1] A card used to make immediate/direct payment
[2] Increase in internet shopping / ecommerce (1) more people are shopping online (1) can be used 24/7 (1)
[2] More convenient / ease of access (1) just need to carry smartphone (1) just need to tap smartphone to make payment (1) or hold phone near payment terminal (1)
[2] Rising smartphone use (1) more consumers pay with smartphones (1)
[2] More locations/websites (1) accepting payment by this method (1)
[2] Speed/quick payment (1) no need to enter credit card information for a transaction (1)
[2] Can use for a range of payments (1) e.g. utilities, train tickets (1)
[2] Greater awareness of mobile wallets (1) more consumers posting messages on social media about the service / more advertising of this service taking place (1)
[2] More options for digital payment (1) you can store a number of different credit cards / debit cards / gift cards / loyalty cards, and more in one wallet (1)
[2] Safer (1) than carrying cash (1)
[2] Secure (1) against potential theft (1)
[2] Provides loyalty rewards (1) easy to obtain loyalty points (1)
[2] No transaction charges (1) for transferring money anytime/anywhere (1)
[2] Can check balance (1) no need to go to bank / receive bank statements (1) transactions can be carried out at home (1)
[3] Yes more convenient/easier than carrying cash (1) transactions will be faster / faster to pay (1) useful in an emergency (1) if credit card not available (1) more transparency as non-cash transactions supported by records / give proof of payment (1) less need to use foreign currency (1) making large payments (1) less crime / theft (1) so safer not to carry cash (1) can make transactions internationally / over long distances (1)
[3] No - people may spend more (1) increases debt (1) lack of privacy in transactions (1) people trust using cash (1) adds to traders' costs as there is the need for IT systems (1) largest payment section used in Fig. 5.1. (1) some retailers do not have card machines (1) e.g. hairdressers (1) some people prefer receiving cash (1) e.g. window cleaner (1) some people lack knowledge in using technology (1) e.g. internet banking (1) some people fear hacking of their credit card / internet banking (1) losing money (1) some people do not have bank accounts (1) do not want to live in a cashless society (1)
[3] Cash can be obtained at all times. (FALSE)
[3] Customers log on by using their date of birth. (FALSE)
[3] Electronic payments can be made at any time. (TRUE)
[6] A credit card is a plastic card containing customer details used to make purchases on credit. Credit is buying now, paying later.
[6] Free credit - It can be a more convenient option to use a credit card, as it can let you buy a product but not pay for it until next month.
[6] Spreading payments out – If you need make a large purchase, such as a home appliance, a credit card offers the advantage of spreading the cost over several monthly payments.
[6] Having purchase protection – If you buy something on your credit card and something goes wrong – for example if the selling company goes bust or if the purchase is faulty or goes missing, you can claim the cost back from your credit card provider.
[6] Interest free spending: If you need to make a purchase but you've not saved up enough yet, some credit cards offer a 0% interest period that effectively lets you borrow for free, providing the monthly payments are made.
[6] Getting cashback, benefits and rewards – if you know you'll be using the credit card for regular spending, you could take advantage of one with varying incentives. For example, airmiles on an airline credit card
[6] Safer to use than carrying cash in many different outlets.
[6] Evaluation: As long as consumers use their credit cards and are disciplined in paying their credit card balance in full and on time, there are endless advantages of using a credit. Free credit is the more important advantage. Given the timing of receiving wages, making certain purchases at certain times of the month can be tricky. A credit card frees you up by allowing you to spend money you don't have and then pay it back over time in the future.