Module III·Article III·~1 min read
Payment Systems: How Money Moves in the Digital Age
Fintech and Digital Finance
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Payment Infrastructure
Traditional card payment: Customer → Acquirer (merchant’s bank) → Payment system (Visa/Mastercard) → Issuer (customer’s bank) → Back. This process takes fractions of a second, but settlements — T+2 days.
Participants: Visa/Mastercard — “rails” (do not hold money, only process information); issuer banks (issue cards); acquirer banks (accept payments); processors (technical layer).
Innovations in Payments
Real-Time Payments: instant interbank transfers. The Bank of Russia’s system (SBP), UPI in India (8+ billion transactions/month), FedNow in the USA (2023), SCT Inst in the EU.
Open Banking Payments: payment directly from the buyer’s account without a card — via the bank’s API (A2A payments). Cheaper for the merchant, no interchange fee.
Stablecoins for Payments: USDC, USDT — dollar-based stablecoins. Circle (USDC) is actively promoted as a cross-border B2B payment tool.
CBDC (Central Bank Digital Currencies): digital ruble (Russia), digital yuan (China), eNaira (Nigeria). Government digital money. Potential: instant G2C payments, programmable money (subsidies only for food).
Cross-Border Payments
Traditional cross-border payments through SWIFT: expensive (3-5%), slow (2-5 days), opaque. Alternatives: Wise (0.5-1%), Ripple (for banks), Western Union (convenient for cash last mile).
UAE — major hub for cross-border payments: $78 billion in annual transfers (2022), connections with India, Pakistan, Egypt, Philippines.
Practical Task
E-commerce company sells worldwide. Problem: accepts payments in 20 currencies, conversion costs 2-3%, supplier payout delay — 5 days. (1) Which payment stack to choose (Stripe vs Adyen vs Checkout.com)? (2) How to minimize currency losses? (3) How to speed up supplier payouts?
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