Payment Systems

The payments system is the complex of financial instruments and relationships that transfer value between buyers and sellers to complete their transactions. The character and reliability of the payments system, the rules, practices, and institutions by and through which value is transferred from payors to payees, is obviously a crucial underpinning to a market economy. Cash is the simplest means of payment. However, the vast majority of transactions, especially in developed economies, involve non-cash payments instruments. The use of non-cash instruments in the payments process can take time and involve some risk since they are promises to make future payments. Payments system improvements that reduce costs and/or risks should have a salutary effect on the operations of a market economy.