Introduction 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. Methods of Payment in Trade and Other Transactions 1. Through Commercial Banks: • • • • Cheque Cashier order Bank draft Telegraphic transfer • Autopay – Standing order – Direct debit – Letter of credit (L/C) Methods of Payment in Trade and Other Transactions 2. Through Post Offices: • Postal remittance service • PayThruPost service Methods of Payment in Trade and Other Transactions 3. Other Methods of Payment : • • • • • • Cash Credit card Debit card Smart card Promissory note Bill of exchange Components of a cheque Payee’s name Payt. Amt. Payt. Date Drawer’s signature/chop Cheng Siu Ming Chq. stub A/C # Bank code chq. # Branch code Advantages of Using Cheques Safety Flexibility Convenience A proof of payment Types of Cheques Bearer cheque Order cheque Uncrossed cheque / Open cheque Crossed cheque: General crossing Account payee only Not negotiable Not negotiable, account payee only Endorsement – Transfer to a third party – Types: Blank endorsement Endorsement to order Dates of Cheque – Post-dated cheque – Stale cheque – Antedated cheque Reasons for Not 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 Finance Companies in HK • Deposit-taking institutions: – Licensed banks – Restricted licence banks – Deposit-taking companies Comparison of the Financial Institutions Institution Licensed banks Restricted licence banks Deposit-taking companies Bank Restricted licence bank Bank 2. Minimum paid-up capital HK$150M HK$100M HK$25M 3. S/A, C/A, T/D account services All Only T/D Only T/D 4. Minimum deposit amount No restriction HK$500,000 HK$100,000 Comparison 1. Name Comparison of the Financial Institutions Institution Comparison 5. Min. deposit maturity 6. Interest rates 7. Licensing authority 8. Regulations 9. Supervised and audited by Licensed banks Restricted licence banks Deposit-taking companies No restriction No restriction 3 months No restriction Hong Kong Monetary Authority Restricted by the Banking Ordinance Hong Kong Monetary Authority Services of Commercial Banks 1. Accepting Deposits: – – – – Savings account Current account Time deposit account Foreign currency account Services of Commercial Banks 2. Granting Loans: – – – – – – Overdraft Personal loan Business loan Secured loan Trade financing Syndicated loan Services of Commercial Banks 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 Banking Services Phonebanking All-in-one monthly statements Investment consultancy service Internet banking services The Position of HK in the International Financial Market • 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 Factors Contributing to HK’s Role as a Famous Financial Centre • • • • • Favourable geographical position Regulatory framework Good communication facilities Qualified workers for the financial sector Economic factors