Question

Bill Ikeda and Martha Wong operate a building supply outlet in Timmins, Ontario. They also sell hardware, plumbing, and electrical supplies. Their customers are retail and commercial. They operate the business through a corporation, Hometown Hardware Ltd (Hometown). Bill is the CEO and majority owner. He conducts most of the business apart from the operation of the store. Martha is the vice president and owns the remaining shares. She manages the store. The business has dealt with the local branch of the same bank for many years—the Full Service Bank (FSB). Both Bill and Martha have signing authority for Hometown. Bill and Martha have recently begun to reconsider their relationship with FSB. The branch has a new manager, and there have been other personnel changes, with the result that Hometown’s accounts and loans are now handled by employees who seem uninterested in Hometown’s business and are not always helpful. Bill is not sure that Hometown has the appropriate types of bank accounts. He is also concerned about high service fees on his accounts and rising interest rates on his loans. He wonders whether he should consider moving his business to another bank, or try to renegotiate the relationship with FSB. Martha has been advised by business acquaintances that perhaps Hometown’s banking could be done more easily and economically online. Bill is also concerned about the growing number of cheques being returned by the bank because customers have insufficient funds in their accounts to cover them. Hometown currently accepts payment by cash, cheque, debit card, and credit card. Hometown also extends credit to some commercial customers. Bill is interested in the pros and cons of various payment options.

1. What do Bill and Martha need to know about the legal aspects of the relationship between their business and a bank?

2. What are the risks and benefits of different payment options?

3. Would electronic banking be a feasible option for Hometown?

Answer 1

Different lawful connections of Banker and Customer

1) Trustee and recipient

Section 3 of the Trusts Act characterizes a trustee as one to whom property is endowed to be managed for the advantage of another called the recipient. A banker turns into a trustee under uncommon circumstances. At the point when a customer stores securities or different assets with the investor for safe authority, the broker goes about as trustee of the customer.

2) Bailee and bailor

Amid specific circumstances banker gets to be bailee. When he gets gold decorations and vital records for safe care he assumes responsibility of it as bailee and not trustee or specialist. He can’t make utilization of them as he will undoubtedly return the indistinguishable articles on interest.

3) Pawnee and pawner–

Pawn is a kind of bailment in which the products are conveyed to another as a pawn, to be a security for cash obtained. In this manner, a banker goes about as a pawnee where a customer conveys his products to the former to be kept as security until the obligation is released. The banker can hold the merchandise swore until the obligation is paid.

4) Mortgagee and mortgagor

The connection between an investor as mortgagee and his customer as mortgagor emerges when the last execute a home loan deed in admiration of his unfaltering property for the bank or stores the title deeds of his property with the bank to make an impartial home loan as security for development.

5) Lessee and lessor

When a customer hires a locker in the bank’s safe store vault, the bank embraces to take important precautionary measure for the wellbeing of the articles in the locker. The connection between the gatherings is that of a lessor and resident.

6) Guarantor and certification

A bank as underwriter offers assurance to its customer by issuing a letter of credit. It is a sort of credit office to its customer to encourage worldwide exchange. A bank guarantee contains an undertaking to pay the sum with no dispute on the simple interest of the important sum on the ground for non-execution or break of agreement.

7) Fiduciary relationship

Each connection of trust and certainty is a trustee connection. A banker who gets customers cash is under an obligation not to part with it which is conflicting with the customer’s trustee character and obligation.

The connection between an investor as mortgagee and his customer as mortgagor emerges when the last execute a home loan deed in admiration of his unfaltering property for the bank or stores the title deeds of his property with the bank to make an impartial home loan as security for development.

2)  

Each payment method has its own advantages and disadvantages. I tell you some of them.

CASH

Cash and direct money to your pocket. No matter if they are bills or currency, cash is the most classic and popular form of payment, and probably the first one you use in your business.

Advantage

· You have the money immediately. There is no waiting.

· There are no additional commissions. Almost all other forms of payment support some type of commission. If you cash, there is no intermediary that manages the collection and, therefore, 100% of the agreed upon will go directly to your cash.

Disadvantages

· Most people do not carry much cash on top. Increasingly, people use credit or debit cards and do not carry many bills. If you only receive cash, you may end up losing a lot of customers.

· You should be careful with fakes. Although it is not something that happens every day, you should be prepared in case you end up with a fake banknote in your hands.

· If you handle large amounts of cash, you will have to exert more control over your numbers. Money in cash is harder to control and you will not want to see yourself without a penny when the day comes to pay taxes. And unless you’re one of those who keeps all their income under the mattress, you’ll be going back and forth from the bank all day.

CREDIT AND DEBIT CARDS

Credit cards are the most common form of payment in the world today.

Advantage

· Cards are the most common form of payment. It is rare to find someone who does not have a credit card, or at least a debit card.

· Card acceptance drives sales. Credit cards are very easy to use, at least from the customer’s perspective.

· Credit cards can be used to make purchases through PayPal. If you are already using PayPal in your business, as most online freelancers do, then you can accept payments with credit cards, without the need for your user to have (or want) a PayPal account.

Disadvantages

· Comply with several laws and safety regulations. Before accepting credit cards, you must comply with a good number of security and data protection regulations to ensure the data of your customers.

· Intermediation commissions. Obviously, you will have to contract the services of a payment gateway to process credit and debit cards, and those services have a cost based on the amounts you deposit.

CHEQUES

Before the popularization of the cards, cheques were extended to make payments of a certain amount without having to carry a lot of cash. Nowadays they are not so frequent, but there are still people and companies that use them. The value of the check is directly linked to your client’s current account.

Advantage

· If you accept cheques you can work with large accounts. There are large companies that make many of their payments only through bank cheques. If you do not accept this form of payment, leave saying goodbye to this type of client.

· Cheques can now be processed electronically. If you have the means to do so, you can process the cheques electronically and collect more securely, although you will have to pay the corresponding commission (usually less than other forms of payment).

Disadvantages

· Checques can be returned. If your client does not have enough funds in your account, then you will not be able to cash your check and your bank will return it (with its corresponding commission). Currently, it is a crime to pay with a check without funds, but it is better not to find yourself with that dislike, especially when you already had that income to make some kind of purchase or investment.

·To cash the cheques you will have to physically present yourself at your bank or at your customer’s bank. And that is the time that you are not dedicating to your work.

MOBILE PAYMENTS

This form of payment really consists of different variants. In this article, we will refer only to the payments that you can issue or receive through your mobile phone, either by SMS, QR code, NFC, or any other system.

Advantage

· Almost everyone has a mobile. As with credit cards, it is difficult to find someone who does not carry a mobile phone with them. The advantage of instant payment is there.

· Payments are usually very fast. There is no need to think. You just have to take out your mobile phone and in a matter of seconds, you have the money in your bank account.

Disadvantages

· Security Breaches. Some forms of mobile payment still present some loopholes that do not make them 100% safe.

· Not all card readers work the same. If you have chosen a mobile payment system that involves using an application with your card processors, such as Square, PayPal or Inuit GoPayment, then it is quite likely that you may have some compatibility problems. Most card processors are compatible with iPhone, but perhaps not with other devices. Investigate it well before making a decision.

· Problems with the updates. A simply failed update can break the whole system and prevent you from continuing to charge normally. So be very careful if you update the application you use to charge and make sure it is compatible with your phone before installing it.

ELECTRONIC PAYMENTS

It is my favorite form of payment. Electronic payment methods such as PayPal or Stripe are the most popular new methods among freelancers, entrepreneurs, and online sellers.

Advantage

· They are very simple.

They are usually the simplest and most immediate form of payment.

· They are international. They open the doors of the world market. It does not matter where your client resides or in what currency they want to pay you.

· They are fast! Almost as much as the cash payment.

Disadvantages

· The commissions are somewhat high.

With few exceptions, the commissions associated with electronic payment systems are usually quite high.

It is likely that the commission that you have to pay will compensate all the advantages that I listed above, but if you are going to charge a high bill, perhaps you should consider using an alternative form of payment.

To eliminate this problem of high charges, you can compare the money transfer services online to choose the best.

And these are some of the most popular payment methods nowadays.

Of course, there are many other alternative methods, such as money orders or direct debits. You must find out which one is most suitable for your business.

3) yes they can use electronic banking methods in Hometown as it is a feasible option.the following points support this:

• 24/7 account and service access.
• Speed and efficiency.
• Online bill payment.
• Low overhead can mean low fees.
• Low overhead can mean high interest rates on deposit accounts.