In today’s dynamic world, payment systems are going through swift transformations stimulated mainly by technological advancement. Distributed network technology, real-time processing and customers’ readiness to make use of digital financial interfaces will even more reshape payment systems over the future years. Internet and e-commerce will have a significant influence on payment systems. This report offers the present developmental trends. It studies the requirement to develop payment specifications and the content of payment instructions as a way to completely automate the payment procedure. Given that interbank settlements comprise a crucial part of payments, they need to be made a fundamental element of the payment process within the Internet environment. With cross-border payments growing in value, any fresh advancements must take a global point of view. Payment system development demands cooperation amongst the banks and other participants engaged. In an effort to develop the required agreement, banking industry organizations along with central banks as well as other regulators will have to come together to re-engineer the current payment systems, making optimum use of the possibilities produced by modern technology.
Video: Electronic Commerce Payment Systems
Today’s payment systems have emerged with time by building on paper-based processes. Automation has took place in phases where different parts of the procedure are already electronified independently, without redesign of the whole method. Today we are in times where significant advantages could be realized only by re- engineering the whole payment procedure as a way to make use of the new effective capabilities given by technology advances. The main user trends and technology changes that would appear to require this re-engineering are – the distributed network solutions (ie the Internet and TCP/IP) and the new interactive real-time communication mode depending on direct one-to-one contacts clients willingness and fascination with using electronic interfaces and integrating their internal systems with financial institution systems for transaction processing security infrastructure using modern encryption approaches and secured chip based processors lowering costs of real-time processing and telecoms increase in global cross-border communications that calls for economical cross-border operability.
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Source: Research Discussion Papers, Bank of Finland