Payments in Australia
We came a long way from barter system where people exchanged goods and services to other goods and services. In the barter system the intrinsic value of the good/service depends on the need of the other person who is interested in the barter.
And then came monetary system based on precious commodities like spices and precious metals(gold and silver).
We moved on from there to coins and paper currency where the medium of exchange is money and goods and services can be purchased with the currency.
Now we are in the era of fiat money where the value of currency is based on perception rather than any backing commodity or goods.
Now coming back to payments, from Wikipedia the definition is
A payment is the voluntary tender of money or its equivalent or of things of value by one party (such as a person or company) to another in exchange for goods, or services provided by them, or to fulfil a legal obligation.
In the 21st century, currency is no more used in terms of bank notes or currency coins. The currency exists in data storage in computer systems within the financial institution networks across the world.
Banks are pretty good in terms of how they manage these numbers and how secure they keep the information. Redundancy is built in all bank systems and you can bank on them to keep your money safe.
So, now we had established that money is just some numbers that the bank manages for you securely, what about payments.
This is where Payment Systems comes into play. There are multiple payment systems in the world and they change according to their local governments rule and regulations.
We in Australia have a very good banking system which is highly regulated and secure.
Lets look at the different payment systems we Australians use
Cash: Cash is king, only if you want to carry a ton of that for purchases or a lot of coins in your coin pouch. Australians tend to use cash for low value payments and its usage is decreasing consistently.
Non Cash Payments: The bulk of payments in Australia are Non Cash and involves varied payment systems. Some of them are
- Australia’s real-time gross settlement (RTGS): High value payments
- Cheque: Used mostly in property transactions.
- Cards: Debit, Credit and EFTPOS cards.
- Digital Wallets: Use your smart phone and watches to make payments.
- Direct Entry payments: Pay Anyone and bulk payments.
- New Payments Platform: Australia’s real-time 24x7 payment system
