Simply put, yes, it certainly does! Any payment system is a kind of connecting chain within the economic space. This is the link between the buyer and the seller, allowing settlements through technological processes/hardware for transferring funds from one entity to another. Thus, the payment system serves as an essential economic component, namely money circulation. Therefore, the impact of the e-technologies introduction provides stable money circulation.
Let’s note e-payments that offer financial transactions via the Internet. So, it’s no surprise that e-commerce development entails the popularity of payment solutions. Moreover, they become faster and safer. What does it mean? This suggests that the number of cash transactions worldwide will decrease. Currently, payment systems are becoming an optimal banking alternative (due to information technology and fintech startup growth).
E-Payments & Their Features
Paying online using bank cards is the most common method. The most popular international options for this type of payment are Visa and MasterCard. However, to make the financial transaction in your favorite online store or online casino convenient and run in a few minutes, there are e-wallets. Nodar Giorgadze, the head author of the Gamblorium team, emphasizes that this is an excellent tool to ensure secure transactions, including fast payout deals, that are highly appreciated by players worldwide. It also allows online stores, iGaming sites, bookmakers, etc., to expand the geography of users. It is a kind of intermediary responsible for transmitting information between the consumer and the e-payment processor.
Besides, e-wallets allow their owner to store e-money. They can also be used to pay for services and make transfers. E-wallets are often not tied to a country and work with different currencies. One of their advantages is that you do not need to pay for their service – fees are charged only for a single activity.
Modern Payment Systems: The Security Deals
What is the main issue when using payment systems? Surely, it is their security! To ensure reliability, they use various methods of client authentication. So, for example, when connecting to a payment gateway, the owners of a particular website/store need to confirm their business legality. They provide documents and agree with the payment system provider. Meanwhile, the latter will identify the service sellers and allow them to conduct transactions (or not allow). To use e-wallets, customers also need to provide documents and undergo verification.
In addition to the formal part, there is also the technical aspect of ensuring e-transaction security. This is a rather complicated and peculiar act – thus, modern financial providers pay special attention to it. Information protection is ensured, among other things, thanks to:
- Security certificates,
- Encryption of the Internet connection,
- Personal data confidentiality, etc.
As a rule, e-payment systems are well protected. Often, hacking and other illegal actions occur due to fraud, which results in negligence on the user’s part. Therefore, users should pay due attention to the safety measures.
Payment Systems are a Vital Component of the World Economy!
A modern economy cannot do without payment systems. When people have reliable and convenient tools to make payments quickly (sometimes free), they use banking services more actively – thus, the number of transactions increases. At the same time, consumer demand increases as banks expand lending opportunities through more accurate risk assessments. So, an important indicator of payment system development is the share of retail payments made using cash.
The creators and operators of payment systems are government institutions, banks, and other financial organizations. However, the spread of payment mechanisms depends on the population and retailers. We should also note the commodity direction and cash flow. Since the introduction of bank cards, the payment industry has mainly developed due to competition between different payment methods. Market players offer consumers and businesses convenient payment formats. While progress in this area often leads to serious structural changes. However, new technologies are driving even more significant changes in the payment infrastructure. We are talking about national payment systems, digital currencies, and blockchain.
Large-Scale Transformations in the Payment Infrastructure
While payment methods are evolving gradually, the payment infrastructure is now undergoing radical changes.
- Firstly, many countries are launching national payment systems that allow payments within the country (and sometimes between countries) without traditional international payment systems.
- Secondly, instant payment systems (Real Time Gross Settlement, RTGS) are being created, which are also usually national. For example, this is SCT Inst in the eurozone. RTGS is an e-payment system that enables real-time transfer of funds between banks. It is used to convey high-value transactions that require immediate resolution, such as large financial transactions between banks, corporations, or governments.
- Third, digital currencies are being introduced, often using blockchain technology.
Of course, the financial system of a country that has a national payment system is more resistant to external shocks. For example, systems such as Shetab in Iran, BancNet in the Philippines, and UnionPay in China have been supporting the autonomous payment infrastructure of these countries for many years.
Naturally, RTGS systems increase the convenience of making payments for users! For example, they can transfer money between banks via a phone number. In settlements between companies, instant payments reduce the amount of funds that are temporarily frozen when making payments. In addition, RTGS systems cut business costs for settlements. Finally, the introduction of digital currencies (most often blockchain-based), although fraught with considerable difficulties, opens up additional opportunities regarding the transparency, reliability, and security of the payment infrastructure.
We are Waiting for More New Things!
So, the global payment infrastructure is growing and thus affects payment systems that offer services worldwide. Meanwhile, digital currencies also serve to amend the payment infrastructure, in particular, to increase its reliability and efficiency. They will allow us to develop new types of services that refine the quality of user interaction.
We are now following new partnerships and close collaboration between banks and retailers! This contributes to high competition and can help improve the customer experience. In new realities, the success of financial market participants will depend on the speed of adaptation to changes and the willingness to manage service conditions flexibly.