What is a Payment?

Payment is an everyday concept we stumble upon in our day to day life. We have to purchase goods in order to satisfy our basic needs of food, clothing and shelter, and in order to make these purchases we must be able pay for them. It is thus a means of money transfer as affected from one person to another, and the person making the settlement is known as the payee and the person receiving it is known as the receiver of the reimbursement. As a token of the settlement being made by the customer or payee, the seller of the said good or service gives out a receipt to the payee. This receipt can be used as a proof of purchase of the desired goods.

The oldest form of reimbursement in mankindís history is the barter. In the barter system, the two parties involved in the sale of a product- namely the buyer and the seller- exchange goods of value which cancel each other out in terms of worth. Barter always worked in the sellerís favor because the good on offer from the buyerís side might not meet his valuation, and hence the transaction does not occur. Nowadays though, the remittance t is made through a lot of modes, like credit and debit cards, cash and bank transfer being a few. These Payments are generally made as fallout of an invoice being delivered or before the receipt of a written receipt.

Two variants of Payment can take place- exchanging and provisioning. Exchanging involves bartering notes and coins for the desired article and provisioning means to transfer money from one bank account to another. Settlements nowadays are also made in the electronic mode through net banking and credit cards, and also the advent of mobile, paying money has been made simpler. In Canada numbers of parties are involved and in the case of credit card Payment the number is four- namely the seller, buyer, the issuing bank and the receiving bank.

The Canadian government set up a non profit organization called Canadian Payments Association in 1990 that oversees the clearance and settlement of transactions made with the nation of Canada. All banks as recognized in Canada are required to be members of the Canadian Payments Association (CPA). The CPA is a very dynamic body: on an average, about 20 million items, accounting for around $164 billion in transactions, were cleared and settled through the CPA every business day in 2005. The CPA also handles the Canadian Large Value Transfer System (LVTS) Network. Also popular in Canada is the transfer Payment scheme. They are a compilation of financial equalization schemes used in Canada. Important among these are the Canada Social Transfer, the Canada Health Transfer and equalization settlements. The latter of these can be dispensed with as the receiving provinces see fit, while the first two must be spent on social and health sectors only. The Canadian government also pays a subsidized amount known as Stabilization remittance to farmers who suffer from falling prices or incomes. This illustrates the fact that Payment not only involves the purchase and selling of goods.

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