Mode of Payment | Meaning | Types | Best Payment Method

Paying has become a common activity in any business sector. Whenever we buy or sell something, there is some transaction process for it. Usually, there are various modes of payment available to complete transactions in sales and purchases. We can do these transactions in many ways like cash, net banking, debit cards, and credit cards, and promotional vouchers.

In this article, we will know what is the mode of payment, what are the types, and which payment method is the best.

Mode of Payment | Meaning of Payment mode | Types of Mode of Payment | Best Payment Method

What Do you Mean by Mode of Payment ?

In Ecommerce, The mode of payment signifies methods accepted by both the investor and the company to complete a transaction for an amount. It is a method of payment that is accepted by both parties. Mode of Payment is used by the investors whenever they pay for something. 

What are the different types of modes of Payment?

If one party wants to use the goods or services of another party, has to pay something to the other party for those goods and services. There are various types of Mode of Payment available which can be used for making payment.

The following different types of mode of payment are as follows: 

Cash Payment

Cash payment is the most commonly used method. This cash payment has been used for a long time, although this method is still used elsewhere. In this method, cash notes or coins are used for cash payment to get goods and services. And after the payment is made, the seller also provides a receipt for the bill to the buyer. People often use this cash payment method in everyday transactions.

Cheque Payment

Paying via cheque is also the most commonly used method. The checkbook is provided by the bank to the account holder through which he can easily pay. The buyer can easily pay any amount through a cheque. 

Payment via Cheque is the safest mode of payment used by anyone.

There are various types of Cheques provided by the Bank to the Account holder such as Bearer Cheque, Order Cheque, Open Cheque, Self Cheque, Crossed cheque, Stale cheque, Post-dated cheque, and Banker’s cheque, etc.

Digital Payment Modes

In today’s time, this mode of payment has become very popular. This mode of payment enables you to pay an amount digitally. Due to advanced technology, this mode of payment is being used in every business sector and every field today. There are various Digital Payment Modes available by which you can make payment online such as Net Banking, Debit Card or Credit card, UPI, Paypal, etc.

Bank Drafts or Demand Drafts

A bank draft is a kind of banknote through which payment can also be made. In this mode of payment, payment is made to another bank branch of one bank branch through bank draft. To get a bank draft from any bank, the account holder has to pay the money from his account. 

In return, a draft is issued by the bank to the account holder in which the payment is made in the name of that bank branch.


Also Read 

What is Net Demand and Time Liabilities NDTL and ODTL ?

Contra Entry : Types and Example of Contra Entry

Trading Account : Format for Trading Account

Mail Transfer or Telegraphic Transfer Mode of Payment

To make payment through this mode of payment, the payer has to deposit cash in his account. After doing so, the bank is informed to make the payment through telegraphic.

This mode of payment is the most popular method used by merchants in the field of business. This mode of payment is the best option for those merchants and traders who transact thousands of daily transactions. And this is supposed to be a much faster method for such a transaction. Mail Transfer is the same as the Telegraphic Transfers but it may take a long time.

Exchange Bills or Bill of Exchange

A bill of exchange is a legal document that is used at the time of payment. This legal document details an assessment date on which the payer has to pay. 

Generally, this bill of exchange mode of payment is used at the time of international agreements. 

In which two unknown parties are going to be involved in a big business deal.

Promissory Notes

The Promissory Notes mode of Payment is the same as the exchange bills method. The promissory note is not a type of Bank Note. It is a kind of notary document in which one party promises to pay the other party by a certain date or time. All the conditions laid down in this promissory note are adhered to by the payer, which is done during the agreement.

Which method is best for using Payment?

Usually, there are various methods available to make payments to obtain goods and services. Some of these methods are secure and reliable modes of payment. With these modes of payment, you can pay for goods and services whatever you want to consume.

Here List of the best payment methods

  • Credit Card or Debit Cards
  • Phone Pe
  • Google Pay
  • Amazon Pay
  • Net Banking
  • WePay
  • Paytm

9 thoughts on “Mode of Payment | Meaning | Types | Best Payment Method”

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