what is a payment 
payment is the transfer of money goods or services in exchange for goods and services in acceptable proportions that have been previously agreed upon by all parties involved a payment can be made in the form of services exchanged cash check wire transfer credit card debit card or cryptocurrencies understanding paymentstoday s monetary system allows for payments to be made with currency currency which has simplified the means of economic transactions provides a convenient medium through which payments can be made and it can also be easily stored before the widespread use of currency and other payment methods barter payments were used in which one product or service was exchanged for another for example if an egg farmer with a large surplus of eggs wanted milk the farmer would need to find a dairy farmer who would be willing to take eggs as payment for milk in this case if a suitable dairy farmer weren t found in time not only would the egg farmer not get the milk but the eggs would spoil becoming worthless currency on the other hand maintains its value over time however bartering is still practiced today when companies want to exchange services between one another payments can be the transfer of anything of value or benefit to the parties an invoice or bill typically precedes a payment payees usually get to choose how they will accept payment however some laws require the payer to accept the country s legal tender up to a prescribed limit payment in another currency often involves additional foreign exchange transaction fees usually around 2 3 of the total payment being made but could be quite a bit higher depending on the bank or card issuer and country of purchase in the u s the payer is the party making a payment while the payee is the party receiving the payment types of paymentspayments are made using various methods throughout history these types of payments have changed and evolved and new payment methods are likely to appear in the future here are the most common types of payments used today today credit cards are widely used for purchases and payments credit cards work by offering its user a line of where where an individual can draw credit up to a certain limit when you attempt to use your credit card your account information is sent to the merchant bank the merchant bank then receives authorization from the credit card network to process the transaction many businesses accept credit cards though many that accept cards charge a fee from the merchant that provides the machine and payments infrastructure as well as their financial institution this fee is often a percentage of the transaction amount and or a flat fee for each payment help an individual build a credit history that can used to make more major purchases in the futurereduce risk as it is easier to carry a single plastic card as opposed to cashproduce revenue opportunities through rewards and airline milesdelay when an individual actually needs to use personal capital to pay for somethingcreate the potential to overextend credit and incur unpayable debtcharge processing fees by many merchants making a purchase more expense than other methodscharge high interest 15 to 25 apy on unpaid balancesimpact a credit report negatively when too many cards are openeddebit cards may look similar to credit cards but their underlying mechanism is entirely different when a debit card is used funds are immediately withdrawn from an individual s account instead of having a line of credit that you can pull from in excess of what you have saved debit card transactions can be declined if you do not have enough money in your account debit cards share many advantages as credit cards as the small piece of plastic is easy to carry widely accepted by many merchants and has varying levels of fraud protection however debit cards often have less promotional opportunities and may result in processing fees if you accidently attempt to overdraw your account help individuals transact easier through atm withdrawals or purchases as many major companiestypically don t have annual fees or transaction costs as long as you have money in your accountdiscourage excess spending by only allowing spending up to account balance