Evolution of Payment System

Abstract

Clearing has been an important part of the banking system and will always remain a part of it for years to come. Clearing in banking indicates the transfer of fund from one person to another. This clearing of fund can take place in 2 ways either through cash or through cheque. There has been no major change in the cash transactions except for the changes in value of money. However the cheque clearing system has undergone lot of changes. The origin of cheque can be traced back to the first century AD, where banks in and around Persia used to issue letters of credit called "Sakks" wherein the banks used to pay the identified payees as per the instructions. This eliminated the cumbersome process of carrying money or gold which was very risky. Changes have taken place in cheque clearing over the period of time. From ordinary cheque clearing to MICR clearing and finally to the latest in clearing 'Cheque Truncation System'. This is a conceptual paper which tries to explore the changes that have taken place in the bank clearing system in the past, present and will also try to visualise the future of bank clearing.

Mathematical Interpretation of Global Competition between Payment Systems

“…Otherwise, the appealing payment options such as PayPal, Google Wallet, Bitcoin, Facebook and M-Pesa will take over [3]. It is confirmed that in order to win the competition for payments, it is necessary to develop new forms of partnerships with modern technological financial companies [2] and adapt to the requirements of a new generation of customers. As a result of the survey, the theses of earlier works have been confirmed, testifying that players in the global payment market should become more flexible, use the latest technologies to develop cross-product offers and develop market strategies, which correspond to the needs and nature of the payment space in each market, actively focusing on fast-growing segments [6], because the modern perception of competitiveness is primarily related to safe and effective satisfaction of consumer demands.…”

“…− Adaptation and use of the existing payment infrastructure for processing transactions [40]. For example, a PayPal wallet is linked to credit and debit cards, as well as to a current bank account, which facilitates the company's entry to the payment market [2]. Electronic transaction providers also strengthen their security practices by ensuring accessibility, authorization, authentication, and confidentiality [41], competing with banking services at the level of the global system [42].…”

“…The payments industry has historically been characterized by the presence of network effects, high fixed costs, and economies of scale [1]. Payment systems and remittances are considered the backbone of the financial sector, fostering economic growth and financial development by reducing systemic and settlement risks, facilitating proper liquidity management, and creating effective monetary policy [2]. Payment systems are of central importance for supporting financial inclusion; a transaction account allows people to make and receive payments in a cost-effective way [3].…”

The Innovation of the Cashierless Store: A Preliminary Analysis in Italy

“…The concept of payments has also been implemented using new technologies, such as the mentioned NFC or Wi-Fi or through Bluetooth. Sometimes these methods are inefficient or vulnerable to hackers; therefore, privacy and safety are critical aspects of this characteristic [50][51][52][53].…”