 Payment and Payment system

 A payment is a mechanism that transfers of value, through bank channel.

 Payment by the physical delivery of money from payer to payee can be both
expensive and risky. This has led to the development of various payment
mechanism and payment system.
 A payment mechanism facilitating a standard method of payment through a
banking system is frequently referred to as payment system.
 Transmission of money which by possess the transportation of money and its
physical delivery from the payer to the payee is a payment mechanism.

Key features of payment system

 Message: Through electronic or paper based
 Clearing: computing the net obligation and circling the net obligation.
 Settlement: Net and gross settlement system.

Payment system under different categorization

1. Large value payment system: Electronic based, Immediate payment, Inter-
bank transaction above two million
2. Retail payment system: payment of small value through cheque,
3. Cash payment, paper based payment etc.
4. Credit based payment : Affordable payment compliance with the individual
and entity account
5. Electronic payment: E-banking

Payment of cheque: A cheque is an order to transfer funds from payer's bank to

the account of the payee. Cheques are simply a payment instruction from
account holder to his/her banker directing that a certain sum of money should
be paid to a specific Individual.

As per negotiable instrument act 1881, A “cheque” is a bill of exchange drawn on

a specified banker and not expressed to be payable otherwise than on
demand.

There are three parties in Cheque Transaction – Drawer, Drawee and Payee.

 Drawer (Maker of Cheque) – The person who issue the cheque or hold the
account with bank.
 Drawee – The Person who is directed to make the payment against cheque. In
case of cheque, it is bank.
 Payee – A person whose name is mentioned in the cheque or to whom the
drawee makes payment. If drawer has drawn the cheque in favor of self then
drawer is payee.

Payment by Cheque is safest way to conduct business transactions as it helps to

maintain record in account statement to whom the payment is made by which
payment is received. So it becomes easier to track the transactions through
bank account statement.

Different Types of Cheque

There may be different types of Cheque depending on how the drawer has issued
the Cheque.

 Open / Bearer Cheque

 Order Cheque
 Crossed Cheque
 Post dated cheque
 Self Cheque
 Blank Cheque
 Banker’s Cheque
 Cancelled Cheque

Collection of the cheque

A) Time for presentation : Reasonable time after issue

B) Means of presentation: Presentation through clearing, Presentation by post,
Presentment by one bank to another or through electronic media etc.
C) House cheque
D) Liability of customer for delay in presentment

Negotiable instrument Act, 2034

Section 43: Presentment for payment (Cheque)
Section 47: Presentment of cheque to drawer.
Section 90: Non-liability of Banker receiving of the cheque

Credit card system: A credit card system is a credit facility extended to a user who
is issued a plastic card that can be used for cash.

Features of credit card

 Alternative to cash
 Credit limits
 Payment in domestic and foreign currency
 Record keeping of all transaction
 Regular charge
 Service charge

Conclusion: Credit card is the outcome of the comprehensive banking system

Presented By Buddhi Khanal Roll No: 20