International payment systems by Kirill Yurovskiy

January 20, 2023

International payment systems provide access to international financial markets and allow citizens of different countries to pay for goods and services without territorial restrictions.

The globalization of economic relations and the development of computer technologies have led to the creation of services for quick and instant payments between economic entities, regardless of territorial boundaries. Any international payment or money transfer is based on a number of financial institutions called international payment systems – link.

Let us consider the structure of such international structures, the conditions of their functioning, and get acquainted with individual representatives of this segment of the financial market.

Peculiarities of international payment systems

Any payment system is an association of banking institutions and commercial organizations, providing reliable and secure settlements between the participants and partners of the association according to the rules set by them.

Direct subjects of an international payment system are:

  • the issuing bank;
  • acquirer
  • a processing operator;
  • clients-cardholders.

The order of their work is determined by the rules and agreements between the partners, legislative norms in force on the national territory. The whole process is the interaction of issuers, acquirers and customers through processing centers.

International settlements account for up to 95% of the total global financial turnover, including transfers in various forms of virtual money.

What is the difference between international payment systems and national and regional payment systems?

An international association of participants gets a status of an international payment system if this association will provide citizens and organizations with an opportunity to make payments on the territory of most countries of the world. For this purpose an international payment system must have operators from different countries. Their role is usually played by the leading banks of the states. World famous international payment systems can be named Visa and MasterCard.

As for national payment systems, they are united in their countries, work under control of central state banks and connect only operators of their country to their work. Regional associations spread their services within the boundaries of a limited number of states.

Main members of associations work out and approve rules of international payment systems, monitor all aspects of their activity. They determine strategic directions of capital investments, as a rule, investing them in the field of development and implementation of the latest technologies and means of communication.

International payment systems of bank cards form a fund of their funds from the contributions of the members of the PS based on the volume of transactions carried out by them. In addition, associations perform a number of functions related to the life of the international structure. Among them:

  • Considering the issue of permits for the issuance of cards with the organization’s logo; protecting the rights and technological know-how;
  • Creating conditions for the smooth functioning of the network of automated clearing centers;
  • Distribution of fee revenues among the main members of the association.
  • The most important operational functions of the associations are to provide authorization for transactions and to settle disputes over card transactions.

Peculiarities of functioning of international payment systems

Rules of international payment systems stipulate strict requirements for bank-operators:

  • they may work only with commercial entities located in the zone assigned to the operator and recorded in the license;
  • banks-operators work with entities outside this zone only with cards whose issuers are located in the territory assigned to the operator.

Types of international payment systems

There are three types of international payment systems:

  1. international payment systems based on bank cards (designed mostly for individuals);
  2. systems, through which large operational financial settlements between legal entities (banks, state institutions, business structures, located in different states) are made;
  3. electronic MPS, which are making transactions with the electronic money in the Internet.

International card payment systems or international card associations, as they are called abroad. By all accounts the leading of them are Visa, MASTERCARD, American Express, Diners Club and Japanese JCB.

The main purpose of bank card payment systems is to provide settlement transactions between merchants and buyers paying with bank cards. Thus international payment systems on the base of bank cards take and fulfill obligations on disbursement of cash to cardholders in traditional forms: bank teller desks or in the cash dispensers.

In the category of major international bank card payment systems three leading giants of the payment industry are noted: VISA, MasterCard and China Union Pay. The first two are American transnational corporations, the third is the Chinese global system. It accounts for 30% of all cards issued in the world. Visa is in second place with 28.6%, while MasterCard is in third place with 20% – says Юровский Кирилл.

Peculiarities of some plastic card payment systems

MasterCard works more with euro. The card is accepted everywhere in Europe.

Visa is dollar-oriented.

Chinese Union Pay cards are not accepted in all stores in neighboring Asian countries, let alone in Europe or America.

American Express is known for its traveler’s checks, which are now used very rarely. This system of plastic cards is accepted in more than 100 countries of the world.

Maestro – was specifically designed for residents of Russia and is valid only on its territory.

Electronic international payment systems

Such payment systems work with electronic money which shares in the mass transactions increases every year. Citizens get more opportunities to pay for goods and services through web-services, to get salaries from employers, to buy real plastic cards online at web-resources of these payment systems.

At the same time the security of online transactions is duly secured, as evidenced by the examples of international Internet payment systems.

WebMoney Transfer

Russian international payment system, one of the old-timers of the electronic money market. It has 36 million users worldwide. Participants can start on the account electronic purses with which help it is possible to conduct the account, to exchange title signs WM, acting as settlement means, to make real payment of services and the goods. Low commissions for a conclusion of means.

At registration it is necessary to present the personal data which pass check in the certification center. Getting a higher level certificate gives an opportunity to use a lot of additional functions and conduct the instant operations. Four main types of currencies are available. You can exchange currencies in a profitable way with the help of the exchangers.

PayPal

This is the largest and most popular international electronic payment system. The number of participants has already exceeded 200 million. It was founded more than 20 years ago.

By opening an online account, the user is given the right to send financial transfers, make purchases and manage your finances with a computer address and password to access the system without using your card information.

Purchases are possible on websites around the world. For entrepreneurs there is a service for paying customers’ bills from their bank cards. And the payment is made within several minutes.

PAYEER

Young and quickly gaining popularity international payment service. It has over 15 mln users. Money can be withdrawn to different payment systems, bank cards and accounts in more than 200 countries.

Anonymous execution of operations for clients of the system. No account blocking. Offers free plastic with zero fees for all types of payments and withdrawals in all countries of the world.