In the commercial world, we seldom use cash in transactions. Different payment methods have been developed since the banking activities become more and more important in the modern society.

IntroductionIntroduction

Methods of Payment in Methods of Payment in Trade and Other Trade and Other

TransactionsTransactions

• Cheque

• Cashier order

• Bank draft

• Telegraphic transfer

• Autopay– Standing order– Direct debit– Letter of credit

(L/C)

1. Through Commercial Banks:

Methods of Payment in Methods of Payment in Trade and Other Trade and Other

TransactionsTransactions

• Postal remittance service

• PayThruPost service

2. Through Post Offices:

• Promissory note• Bill of exchange

Methods of Payment in Methods of Payment in Trade and Other Trade and Other

TransactionsTransactions3. Other Methods of Payment :

• Cash• Credit card• Debit card• Smart card

Components of a chequeComponents of a chequePayee’s name

Chq. stub

Cheng Siu Ming

Payt. Amt.

Payt. Date

Drawer’s signature/chop

chq. # Bank code

Branch code

A/C #

Safety Flexibility Convenience A proof of payment

Advantages of Using ChequesAdvantages of Using Cheques

Bearer cheque Order cheque Uncrossed cheque / Open cheque Crossed cheque:

General crossing Account payee only Not negotiable Not negotiable, account payee only

Types of ChequesTypes of Cheques

– Transfer to a third party– Types:

Blank endorsement Endorsement to order

Dates of ChequeDates of Cheque– Post-dated cheque– Stale cheque– Antedated cheque

EndorsementEndorsement

Reasons for Reasons for Not Honouring a ChequeNot Honouring a Cheque• Insufficient fund• Stale cheque• Post-dated cheque• No signature• Signature not matching the bank record• Not countersigned on alteration, etc.

Commercial Banks and Commercial Banks and Finance Companies in Finance Companies in

HKHK• Deposit-taking institutions:

– Licensed banks

– Restricted licence banks

– Deposit-taking companies

Comparison of Comparison of the Financial Institutionsthe Financial Institutions

HK$100,000 HK$500,000 No restriction4. Minimum

deposit amount

Only T/DOnly T/DAll3. S/A, C/A, T/D

account services

HK$25MHK$100MHK$150M2. Minimum paid-up capital

BankRestricted licenc

e bankBank1. Name

Deposit-taking companies

Restricted licence banksLicensed banks

Institution

Comparison

Comparison of the Comparison of the Financial InstitutionsFinancial Institutions

Hong Kong Monetary Authority9. Supervised an

d audited by

Restricted by the Banking Ordinance8. Regulations

Hong Kong Monetary Authority7. Licensing auth

ority

No restriction6. Interest rates

3 monthsNo restrictionNo restriction5. Min. deposit m

aturity

Deposit-taking companies

Restricted licence banks

Licensed banks

Institution

Comparison

Services of Commercial Services of Commercial BanksBanks

1. Accepting Deposits:– Savings account

– Current account

– Time deposit account

– Foreign currency account

Services of Commercial Services of Commercial BanksBanks

2. Granting Loans:– Overdraft– Personal loan– Business loan– Secured loan– Trade financing– Syndicated loan

Services of Commercial Services of Commercial BanksBanks

3. Remittance Services:–Bank draft / Demand draft–Telegraphic transfer

4. Other Services:– Automatic teller machine (ATM)– Money exchange– Trustee service– Safe deposit box– Gift cheque– Traveller’s cheque

Latest Development of Latest Development of Banking ServicesBanking Services

PhonebankingInvestmentconsultancy

service

All-in-onemonthly

statements

Internetbankingservices

• Major centre of foreign exchange• A strong presence of international financial

institutions• The second largest stock market in Asia• Good regulatory framework• As a window for Mainland China• The host of international meetings

The Position of HK in the The Position of HK in the International Financial International Financial

MarketMarket

• Favourable geographical position• Regulatory framework• Good communication facilities• Qualified workers for the financial sector• Economic factors

Factors Contributing to Factors Contributing to HK’s Role as HK’s Role as

a Famous Financial Centrea Famous Financial Centre