Nepedia
Back to Discover
Advanced Reader
📖

Payment

society Maturity 11-13 Next article →

A payment is the act of transferring something of value from one party to another. This transfer usually happens in exchange for goods or services. It can also fulfill a legal obligation or a desire for philanthropy. The person or company making the payment is known as the payer. The party receiving the value is called the payee. While many payments are voluntary, some are compulsory, such as paying a fine. Once a payee accepts a payment, it extinguishes the debt or the obligation.

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223

There are two primary methods for making a payment: exchanging and provisioning. Exchanging involves using physical money, such as banknotes and coins. Provisioning involves the transfer of money from one account to another. This method often requires a third party to facilitate the move. Electronic payment methods fall under provisioning. These include credit cards, debit cards, cheques, and money transfers. Modern technology also allows for contactless cards and mobile payments.

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223

Payment methods can be broken down into several specific types. An initial up-front partial payment is often called a down payment. In British English, this is frequently referred to as a deposit. Some industries, like travel or hotels, require money before a service is even performed. Other situations use progress payments, which are made in stages. This is common during the construction of large buildings or assets. Instalment payments allow a payer to settle a large cost over time.

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223

The history of the word "payment" is quite interesting. The root word comes from the Latin term "pacare," which means to pacify. This is related to the word "pax," meaning peace. During the Middle Ages, the term was used more broadly. It meant to pacify one's creditors by settling debts. The word evolved into the Old French "paier," which meant to appease or to pay. Eventually, it became the Middle English word "payen."

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223

Different types of transactions involve different numbers of participants. A simple barter involves only two parties: the purchaser and the seller. In this case, one good or service is exchanged for another. A cash payment requires at least three parties. These are the seller, the purchaser, and the issuer of the currency. Some transactions are even more complex. A pre-paid card transaction typically involves four parties. These include the purchaser, the seller, the issuing bank, and the acquiring bank.

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223

The global payment market is massive and involves many large providers. Global credit card providers include Visa, MasterCard, American Express, and Diners Club. For debit cards, international providers include Maestro and Cirrus. In 2005, an estimated $40 trillion passed through global payment systems. Of that amount, roughly $12 trillion was transacted through credit cards. These cards were mostly used through 21,000 member banks of Visa and MasterCard. By 2012, noncash payment systems handled roughly $377 trillion.

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223

Timing is a critical factor in the legal and tax aspects of payment. For example, the timing of a payment can change tax deductions. In the United States, cash payments are generally considered to occur at the time of payment. A payment by cheque is normally deemed to occur when the cheque is delivered. This assumes the cheque is honoured when it is presented. However, postdated cheques are not considered payment when they are delivered. Credit card payments usually take effect at the point of the sale.

TaiwanMoney card in use in Hi-Life 20051223
TaiwanMoney card in use in Hi-Life 20051223
552 words

Where will your curiosity go next?

Keep exploring at your chosen reading level.

🖼️ Images & Media (1)
File:TaiwanMoney card in use in Hi-Life 20051223.jpg
TaiwanMoney card in use in Hi-Life 20051223.jpg
More to explore

🔬 Go deeper

More advanced topics to explore

🪜 Step back

Simpler topics to build understanding

What is Nepedia?

A free, ad-free encyclopedia for children. Every article is written at five reading levels, so the same page works for a five-year-old and a fifteen-year-old — use the level switcher above to see this one change. No account needed to read.