Payment systems have simplified life and accelerated payment for services. According to statistics, people have become less likely to use cash, preferring cards or electronic wallets.
Among the people surveyed, most use payment via phone. Now paper bills are only needed to pay for travel and go to the market. For everything else, there are non-cash payments. An electronic wallet, a bank card, Internet banking – all these words are well-known, but many users do not suspect how payment systems work. Thus, opening a payment business is quite a lucrative business, given the current demand. If you intend to take this path, you need a banking license, in obtaining a ready-made version of which Eternity Law professionals will be happy to help you – experienced experts in the sale and purchase of companies, as well as in obtaining permits for activities.
The pandemic has played an important role in the popularization of payment systems. It can be seen that every year the number of consumers using non-cash payments is growing.
Essence of Payment System Concept
Payment system (PS) is a service for transferring funds and their analogues for calculating services with banks, shops and other institutions. The system is based on hardware and software. The main advantage of PS is the speed of work. Transfers from one point of the world to another take several days, the purchase of goods in online stores is processed instantly.
It is an intermediary acting between the buyer and the seller. It receives a notification from the buyer’s side and contacts the seller with information about the payment amount. In this way, a secure exchange takes place using a cashless payment.
Suppose you have a bank account and want to transfer money somewhere while keeping your bank details secret, or you don’t want to go to a bank branch, but want to increase the transfer speed to instantaneous. To do this, you can connect a third-party payment system to your bank account or card and make a transfer through it. The recipient will instantly receive money not from your bank, but from your payment system.
Global PS function
The payment system is not only a global operator that provides transactions with bank cards. Of course, it is the main participant in the process, but there are others, no less important:
- banks through which all payment systems of the world work. They conclude cooperation agreements, only after that the bank can start issuing payment cards;
- processing center through which all transactions pass. Most often, the largest banks in the country, with the permission of the partner PS, create them on their basis. Centers can be located in any country;
- acquiring banks. These are banks that provide organizations with the technical ability to accept money from bank cards. We are talking about a business service – acquiring, which can be stationary, mobile or created for online platforms.
At the head of all these links are plastic card payment systems. It is they who supervise all operations, ensure their uninterrupted conduct anywhere in the world. Nevertheless, there are also national PSs that are engaged in operations only within the country.
PS perform three important tasks:
- ensure the smooth operation of all elements of the system.
- ensure the security of transactions.
- they insure against any failures in financial transactions.
At the same time, it is important that all activities of payment systems are regulated by law, that is, all financial transactions carried out, as well as the rules and principles of functioning, have a legal basis.
As a rule, the operating conditions of the PS stipulate:
- possible risks when using the system – what they are, who is responsible for them;
- rights and obligations of the parties – participants and operators;
- terms of operations – crediting and debiting, transfers to accounts or virtual wallets.
As part of the PS:
- banking and other organizations that have the ability to carry out financial transactions, processing and settlement operations;
- coordinator;
- participants, due to the payments of which the operability of the entire system is maintained;
- the regulatory framework, rules and main agreements between the parties involved in the activities of the system;
- a set of communication tools and services responsible for the technical aspect of monetary transactions.
Another Market Participant – EMI
Compared to banks, EMIs have been and are a very convenient and progressive tool for doing business. Several advantages of EMI.
- Inexpensive service and no fees for opening an account.
- No minimum account balance.
- Remote identification of the client, the possibility of opening an account for the company without a client visit.
- Remote account management.
- Opening an account is possible in a short time (up to 7 days).
- Unique/dedicated IBAN.
- High degree of security.
Obtaining any license related to the financial market requires the mandatory participation of professional specialists.