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Report

Demystifying Payments – mStar

2014 — By Amitabh Saxena

In its simplest form, a payment is any exchange of value between two parties, where usually Party A offers a form of currency in exchange for a good or service provided by Party B. The advent of nation-states issuing fiat currency, such as paper bills and bronze coins, which unlike gold or silver coins, did not have an intrinsic value, helped take what we now call “cash” payments to a global scale.

Disruptive innovation in the payments sector—and indeed the retail financial services industry—does not occur frequently. This is partly due to the dominant position of the incumbent players (primarily banks and payment networks), and partly due to the nature of the sector itself: as they relate to people’s money, banking and payments are not only inherently conservative, individuals have a lower threshold of risk to experiment with new players or new forms of doing business that dramatically change the status quo.

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