1. Payments Banking & Finance

2. Bellringer Online Chapter 9 Pretest www.g-wlearning.com

3. Activity: 3 minutes You want to buy a new book or video game. Depending on where you buy the item from, what are your payment options?

4. Negotiable Instruments Define a negotiable instrument Compare and contrast types of negotiable instruments

5. Biz Kid$ Video

6. What Is a Negotiable Instrument? Transferrable, signed document that represents the promise to pay a specific amount of money in the future or on demand Easier to transport More convenient than cash for large purchases Proof that payment was made

7. Elements of a Negotiable Instrument Authorized signature Specific amount Unconditional promise to pay Payment date Payee

8. What is the bank’s role? Negotiable instrument is created by a maker Maker (drawer) signs to validate it Maker authorizes withdrawal of cash Drawee (party who pays) is the bank

9. Video: “Learn the Parts of a Check”

10. Path of Payment The maker creates the negotiable instrument The maker gives the negotiable instrument to the payee The payee presents the negotiable instrument to the bank The bank pays the payee the value of the negotiable instrument

11. Checkpoint 1.What elements must be in a negotiable instrument? 2.If a date is not specified in a negotiable instrument, when is it paid?

12. Types of Negotiable Instruments Drafts Orders of directs a payment to be made Payees name “pay to the order of” Checks Written order directing a bank to pay a specific amount from deposited funds –Traveler’s checks –Money order –Cashier’s check

13. Types of Negotiable Instruments Bills of Exchange Contains an unconditional order to pay a specific amount of money to the payee Used in commerce, particularly international trade Notes Promissory Note: commercial version of an I owe you (IOU) Certificate of Deposit: bank is the maker

14. Checkpoint 1.What are the two types of negotiable instruments? 2.How is a money order different from a traveler’s check? 3.Why is a CD considered a negotiable instrument from the bank’s perspective?

15. Bellringer

16. Small Group Activity: 3 minutes Who is responsible for making sure a negotiable instrument is valid? Prepare to share.

17. Using Checks List the characteristics of a checking account Describe the elements of a check Distinguish between the common endorsement types Explain how checks are processed

18. Checking Accounts Main purpose: ability to withdraw funds from a bank account by writing checks Pay little or no interest Liquidity is high For consumers and commercial businesses

19. Endorsements via Video

20. Video Notes for Blank Endorsements

21. Video Notes for Restrictive Endorsements

22. Video Notes for Full Endorsement (Third-Party)

23. Life Cycle of a Check Honoring a check Processing a Check Legal Influences

25. Processing a Check Clearing: process of approving a check and transferring funds from one account to another Used to take several days

26. Processing a Check Back in the Day 1.Drawer wrote the check and gave it to payee 2.Payee endorsed check and presented to bank 3.Payee’s bank mailed check to drawer’s bank 4.Drawer’s bank sent payment to payee’s bank 5.Cancelled check, cleared check, returned to drawer

27. Processing a Check TODAY Automated clearinghouse (ACH): system that processes checks 1.Drawer writes check and gives to payee 2.Payee endorses check and presents to bank 3.Bank sends image of check to the ACH 4.ACH transfers funds from drawer’s account to the payee’s account

28. Processing a Check Many banks no longer return cancelled checks –Substitute check: paper copy of front and back of original check –Images of checks and deposits viewed online

29. Research Activity: Legal Influences Red Cups: Federal Reserve Act of 1913 Blue Cups: Uniform Commercial Code of 1952 Yellow Cups: Expedited Funds Availability Act of 1987 Green Cups: Check Clearing Act for the 21 st Century of 2004 aka Check 21 (image replacement document—IRD) Your group will provide 5 facts on the assigned legal development.

30. Checkpoint 1.How is the drawee identified on a check? 2.Which type of endorsement is the least safe? Explain. 3.What is the purpose of a third-party endorsement? 4.What two steps did ACHs remove from the check-processing procedure? 5.How did IRDs remove bank and customer concerns about the use of electronic records?

31. Bellringer List and describe the 3 types of endorsements.

32. Small Group Activity: 3 minutes Think of things for which you can prepay. Prepare to share.

33. Other Payment Systems Define a payment system Describe the common types of electronic funds transfers Explain how cards are used as payment systems

34. Payment Systems Methods of transferring funds without using cash Global trade would grind to a halt with cash only Electronic funds transfer most common Any transfer of funds started by electronic means

35. Automated Teller Machines Computerized machine that allows a customer to perform basic banking activities Enter Cash card and PIN, follow prompts to conduct transaction Free unless at a different bank from account

36. Direct Deposits Funds are added directly into a bank account by electronic means instead of a negotiable instrument being used. 2 advantages –Funds are available immediately –Safe, eliminates need to transport a check

37. Wire Transfers Electronic transfer of funds from one location to another Fastest and safest way to transfer Federal Reserve Wire Network (FedWire): Verbal Explanation—write this down! Clearing House Interbank Payment System (CHIPS): privately held, enables major banks around world to transfer funds to each other

38. Automatic Payments Preauthorized electronic funds sent from a customer’s account to a vendor’s account at regular intervals. Generally for a set amount

39. Bill-Payment Services Electronic transfer of funds from a customer’s account to a vendor’s account must be requested by the customer or the vendor each time a payment is due. More practical than automatic payments for bills that might vary in amount

40. Cards Credit Cards: used to buy products or services on credit Charge cards: like credit cards, but balance must be paid off monthly Debit cards (check card): enables customer to electronically access funds in account

41. Checkpoint 1.How are ATMs a source of income for the bank? 2.What are two advantages of direct deposit from an employee’s standpoint? 3.How does the Federal Reserve Wire Network participate in wire transfers? 4.What is the difference between automatic payments and a bill-payment service? 5.How is a debit card different from a credit card?

42. Common Core Listening Activity View “Jordan Maxwell on the Law of the UCC: Uniform Commercial Code”“Jordan Maxwell on the Law of the UCC: Uniform Commercial Code” Write a report in which you summarize the speaker’s point of view, reasoning, use of evidence and rhetoric, word choice, points of emphasis, and tone. How do these contribute to the speaker’s overall message?