Payment

A payment is the trade of value from one party (such as a person or company) to another for goods, or services, or to fulfill a legal obligation. A payment is the trade of value from one party (such as a person or company) to another for goods, or services, or to fulfill a legal obligation. Payment can take a large variety of forms. Barter, the exchange of one good or service for another, is a form of payment. The most common means of payment involve use of money, cheque, or debit, credit or bank transfers. Payments may also take complicated forms, such as stock issues or the transfer of anything of value or benefit to the parties. In US law, the payer is the party making a payment while the payee is the party receiving the payment. In trade, payments are frequently preceded by an invoice or bill. In general, the payee is at liberty to determine what method of payment he or she will accept; though normally laws require the payer to accept the country's legal tender up to a prescribed limit. Payment is most commonly effected in the local currency of the payee, unless if the parties agree otherwise. Payment in another currency involves an additional foreign exchange transaction. The payee may compromise on a debt, i.e., accept a 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. 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. 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 French, was also used in both ways. There are two types of payment methods; exchanging and provisioning. Exchanging involves the use of money, comprising banknotes and coins. Provisioning involves the transfer of money from one account to another, and involves a third party. Credit card, debit card, cheque, money transfers, and recurring cash or ACH (Automated Clearing House) disbursements are all electronic payments methods. Electronic payments technologies include magnetic stripe cards, smartcards, contactless cards, and mobile payments. Payments may be classified by the number of parties involved in a transaction. For example, a pre paid care transaction usually involves 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). The infrastructure and electronic clearing methods are formed by the payment provider. Global credit card payment providers are Diners Club, Visa, American Express and MasterCard. Maestro and Cirrus are international debit card payment providers. The central bank CB(Ccy) of a currency can maintain a loro account for a bank (which the bank would call a nostro account).