International payment systems transfer funds (money, checks, securities, certificates, conventional payment units) in electronic or real form. The payment system is a set of certain procedures, rules, and technical infrastructure for the transfer of value from one economic entity to another. These systems form the basis of modern monetarism. In this article, you will learn about why international payment systems such as Transferra UK are needed and how they work.
Why are international payment systems needed?
A payment system (hereinafter referred to as PS) is an approved set of rules, conditional relations, calculation methods, and general and local standards that determine the procedure for conducting financial transactions and mutual settlements between its participants.
The main tasks that international payment systems solve are:
- Safe, uninterrupted and productive work;
- Efficiency, resulting in an accurate, efficient, and economical flow of operations;
- Reliable operation without disruptions or serious problems in making payments;
- An objective approach (for example, the right to participate in the payment system only for persons with certain qualifications).
- The main function of each PS is dynamic and stable economic turnover.
Active international payment banking systems help control the credit and financial sphere and allow banks to effectively manage liquidity, thereby reducing the need for large excess reserves. This greatly simplifies the formation of financial and credit programs and intensifies financial transactions.
Elements of payment systems are:
- Organizations performing money transfers and repaying debt obligations;
- A set of communication systems and financial instruments for money transfers between economic entities;
- Contractual relations regulating non-cash payment methods.
- The International Payment System (hereinafter referred to as IPS) operates internationally, providing financial services to various countries.
- These payment systems cover the whole world and make it possible to quickly carry out mutual settlements in foreign economic activities.
Today’s global trend – the desire to accelerate all processes in the economy – is based on universal systems of international payments without the existence of territorial borders.
The enormous popularity of e-commerce with a mass of online stores and the ability to conveniently pay for goods (services) directly from home is causing an increase in the number of users of various international payment systems. This calculation method is very convenient and reliable, so its reputation is getting higher every day.
What are the different payment systems for international payments?
Today, at the global level, there are several International Card Associations – this is what payment systems are called in the West, in Anglo-Saxon countries. The largest of them are:
- MasterCard International;
- Visa International;
- Diners Club International;
- American Express;
- JCB Card.
These giants approve the general rules of international payment systems and study and regulate the activities of their systems. In addition, central PS companies accumulate resources to apply advanced technologies and expand information connections. Costs for these purposes are reimbursed by contributions from financial institutions involved in the operation of the payment system. The amount of contributions is determined in proportion to the amount of banking transactions on cards.
International payment card systems must perform the following functions:
- Issue licenses for the production of plastic cards with the association logo;
- Protect property rights and patents;
- Develop norms and rules for financial transactions;
- Ensure proper operation of international and national automated systems and calculations;
- Process financial data and transfer commission payments from system participants;
- Analyze the activity of the system;
- Develop new financial products;
- Develop marketing, engage in advertising, and promote your products on the market.
One of the significant operational functions prescribed for members of associations is authorization (consent of the issuing bank to the transaction), if the purchase price exceeds the one-time limit or the seller doubts the identity of the buyer and the legitimacy of his card.
The request is made offline (by telephone) or online via an electronic POS terminal. If the card is not included in the stop list and the total account limit is met, the card issuing bank allows the transaction.
It is accompanied by an authorization code, which is then reflected in the report. Financial institutions have specialized authorization centers whose employees receive calls from sellers. When a request arrives at an electronic terminal, the bank server receives a coded message and then allows (prohibits) the operation.
Another important function performed by international payment card systems is the coordination of the process of complete regulation and repayment of any debt on card transactions (settlement).