Payment Procedures - Transfer Internationally

1. PAYMENT PROCESS
PRINCIPLES
By Zain Hassan

3. PAYMENT
• DEFINITION
THE ACTION OR
PROCESS OF
PAYING
SOMEONE IN
EXCHANGE FOR
SOMETHING.

4. PAYMENT SYSTEM
A payment System is a set of instruments, procedures, and rules for the
transfer of funds between or among participants; the system includes
the participants and the entity operating the arrangement. (BIS, 2016).

5. Cash
• Paper Currency & Coins
Cheque
• Cheque is a document that orders a bank to pay a
specific amount of money from a person’s account to
the person in whose name the cheque has been issued
TRADITIONAL PAYMENT SYSTEM

7. Credit Cards
• A card issued by a financial company gives the holder an option
to borrow funds, usually at the point of the sale. Credit Cards
charge interest and are primarily used for short term financing
Charge Cards
• It is similar to credit card but charge card holder must settle their
outstanding amount in full by the due date every month.
TRADITIONAL PAYMENT SYSTEM

8. Debit Cards
•A Debit card is a plastic payment
card that provides the cardholder
electronic access to their bank
accounts at a financial institution.
TRADITIONAL PAYMENT SYSTEM

9. LIMITATIONS TO TRADITIONAL PAYMENT
SYSTEM
1. Cheque and cash cannot be exchanged in real-time
2. Credit and Debit card information exchanged over the phone or by
email security risks.
3. Credit and Debit cards do not support individual-to-individual
payment transactions.
4. Some individuals do not have access to credit cards or checking
accounts because of credit history.
5. Cash do not support low-value transaction (Micropayments)

10. ELECTRONIC PAYMENT SYSTEM
EPS has become popular on account of the following reasons:
1. Decreasing technology cost
2. Reduced operational Processing cost
3. Increase online transactions.
4. Lower transaction fee or cost for e-payments
5. Variety of e –payment options are available to the customers.
6. The seller is able to receive payment from any part of the world
within a few minutes.
7. E-payments are convenient for both the merchant and customer.

11. ELECTRONIC PAYMENT SYSTEM
E-Payments systems requirements:
1. Security
2. Privacy
3. Integrity
4. Authentication
5. Reversible
6. Standardized
7. Economical
8. Scalable

12. ELECTRONIC PAYMENT SYSTEM
Benefits of E-Payments systems :
1. Speed and convenient
2. Safety
3. Accept online payments
4. Cut Costs
5. Reduce late payments
6. Environment Friendly

13. ELECTRONIC PAYMENT SYSTEM
Limitation of E-Payments systems :
1. Lack of Security
2. Lack of applicability
3. High usage costs for merchants
4. Unsuitability

14. • Single Bank dependent / No Bank Independent
• Lack of Support
• Lack of Flexibility
• Build for the mass market – no customization
• Reactive approach
LIMITATIONS OF TRADITIONAL PAYMENT
SYSTEMS

15. An invoice is a document given to the buyer by the seller for his
purchases and to claim the money against the invoice.
It includes the cost of the products purchased or services rendered to
the buyer. Invoices can also serve as legal records, if they contain the
names of the seller and client, description and price of goods or
services, and the terms of payment.
INVOICES

16. • Legal purposes
• Records
• Avoid any ambiguity
• For future purchases
WHY INVOICES ARE NECESSARY

17. INVOICES
INFORMATION SHOULD BE INCLUDED IN THE INVOICE:
- Seller’s Name
- Buyer’s Name
- Date
- Tax Number
- Item with description
- Quantity
- Unit Rate
- Total Amount
- Tax Amount

18. INVOICE

19. METHODS OF RECEIVING / SENDING MONEY
INTERNATIONALLY
1. Wired Money Transfer
2. Automated Clearing House (ACH) Network

20. WIRE MONEY TRANSFER
A wire transfer is an electronic transfer of funds via a network that is
administered by banks and transfer service agencies around the world.
Wire transfers involve a sending and receiving institution and require
information from the party initiating the transfer, such as the receiver's
name and account number.
NOTE:
Wire transfers don't actually involve
the physical exchange of cash but
are settled electronically. They can
be sent between banks, or through a
non-bank service such as Western
Union.

21. WIRE MONEY TRANSFER (Cont.)
PROCESS:
• A wire transfer facilitates money transfers electronically across a
network of banks or transfer agencies around the world.
• Senders pay for the transaction at the remitting bank and provide the
recipient's name, bank account number, and the amount transferred.
• Most wire transfers can take as long as two business days to process.
• International wire payments are monitored by the Central
Government Authority to ensure the money isn't being wired to
terrorist groups or for money laundering purposes.

22. WIRE MONEY TRANSFER (Cont.)
ADVANTAGES:
• Fast settlement, even across borders.
• Cannot be bounced or held due to insufficient funds
• Can be done by individuals

23. WIRE MONEY TRANSFER (Cont.)
DISADVANTAGES:
• Banks often charge a flat fee for wire transfers
• Set a limit on the transfer amount that can be wired in a single day.
• Bank fees make wires impractical for some amounts.

24. WIRE MONEY TRANSFER (Cont.)

25. AUTOMATED CLEARING HOUSE (ACH)
The network essentially acts as a financial hub and helps people and
organizations move money from one bank account to another.
The Automated Clearing House (ACH) is the primary system that
agencies use for electronic funds transfer (EFT). With ACH, funds are
electronically deposited in financial institutions, and payments are
made online.

26. Automated Clearing House (ACH) – Cont.
ADVANTAGES:
• Low processing payment
• Huge amounts could be a process

27. Automated Clearing House (ACH) – Cont.
DISADVANTAGES:
• Longer processing times

28. KNOW YOUR CUSTOMERS (KYC)

29. THANKS