Payments

Abstract

Payments, paper-based or electronic, are essential for efficient economic exchange. For retail payments, debit and credit cards have been replacing cash and checks for point of sale transactions. Cards and automated clearing house (US) and giro networks (Europe and elsewhere) have replaced cash and checks for bill payments and employee disbursements. Daily retail payments have relatively small average values but number in hundreds of millions of transactions. Daily wholesale wire transfer transactions are in the thousands but their value is in the trillions. They are used to make large-value business, government, and financial market transactions, along with settling payments made over other networks. To be widely adopted, a retail payment instrument has to have lower cost and greater convenience. Cost is also emphasized for wholesale payments but this has generated risk. Reducing risk has raised costs. The issues associated with retail and wholesale payments are quite different; they are discussed separately in this chapter.