What are the methods of payment in home trade?


What are the methods of payment in home trade?
Payment marks the end of business transactions usually between a buyer and a seller. It could also be stated that payment settles the debts arising out of a transaction.
There are several types of payments as far as trade is concerned. The payments may differ when used in home trade and international trade.

Home trade’s payment can be issued through the central bank, commercial banks, the post office and payment among businessmen themselves.
Payment through Central Bank
Cash payment: It may be argued that whatever means of payment used, it is expected that ultimately it will be converted into form of bank notes and coins. Seller may accept a cheque in settlement of an invoice issued by him.
Paying through Commercial Banks
Cheques: A cheque or check (American English)is a document (usually a piece of paper) that orders a payment of money.
A cheque has four main items:
A Drawer, the person or entity who makes the cheque
Payee, the recipient of the money
Drawee, the bank or other financial institution where the cheque can be presented for payment
Amount, the currency amount
Paying through the Post Office
           Postal Orders: Are convenient and safe means of sending moderate amounts of money to a named payee through mail. They are similar to cheques for those without a bank account. A sender pays the face value of the postal order plus a small fee called to a post office and gets the postal order. He writes the name of the payee and sends it to him in a registered envelope.
Money Orders: These are orders addressed by one post office to another requiring the latter to pay a sum of money to a specified person. An application form must be filled by the sender and handed over (with the amount to be paid to the payee) to the issuing post office. Since it's prepaid, it can't “bounce” or overdraw the purchaser’s bank account.

Payment among businessmen themselves
             Bill of Exchange: Is unconditional order issued by a person or business which directs the recipient to pay a fixed sum of money to a third party at a future date. The future date may be either fixed or negotiable. A bill of exchange must be in writing and signed and dated.
Promissory Note: This is a document where in one person promises to pay another person a specified sum of money at a certain date.  It defines the details of a unsecured debt transaction and the stipulations on how that debt will be repaid to the lender. It is normally issued by a debtor.


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