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Definitions
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Dictionary > Definitions > Economy > Payment
Payment
Definition
A payment is the transfer of wealth from one party (such as a person or company) to another. A payment is usually made in exchange for the provision of goods, services, or both, or to fulfill a legal obligation.
Description
The simplest and oldest form of payment is barter, the exchange of one good
or service for another. In the modern world, common means of payment by an
individual include money, check, debit, credit, or bank transfer, and in trade
such payments are frequently preceded by an invoice or result in a receipt.
However, there are no arbitrary limits on the form a payment can take and thus
in complex transactions between businesses, payments may take the form of stock
or other more complicated arrangements.
In law, the payer is the party making a payment while the payee is the party
receiving the payment.
There are two types of payment methods; exchanging and provisioning. Exchanging
is to change coin, money and banknote in terms of the price. Provisioning is to
transfer money from one account to another. In this method a third party must be
involved. Credit card, debit card, money transfers, and recurring cash or ACH
disbursements are all electronic payments methods. Electronic payments
technologies are magnetic stripe card, smartcard, contactless card and mobile
handset. Mobile handset based payments are called mobile payments.
The infrastructure and electronic clearing methods are formed by the payment
provider. Global credit card payment providers are Visa and Mastercard. Japan
Credit Bureau, JCB is a payment provider for Japanese market. Maestro and Cirrus
are international debit card payment providers.
For tax purposes, it is important to determine the timing of actual payment and
whether it qualifies as a deduction in a taxpayer's calculation of taxable
income.
Cash payments occur at the time of payment. This is the easy case, but payments
in other forms can be trickier. Payment also occurs when the taxpayer transfers
property or performs services in lieu of making a cash payment. Payment by check
is deemed to occur when the check is delivered, as long as the check is honored
on presentation by the payee. This rule is enforced even where presentation does
not occur until the next taxable year, and even though the taxpayer could stop
payment on the check in the meantime. Postdated checks, however, are not
considered payment when delivered. Generally, payment by credit card occurs at
the point of the sale and not when the taxpayer is billed by the credit card
company or when the taxpayer pays the bill.
Author
Aziz
Author Email
azizjipsbd@yahoo.com
References
Definitions to be consulted