A payment is the tender of something of value , such as money or its equivalent, by one party (such as a person or company) to another in exchange for goods or services provided by them, or to fulfill a legal obligation or philanthropy desire . The party making the payment is commonly called the payer , while the payee is the party receiving the payment. Whilst payments are often made voluntarily, some payments are compulsory, such as payment of a fine .
25-405: A payer is a person who makes a payment . Payer also may refer to: Payment Payments can be effected in a number of ways, for example: In general, payees are at liberty to determine what method of payment they will accept; though normally laws require the payer to accept the country's legal tender up to a prescribed limit. Payment is most commonly affected in the local currency of
50-469: A "most valuable analysis" of the correct contractual construction of such payments. An initial up-front partial payment for the purchase of an expensive items or service is often referred to as a " down payment "; this is also called a deposit in British English . A payment may involve more than two parties. For example, a pre-paid card transaction usually involves four parties: the purchaser,
75-413: A certain credit card, etc. Payments are frequently preceded by an invoice or bill, which follows the supply of goods or services, but in some industries (such as travel and hotels) it is not uncommon for pre-payments to be required before the service is performed or provided. In some industries, a deposit may be required before services are performed, which acts as a part pre-payment or as security to
100-399: A down payment. With rising home prices in the years from 2000 to 2007, lenders were willing to accept smaller or no down payment (either through 100% financing, seller-assisted down payment assistance, government down payment providers or by providing a combination of an 80% first and 20% second mortgages ) so that more individuals could purchase homes as their primary residences. Currently, in
125-511: A non-profit organization, or lender usually set the requirements and conditions for the DPA program. Some programs require you or your loan officer to take a short course on Down Payment Assistance for first time home buyers. Homebuyer assistance programs vary by state and can amount to up to three percent of the loan amount for down payment or closing costs. Some states have special programs supporting home purchases in selected geographic areas. There
150-447: Is expected to double to 18.82 per cent in 2011. There is a fast growth of mobile payments around the world. Google Pay, Apple Pay and Samsung Pay are the three main choices for mobile payments, while some banks also allow NFC Payments. In some countries, mobile wallets have become a dominant way of mobile payments. Historically, cheques have been one of the primary means of payment for purchasing goods and services, though its share in
175-419: Is then required to finance the remainder of the payment. The main purposes of a down payment is to ensure that the lending institution has enough capital to create money for a loan in fractional reserve banking systems and to recover some of the balance due on the loan in the event that the borrower defaults . In real estate , the asset is used as collateral in order to secure the loan against default. If
200-554: Is usually obligated to acknowledge payment by producing a receipt to the payer. A receipt may be an endorsement on an account as "paid in full". The giving of a guarantee or other security for a debt does not constitute a payment. The root word "pay" in "payment" comes from the Latin "pacare" (to pacify), from "pax", meaning "peace". In the Middle Ages, the term began to be used more broadly, to mean "to pacify one's creditors". As
225-404: The construction of buildings or other assets. Instalment payments were planned for in the case of Cadogan Petroleum Holdings Ltd v Global Process Systems LLC , where the latter would pay in instalments for the acquisition of two gas plants. Their contract stated that ownership would not pass until the payments were complete and that any failure to pay an instalment would allow Cadogan to rescind
250-590: The European Union under the Late Payment directives of 2000 and 2011. Down payment In accounting , a down payment (also called a deposit in British English) is an initial up-front partial payment for the purchase of expensive goods or services such as a car or a house. It is usually paid in cash or equivalent at the time of finalizing the transaction . A loan of some sort
275-461: The Latin word was made part of Old French "paier", it retained the meaning "appease" but gained the meaning "to pay" (as in paying a debt). The Middle English word "payen", which came from the French, was also used in both ways. There are two types of payment methods; exchanging and provisioning . Exchanging involves the use of money , comprising banknotes and coins . Provisioning involves
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#1732776019497300-637: The United States, the Department of Veterans Affairs offers complete financing for qualifying veterans. The USDA Home Loan program also offers complete mortgage loans with no down payment. These loans are available as direct or guaranteed loans and are offered to qualifying borrowers purchasing a home in a more rural area. Most state finance housing agencies offer down payment assistance. Down Payment Assistance programs are all different with certain requirements for each. State or local housing authorities,
325-403: The borrower fails to repay the loan, the lender is legally entitled to sell the asset and retain enough of the proceeds to repay the remaining balance on the loan, including fees and interest added. A down payment, in this case, reduces the lender's risk to less than the value of the collateral, making it more likely that the lender will recover the full amount in the event of default. The size of
350-555: The borrower's finances are sound, and that the borrower is not borrowing beyond his or her means. If the borrower is unable to pay off the loan in its entirety, the down payment amount is forfeited. In the United States , down payments for home purchases typically vary between 3.5% and 20% of the purchase price. The Federal Housing Administration has advocated lower down payments since its inception in 1934, and, currently, borrowers that qualify for an FHA loan pay only 3.5% for
375-472: The cheque is not presented to the bank until the next taxable year, even though the payer could stop payment on the cheque, in the meantime. Postdated cheques , however, are not considered payment when delivered. Generally, payments by credit card take effect at the point of the sale and not when a payer is billed by the credit card company or when the payer pays the credit card company's bill. A business that reports on an accrual basis, would report income in
400-442: The contract , "without prejudice to any accrued rights". The High Court ruled that the wording allowed Cadogan to retain the instalments which had been paid even though they did not acquire the assets in exchange. The court referred to a text written by Jack Beatson , later a Lord Justice of Appeal , on Discharge For Breach: The Position of Instalments, Deposits and other Payments due before Completion , which Eder J described as
425-435: The down payment thus determines the extent to which the lender is protected against the various factors that might reduce the value of the collateral, as well as lost profits between the time of the last payment and the eventual sale of the collateral. Furthermore, making a down payment demonstrates that the borrower is able to raise a certain amount of money for long-term investment, which the lender may desire as evidence that
450-414: The next. For U.S. tax purposes, cash payments generally are taken to occur at the time of payment. Payment may also occur when a person transfers property or performs a service to the payee in satisfaction of an obligation. A payment by cheque is normally deemed to occur when the cheque is delivered, as long as the cheque is honoured on the presentation by the payee. This rule also generally applies where
475-421: The payee unless the parties agree otherwise. Payment in another currency involves an additional transaction for the conversion. The payee may compromise on a debt, i.e., accept part payment in full settlement of a debtor's obligation, or may offer a discount, E.G: For payment in cash, or for prompt payment, etc. On the other hand, the payee may impose a surcharge , for example, as a late payment fee, or for use of
500-409: The payment mix is falling worldwide. In 2001, in the United States, cheques accounted for 25% of the U.S.-based payment mix; and in 2006, this was projected to fall to 17%. The timing of payment has legal implications in some situations. For tax purposes, for example, the timing of payment may determine whether it qualifies as a deduction in a taxpayer's calculation of taxable income in one year or
525-798: The seller, the issuing bank and the acquiring bank . A cash payment requires at least three parties: the seller, the purchaser and the issuer of the currency. A barter payment requires a minimum of two parties: the purchaser and the seller. The infrastructure and electronic clearing methods are formed by the payment provider . Global credit card payment providers are Diners Club , Visa , American Express and MasterCard . Maestro and Cirrus are international debit card payment providers. Blockchain also provides an infrastructure for payments using digital currency and potentially better security, fewer intermediaries, and lower transaction costs. In 2005, an estimated $ 40 trillion globally passed through some type of payment system. Roughly $ 12 trillion of that
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#1732776019497550-432: The service provider. In some cases, progress payments are made in advance, and in some cases part payments are accepted, which do not extinguish the payer's legal obligations. The acceptance of a payment by the payee extinguishes a debt or other obligation. A creditor cannot unreasonably refuse to accept a payment, but payment can be refused in some circumstances, for example, on a Sunday or outside banking hours. A payee
575-452: The transfer of money from one account to another, and involves a third party. Credit card , debit card , cheque , money transfers , and recurring cash or ACH ( Automated Clearing House ) disbursements are all electronic payments methods. Electronic payment technologies include magnetic stripe cards , smartcards , contactless cards , and mobile payment . Progress payments or instalment payments are often used to allow payment in stages for
600-580: The year of sale though payment may be received in a subsequent year. Payment of most fees to government agencies by cheque, if permitted, usually takes effect after a set number of days for clearance or until the cheque is actually cleared. Payments by credit card, if permitted, and cash payments take immediate effect. Normally, no other forms of payment are permitted or accepted. Commercial late payments and consequent interest entitlements are regulated in some countries, for example in Member States of
625-510: Was transacted through various credit cards, mostly the 21,000 member banks of Visa and MasterCard . Processing payments, including the extending of credit, produced close to $ 500 billion in revenue. In 2012, roughly $ 377 trillion passed through noncash payment systems. This led to total account and transaction revenues of nearly $ 524 billion. In the U.S., debit cards are the fastest growing payment technology. In 2001, debit cards accounted for 9 percent of all purchase transactions, and this
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