Payment is the action of transferring money from a person to another in order to obtain the legal rights over goods, property or services. It is usually made using money.
Another form of payment which was used in ancient times is the barter system. This method is now less common although it may still be used in some transactions. The exchange of money is preferred because cash is a universal way of acquiring products and services.
Common methods of payments
Payments can be made in two forms. The first is exchanging and the second is provisioning. Exchanging is the simple transfer of money from one person to another. Provisioning is the term used to signify the exchange of money without using banknotes or coins. This may be done by using a bankcard, cheque or via mobile payment.
Other forms of payments
Although cash, card and mobile exchange of money are the most common forms of payments, they are not the only ones. There are more complicated use of payments which involve trusts and other legal tools. An example is payment in stocks during business transactions between companies. Exchange of money for goods may also be made using digital currency such as Bitcoin or digital gold currency.
Parties involved in payments
Generally, there are only two parties involved in a payment. However, this depends on the form of money transfer. For a simple exchange of cash, only two parties are involved, but for payments by card or cheque there is a minimum of three parties involved. These parties are the individuals between whom the transaction occurs and their banks.