Read the information below about a new payment option used by a business. Harbour Cycle Repair sells helmets, lights and spare parts from its website. It ha...
Question 1 Report
Read the information below about a new payment option used by a business.
Harbour Cycle Repair sells helmets, lights and spare parts from its website. It has begun to accept payments through a mobile wallet. A customer selects products online, approves the purchase using a phone, and the wallet provider sends the payment request to the customer's card provider. When approval is received, Harbour Cycle Repair is told that the sale is complete. The money is then transferred to the business bank account after the provider deducts a transaction charge.
Fig. 1 shows the route of information and money for this option.
The owner is considering whether this new option should be promoted on the website, rather than offering only payment by cash when products are collected.
(a) State two benefits to a customer of using the mobile wallet option. [2]
(b) Explain two reasons why Harbour Cycle Repair may prefer this option to accepting cash from online customers. [4]
(c) Describe how the payment is processed, using Fig. 1. [6]
(d) Explain whether the business should promote the mobile wallet as a payment option on its website. [8]
Answer Details
(a) Customers can pay without carrying cash, can approve payment immediately while selecting products, and can buy from another location. Approval also reassures them that the order has been accepted. Any two. [2]
(b) Mobile-wallet payment allows online payment before collection, reducing non-payment risk and helping cash flow. The business does not need to handle, count or store cash, reducing theft and recording errors. Electronic approval confirms authorisation, allowing the order to be prepared more confidently. Any two explained reasons. [4]
(c) The customer selects products and approves payment using the mobile wallet. The wallet provider receives and sends the payment request to the customer's card provider. The card provider checks and authorises payment. Approval is returned so Harbour Cycle Repair receives confirmation of the sale. Money is then transferred to the business bank account, less the transaction charge. [6]
(d) The business should promote the mobile wallet, but retain cash for customers who need it. It is quick and convenient, may attract customers who prefer phone payments, reduces non-payment risk before collection, and creates digital records that help reconcile sales. However, the transaction charge reduces profit, some customers may lack a suitable phone, wallet or card, and technical faults can delay sales. A balanced judgement is strongest: promotion widens choice, while cash avoids excluding customers. [8]
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