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Payment Processing Systems
Retail payments for goods and services have evolved from using cash to checks, and other payment methods such as credit and debit cards, and now is moving toward banking with smartphones. A check was normally written from one party to another, and requests the payers financial institution to pay a specified sum on demand. The process may have been secure, but was seemed to be overly cumbersome, and is becoming much too slow for the rapid moving world in which we now live. It is now undeniable that payment by checks is being replaced by more efficient payment processing systems.The system may have been dealt a death blow, when the Check 21 act or Check clearing for the 21st century encouraged the use of electronic check clearing as a method for payment processing. This included printed images of checks that can be used for payment processing in place of paper checks.
Additionally, the ACH, or the automated clearing house, was developed to truncate the checks, and make the payment electronically. In truncation, the information on the check is captured, and processed electronically, and the check is not returned to the writer. You may consider yourself fortunate, if you are one of those that still receive a paper check as means of payment instead of an electronic deposit.
Large dollar volume transactions between domestic or foreign institutions are usually settled in real time through the Clearing House Interbank Payment Systems (CHIPS). With global transactions increasing exponentially, both in value and number, as the world becomes more closely interconnected, the number of checks being written, has declined precipitously.
More people are using electronic banking, including direct deposits, pre-authorized payments and online banking as a form as a prelude to payment processing. In 2007, according to recent from the Federal Reserve, about 70 percent of the checks were cleared on paper. The expectation is that in the very near future, approximately 75 percent of all payments will be non-cash payments.
Another factor contributing to decline of checks, is banks are now offering online accounts, because routine transactions such as deposits, withdrawals and transfers, can all be handled online or at an ATM. In some countries, the numbers of checks continue to decline more than 20% each year and many merchants no longer accept them. In the UK, the payments council board has agreed to a target date of October 31st 2018, to close the central cheque clearing, and is working toward having fully compliant and efficient systems in place.
The conversion of paper payments to electronic payments may face some obstacles in the U.S. There are thousands of financial service providers, and hundreds of thousands of billers, who may not have the resources or the technology to provide a seamless network for billing and collections.
Having a robust payment processing system is now essential any e-commerce business, and consumers are also increasing the use of mobile devices for banking and retail transactions. It is also becoming essential, that processing systems be capable of handling mobile transactions.
Merchant account providers now offer a variety of different payment processing options. Having access to with diverse payment processing options, may expand the customer base and increase the number and subsequent sales volume. You can click here for more information.
By: Ador Talukdar
Article Source: EzineArticles.com
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