MUNHUMUTAPA SCHOOL OF COMMERCE

Name Bigboy Gwetsai

Student Number M201460
Course Title & Code International banking HBF219
Lecturer
Task Individual Assignment
Date
a) Write brief notes on the following international payment methods:

i) Debit/Credit card payments (5)

Credit cards and debit cards typically look almost identical, with 16-digit card numbers,
expiration dates, magnetic strips, and EMV chips. Both can make it easy and
convenient to make purchases in stores or online, with one key difference. Debit cards
allow one to spend money by drawing on funds they have deposited at the bank. Credit
cards on the other hand allow one to borrow money from the card issuer up to a certain
limit to purchase items or withdraw cash.

A credit card is a card issued by a financial institution, typically a bank, and it enables
the cardholder to borrow funds from that institution. Cardholders agree to pay the
money back with interest, according to the institution’s terms. On the other hand, a debit
card is a payment card that makes payments by deducting money directly from a
consumer’s checking account, rather than on-loan from a bank or card issuer. Debit
cards offer the convenience of credit cards and many of the same consumer protections
when issued by major payment processors such as Visa or MasterCard.

ii) Telegraphic Transfers (5)

Telegraphic transfers are a method of transferring funds utilized primarily for overseas
wire transactions. These transfers are used most commonly in reference to Clearing
House Automated Payment System (CHAPS) transfers in the U.K. banking system.
Telegraphic transfers are also known as telex transfers. Originally, as the name
suggests, telegraphs were used to communicate the transfer between financial
institutions. The sender went to their bank and provided the required data about the
amount sent and the recipient. An operator at that bank would send a message to the
recipient’s bank using Morse code. Telegraphic transfers are usually fairly expensive
due to the fast nature of the transaction. Generally, the telegraphic transfer is complete
within two to four business days, depending on the origin and destination of the transfer,
as well as any currency exchange requirements.
iii) SWIFT payments (5)

SWIFT is a member-owned global cooperative that provides secure, private financial

transactions for its members. Banks and other financial institutions can use SWIFT to
expedite payments by sending transaction information rapidly, securely, and accurately.
SWIFT is primarily a service for communications. It acts as a messenger between
banks rather than participating in financial transactions directly. It does not accept or
receive funds or provide options for maintaining accounts. Instead, it gives banks a
secure and effective network to communicate with one another about transactions.
Through SWIFT, for example, businesses and sole proprietors can accept card or bank
payments, even if the customer uses a different bank. The SWIFT network facilitates
transactions between different locations while keeping personal and financial data
secure.

iv) International Cheques (5)

International Cheques are any check, draft, cashiers check or money order that meets
at least one of the following criteria i.e. Item issued in any currency other than the
domestic currency including items drawn on a Zimbabwean bank but payable in a
foreign currency or items drawn on or payable through any bank not physically located
in Zimbabwe.

v) Cryptocurrencies(5)

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which

makes it nearly impossible to counterfeit or double-spend e.g. bitcoin. Many
cryptocurrencies are decentralized networks based on blockchain technology i.e. a
distributed ledger enforced by a disparate network of computers. A defining feature of
cryptocurrencies is that they are generally not issued by any central authority, rendering
them theoretically immune to government interference or manipulation.
Cryptocurrencies are digital or virtual currencies underpinned by cryptographic systems.
They enable secure online payments without the use of third-party intermediaries.
"Crypto" refers to the various encryption algorithms and cryptographic techniques that
safeguard these entries, such as elliptical curve encryption, public-private key pairs, and
hashing functions.

vi) Digital Wallets (5)

A digital wallet (or electronic wallet) is a financial transaction application that runs on
mobile devices. It securely stores your payment information and passwords. These
applications allow you to pay when you're shopping using your device so that you don't
need to carry your cards around. You enter and store your credit card, debit card, or
bank account information and can then use your device to pay for purchases. Digital
wallets are applications designed to take advantage of the abilities of mobile devices to
improve access to financial products and services. Digital wallets essentially eliminate
the need to carry a physical wallet by storing all of a consumer's payment information
securely and compactly.
References

Milutinović, M. (2018). "Cryptocurrency". Ekonomika. 64 (1): 105–122.

Chanchani, M. (2016). "Amazon India planning launch of digital wallet in a bid to build
online payments business" – via The Economic Times

Conrad, Jordan (2016). "Cheque vs. Check: What's the Difference?". Writing Explained.

Johnson, Andrew (2010). "Emboldened, Merchants Expected To Push Cheaper

Payments".