Final answer:
When making payments, a check instructs the bank to transfer funds directly from the payer's account to the payee, potentially causing an overdraft if there are insufficient funds. Debit cards, linked to bank accounts, facilitate immediate transfers. Credit cards and smart cards, while used for transactions, are not considered money but rather credit facilities and stored value, respectively.
Step-by-step explanation:
Understanding Forms of Payment
There are various forms of payment accepted for goods and services such as cash, checks, and debit cards. Each payment type has its requirements and processes.
When using a check as payment, it serves as an instruction to the bank to transfer funds from the payer's account to the payee. Stores would receive the money through the banking system as funds are moved from the customer's checking account to the business's account. However, if the customer's account does not have sufficient funds, this could result in an overdraft, where the account balance goes negative.
Debit cards work similarly to checks. They are also linked directly to a customer's bank account and allow immediate transfer of money to the seller for payment. If you have a checking account, banks typically issue a debit card that can be used wherever major credit cards are accepted. Unlike credit cards, debit cards do not offer a credit facility but instead withdraw funds directly from your bank account.
Regarding credit cards and smart cards, it is essential to note that while they facilitate transactions, they are not considered money themselves. Credit cards are more like short-term loans and smart cards allow you to store and spend a certain value loaded onto the card.