Mathematics · Grade 7 · Financial Literacy · Term 3

Methods of Payment

Explore the different ways we can pay for goods and services, from cash and debit cards to credit cards and e-transfers, and learn about the pros and cons of each.

TL;DR:From tapping a card to sending an e-Transfer, how we pay for things is always changing. Let's investigate the tools in our digital and physical wallets to become smarter consumers.

• Ontario Curriculum Expectations
• Ontario Curriculum (2020): Grade 7 Mathematics - Strand F: Financial Literacy - F1.1

About This Topic

This topic introduces Grade 7 students to the fundamental concepts of financial literacy, a key strand in Canadian mathematics curricula. It moves beyond basic monetary calculations to explore the practical applications and implications of various payment methods in a modern Canadian economy. Students will investigate the mechanics of cash, debit cards, credit cards, and increasingly prevalent digital options like Interac e-Transfers and mobile payments. The focus is on developing critical consumer awareness. By analysing the pros and cons of each method, students learn to consider factors like convenience, security, cost (including fees and interest), and personal budgeting. This topic provides a crucial foundation for more advanced financial topics, such as interest calculations, debt management, and investment, preparing students to make responsible and informed financial decisions as they gain independence.

Key Questions

1. Compare the security features of using a credit card versus a debit card for online purchases.
2. Explain a situation where using cash might be more advantageous than an electronic payment.
3. Evaluate the potential risks and benefits associated with new payment methods like mobile payments.

Learning Objectives

• Differentiate between cash, debit, credit, and electronic payment methods.
• Analyse the advantages and disadvantages of various payment methods in specific consumer situations.
• Evaluate the security features and potential risks associated with digital and online payments.
• Apply knowledge of payment methods to make informed choices in simulated financial scenarios.
• Explain the basic concept of credit as a loan and interest as the cost of borrowing.

Key Vocabulary

Debit Card	A payment card that deducts money directly from a consumer's chequing account to pay for a purchase.
Credit Card	A payment card issued to users to enable them to pay a merchant for goods and services based on the cardholder's accrued debt.
Interac e-Transfer	A Canadian funds transfer service that allows users to send money between personal bank accounts using an email address or phone number.
Interest	The charge for the privilege of borrowing money, typically expressed as an annual percentage rate (APR).
Transaction Fee	A fee that a business must pay every time it processes a customer's electronic payment.

Watch Out for These Misconceptions

Common Misconception

Credit cards and debit cards are the same thing.

What to Teach Instead

A debit card uses money directly from your bank account, it is your own money. A credit card is a loan, you are borrowing money from the bank that you must pay back later, often with interest.

Common Misconception

Using 'tap to pay' is not secure and anyone can steal my money.

What to Teach Instead

Tap-to-pay transactions are encrypted and have low limits, typically $100-$250 in Canada, to minimize risk. Financial institutions also have fraud protection policies that usually cover unauthorized tap payments.

Common Misconception

If you have a credit card, you have that much money to spend.

What to Teach Instead

A credit limit is not an amount of money you own; it is the maximum amount of money a financial institution is willing to lend you. Any amount you spend must be repaid.

Active Learning Ideas

Case Study Analysis

Payment Method Scenarios

In small groups, students are given cards with different purchasing scenarios (e.g., buying a snack at a corner store, ordering a pizza online, paying for a family vacation). They must decide on the best payment method, justify their choice, and present their reasoning to the class.

45 min·Small Groups

Case Study Analysis

The True Cost Challenge

Students are given a mock credit card statement with a balance and an interest rate. They calculate the total amount paid if they only make the minimum payment versus paying the balance in full, highlighting the real cost of credit.

30 min·Pairs

Case Study Analysis

Design a Secure Payment App

Individually or in pairs, students brainstorm and sketch a wireframe for a new mobile payment app. They must include and label at least three security features to protect users' financial information.

50 min·Individual

Real-World Connections

• Choosing the best way to pay for lunch at the school cafeteria versus buying a video game online.
• Using an Interac e-Transfer to pay a friend back for a movie ticket.
• Understanding a mobile phone bill and the different options available to pay it.
• Saving up for a purchase and deciding whether to use cash or debit.
• Recognizing secure websites (with 'https://') before entering any payment information for an online purchase.

Assessment Ideas

Exit Ticket

An exit ticket asking students to list one situation where cash is the best payment option and one where a credit card is better, with a brief justification for each.

Peer Assessment

Students create a short presentation or infographic comparing two different payment methods (e.g., PayPal vs. credit card) across several criteria like security, convenience, fees, and user protection.

Quick Check

Students use a simple rubric to rate their confidence in explaining key terms like 'interest', 'debit', and 'credit' to a family member.

Frequently Asked Questions

Why do some small stores have a minimum purchase amount for credit cards?

Businesses have to pay a fee to the credit card company for every transaction. On very small purchases, this fee can eliminate the store's profit, so they set a minimum to ensure the sale is worthwhile for them.

What is an Interac e-Transfer?

It is a popular Canadian service that allows you to send money directly from your bank account to another person's bank account using their email address or mobile phone number. It is a common way to pay friends, family, or small businesses.

Is it safer to use a credit card or a debit card for online shopping?

Generally, credit cards are considered safer for online purchases in Canada. They offer stronger fraud protection and liability limits, meaning if your information is stolen, you are typically not responsible for the fraudulent charges while the issue is investigated. A compromised debit card gives direct access to your bank account.