Payment

A payment is the tender of something of

• the use of money,
  bank transfers, whether through mobile payment
  or otherwise
• the transfer of anything of value, such as stock, or using barter, or personal data, the exchange of one good or service for another.

In general, payees are at liberty to determine what method of payment they will accept; though normally laws require the payer to accept the country's legal tender up to a prescribed limit. Payment is most commonly affected in the local currency of the payee unless the parties agree otherwise. Payment in another currency involves an additional foreign exchange transaction. The payee may compromise on a debt, i.e., accept part payment in full settlement of a debtor's obligation, or may offer a discount, E.G: For payment in cash, or for prompt payment, etc. On the other hand, the payee may impose a surcharge, for example, as a late payment fee, or for use of a certain credit card, etc.

Payments are frequently preceded by an invoice or bill, which follows the supply of goods or services, but in some industries (such as travel and hotels) it is not uncommon for pre-payments to be required before the service is performed or provided. In some industries, a deposit may be required before services are performed, which acts as a part pre-payment or as security to the service provider. In some cases, progress payments are made in advance, and in some cases part payments are accepted, which do not extinguish the payer's legal obligations. The acceptance of a payment by the payee extinguishes a debt or other obligation. A creditor cannot unreasonably refuse to accept a payment, but payment can be refused in some circumstances, for example, on a Sunday or outside banking hours. A payee is usually obligated to acknowledge payment by producing a receipt to the payer. A receipt may be an endorsement on an account as "paid in full". The giving of a guarantee or other security for a debt does not constitute a payment.

Etymology

The root word "pay" in "payment" comes from the Latin "pacare" (to pacify), from "pax", meaning "peace". In the Middle Ages, the term began to be used more broadly, to mean "to pacify one's creditors". As the Latin word was made part of Old French "paier", it retained the meaning "appease" but gained the meaning "to pay" (as in paying a debt). The Middle English word "payen", which came from the French, was also used in both ways.^[1]

Types and methods of payment

There are two types of payment methods;

An initial up-front partial payment for the purchase of an expensive items or service is often referred to as a "down payment"; this is also called a deposit in British English.

Parties involved

A payment may involve more than two parties. For example, a pre-paid card transaction usually involves four parties: the purchaser, the seller, the issuing bank and the acquiring bank. A cash payment requires at least 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.

Providers

The infrastructure and electronic clearing methods are formed by the

Blockchain also provides an infrastructure for payments using digital currency and potentially better security, fewer intermediaries, and lower transaction costs.^[5]

Global 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, mostly the 21,000 member banks of

In the U.S., debit cards are the fastest growing payment technology. In 2001, debit cards accounted for 9 percent of all purchase transactions, and this is expected to double to 18.82 per cent in 2011.^[8]

Mobile payments

There is a fast growth of mobile payments around the world. Google Pay, Apple Pay and Samsung Pay are the three main choices for mobile payments, while some banks also allow NFC Payments. In some countries, mobile wallets have become a dominant way of mobile payments.

Cheques

Historically,

The timing of payment has legal implications in some situations. For tax purposes, for example, the timing of payment may determine whether it qualifies as a deduction in a taxpayer's calculation of taxable income in one year or the next.

For U.S. tax purposes,

Payment of most fees to government agencies by cheque, if permitted, usually takes effect after a set number of days for clearance or until the cheque is actually cleared. Payments by credit card, if permitted, and cash payments take immediate effect. Normally, no other forms of payment are permitted or accepted.

Commercial late payments and consequent interest entitlements are regulated in some countries, for example in Member States of the European Union under the Late Payment directives of 2000 and 2011.

See also

• Accounting
• APACS
  (the former name of the UK Payments Administration)
• Business
• Commerce
• Financial transaction
• Money
• Money transmitter
• Trade

Footnotes

References

• finn. Carmine Bunker, Mary S.:John Wiley and sons.^{[clarification needed]}
• Schaefer, Mary S.: John Wiley & Sons (2007) Controller & CFO Guide to Accounts Payable
• Schaeffer, Mary S.: John Wiley & Sons (2006) Accounts Payable & Sarbanes Oxley

External links

Look up payment in Wiktionary, the free dictionary.

• Media related to Payments at Wikimedia Commons