Money Developments (3) Private Payment Methods

In the last few decades, a range of new tools for making payments when buying products have been developed. These have changed the way that we buy and sell. Many of these options allow people to borrow money to pay for their purchases.

• Credit Cards are the best-established and most widely accepted method for making payments by carrying a small plastic card. Many people are content to pay a fee to their credit card company for the benefit of paying for goods and services all over the world. Credit cards allow people to buy on credit, but their interest charges are high.

• PayPal is a multinational financial technology company that operates an online payments system in a large number of countries. It provides an electronic alternative to traditional paper methods such as checks and money orders. The company operates as a payment processor for online vendors, auction sites and many other commercial users, for which it charges a fee.

• Smartphones are already being used for buying and selling using NFC (Near-field Communication) or QR codes in many parts of Asia and Africa. In China, most people don’t have credit cards, so phone payments are more common. WeChat Pay has become a part of daily life.

  With WeChat Pay enabled on a mobile phone, users can make transaction payments anywhere. It is supported almost everywhere, such as in ordering taxis, supermarkets, and hospitals. In the largest cities, residents pay, on average, 80% of their monthly expenditures through mobile payment services, while in smaller cities, residents use these means for 90% of their monthly expenditures.

  In Africa, the use of smartphones for buying and selling is growing rapidly. It is making it easier for people to operate businesses and start new ones. M-PESA is Africa’s most successful mobile money service. Making payments with a smartphone is far more secure than carrying around wads of cash, so it is facilitating economic development. For example, Somalia is an impoverished, war-torn country, yet 70% of adult Somalis use mobile money services regularly.

  Most of the mobile payment systems in Africa and Asia are operated by companies. Of course, governments can intervene and prevent people from trading if they choose, regardless of what payment method is used. They can also confiscate cash if they choose.

• GooglePay and ApplePay are payment systems operated by two of the largest multinational information technology companies in the world. People are using them to make payments from their bank accounts or credit card accounts with their phones, often with NFC technology.