Payment

From Wikipedia, the free encyclopedia

A payment is the act of transferring wealth into another person or company.

There are several forms of payment available. For example:

In business and trade, a payment takes part as component in a broader and complex process, like a purchase, a contract. It is preceded by an invoice and may originate a receipt. The payment is made by the paying part in order to compensate the other part for the provision of goods, services, or both.

A payor is the legal term for a person, institution or government who is required to make a payment on an income stream e.g. promissory note.

[edit] Number of parties

Payments may be classified by the number of parties involved to consumate a transaction. For example, a credit card transaction in the United States requires a minimum of four parties (the purchaser, the seller, the issuing bank, and the acquiring bank). A cash payment requires a minimum of three parties (the seller, the purchaser, and the issuer of the currency). A barter payment requires a minimum of two parties (the purchaser and the seller).

Modern payment methods can involve up to 12 parties linked electronically to consumate a transaction.

[edit] Global payments market

In 2005 an estimated $40 trillion globally passed through some type of payment system. Roughly $12 trillion of that was transacted through various credit cards, and most of that through the 21,000 member banks of VISA and MasterCard.

Processing payments, including the extending of credit, produced close to $500 billion in revenue. (Source: McKinsey and Company, 2006)