Payment systems – what are they and how do they work?

By on October 4, 2022

First of all, you should understand the terminology. And so, what is a payment system is a way of conducting transactions (financial transactions) through an electronic system using virtual money. In plain language, through electronic invoices, you can use bank cards or other electronic invoices to pay for goods and services, as well as carry out other monetary transactions.

To better understand the principle of operation of payment systems, you need to see money transactions step by step:

  • First, the client through free access to the system chooses the service he needs (payment for services, purchase of goods, transfer of money);
  • Through the terminal, the information goes to the bank, which participates in the operation and transmits the necessary information to the payment system;
  • There is a check of the solvency of the client, if there are no questions to him, the bank issues a go-ahead for the deduction of money depending on the needs of the user;
  • Further, the relevant information about the transaction will be sent to the same terminal, where the payment will be accepted.

Although looking at the points of operation of the payment system, it seems that this is a long time, but in fact everything will happen within a minute. The resource with analytics about instant payments states that the payment system reliably protects its customers from any problems. The flow of information about transfers is a continuous cipher that will not be broken by fraudsters.

What international payment systems are there?

With the development of information technology, including the banking business, a huge number of electronic payment systems have appeared. Each country has its own specialized and including the most suitable international systems. They are constantly improving, making it possible for clients to work as comfortably as possible with their funds.

We can give an example of the most common payment systems:

  • Android Pay is an international payment system using smartphones or tablets. You just need to download the installation to yourself on the gadget, go through the installation of the program and start using the services of the system having an electronic account and a gadget. Very fast and convenient money transfer system;
  • Apple Pay is another payment system that can be used by iPhone users (at least 6th generation). A very popular international payment system operating in 28 countries of the world;
  • Union Play is the largest payment system in the world, 169 countries of the world can use its capabilities and services, for example, in the Chinese market, and the cards of the system are used in 40 countries of the world;
  • PayPal is a huge payment system operating in more than 90 countries around the world. Allows you to withdraw funds through websites, make purchases on the Internet, as well as work with accounts conducting operations in the system itself.

This is only a selected number of payment systems that many users probably know, but the real world of such opportunities is simply huge.

Disadvantages of payment systems

To understand all the pros and cons of payment systems, it is necessary first of all to give positive examples and, of course, pay special attention to negative ones, because this is very important.

Positive examples of the payment system include:

  • Saving time on cash transactions;
  • Control of expenses through special electronic applications that will enter the history of all money transfers;
  • Special control over monetary transactions, allowing to prevent theft;
  • Low commissions for cash transactions;
  • Simplicity and convenience in conducting monetary transactions.

Now it is worth paying special attention to the negative aspects of this system:

  • Restrictions on operations, because the limits of the maximum withdrawal amounts, the number of transactions, the amount of money on the account are clearly defined by each monetary system;
  • There is a very minimal risk of hacking the client’s account;
  • There may be problems when transferring funds through different systems, there must be agreements between them;
  • The presence of the Internet, because only with its help it is possible to connect with payment systems.

As you can see, no matter what disadvantages electronic payment systems are, this is the future that awaits all mankind.

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