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Payments

How money actually moves when you tap a card, send a transfer or pay with your phone, explained from zero.

This channel explains how everyday payments work: card payments and their fees, bank transfers from ACH to instant payments, sending money abroad, digital wallets and the message standards behind them, with every number tied to a regulator or official source.

Start here: read these first

A card payment terminal with a bank card inserted into its chip reader — Photo: “Credit card terminal in Laos” by Basile Morin, CC BY-SA 4.0 (edited)

Payments

How does a card payment actually work?

A card tap looks instant, but at least four organisations take part and the money moves later than the approval. Here is the whole journey in plain English.

6 min read

A filled-in German paper bank transfer form — Photo: “Überweisungsträger für Girokonten (10)” by Bradsills, CC BY 4.0 (edited)

Payments

ACH vs wire vs instant payment: what is the difference?

In the US, money moves between bank accounts on three main kinds of rails. They differ in speed, opening hours, size limits and how hard it is to undo a payment.

6 min read

A currency exchange counter with a cash machine in an airport — Photo: “International Currency Exchange (ICE) office at Toronto Pearson (YYZ) Terminal 3” by Silver Dovelet, CC BY-SA 4.0 (edited)

Payments

How do cross-border payments work, and why are they slow and expensive?

Sending money to another country still costs far more and takes longer than paying someone at home. The reasons are a chain of banks, two currencies and a lot of checks.

6 min read

More in Payments

9 explainers & comparisons

Key terms ↓

PaymentsComparison

Debit vs credit vs prepaid card: what is the difference?

The three cards look the same and work at the same terminals, but the money behind them, and the protection you get when things go wrong, are very different.

Photo: “Credit-cards” by Lotus Head from Johannesburg, Gauteng, South Africa, CC BY-SA 2.5 (edited)

PaymentsExplainer

How do digital wallets work?

A digital wallet can be two very different things: a secure holder for your existing bank card, or an app that keeps a balance of your money. Knowing which one you use tells you how safe your money is.

Photo: “Mobile payment 03” by HLundgaard, CC BY-SA 3.0 (edited)

PaymentsExplainer

How do stablecoin payments work?

Stablecoins are pitched as a faster way to pay. Here is what actually happens when one is sent, how the receiver turns it back into dollars, and what regulators say about how they are used today.

Photo: “DZ3 0627 A night market stall in Sattahip Thailand - vendors weigh durians as a young buyer uses his phone to scan or pay while another cust” by PattayaPatrol, CC BY-SA 4.0 (edited)

PaymentsExplainer

What are instant payments, and how do they work?

For decades a bank transfer meant waiting until the next working day. Instant payment systems now move money between banks in seconds, at any hour, and that speed changes both convenience and risk.

Photo: “Banca móvil” by Torsten Dettlaff, CC BY-SA 4.0 (edited)

PaymentsExplainer

What are interchange fees, and who really pays them?

Every time you pay by card, a small fee moves from the shop's side of the payment to your bank. You rarely see it, but it shapes prices, card rewards and even the law.

Photo: “Viva Wallet bank card, Hillegersberg, Rotterdam (2023) 02” by Donald Trung Quoc Don, CC BY-SA 4.0 (edited)

PaymentsExplainer

What is ISO 20022, and why did the payments world switch to it?

Every bank transfer is really a message between banks. ISO 20022 is the shared language those messages are now written in, and its richer, structured data is changing how payments are checked and tracked.

Photo: “Virginia Tech - data center” by Christopher Bowns, CC BY-SA 2.0 (edited)

Key terms in Payments

Glossary

What does interchange mean in payments?

The per-payment fee that flows from the shop's side of a card payment to your bank.

Photo: “Wij accepteren Visa & Mastercard at the GAMMA, Blijdorpse Polder, Rotterdam (2021) 02” by Donald Trung Quoc Don, CC BY-SA 4.0 (edited)

Glossary

What does settlement mean in payments?

The moment a payment stops being a promise and becomes money that has actually moved.

Photo: “Knowledge Vault, Bank of Thailand Learning Center, December 2024” by Paul_012, CC BY-SA 4.0 (edited)

Glossary

What is a chargeback?

The card-network process that lets your bank take a payment back from a shop.

Photo: “ReceiptSwiss” by Audrius Meskauskas (Audriusa), CC BY-SA 3.0 (edited)

Glossary

What is an acquirer?

The company on the shop's side of every card payment.

Photo: “Payment terminal at self-checkout” by Anselm Schüler, CC BY-SA 4.0 (edited)

About this channel

#What this channel covers

Every payment, whether a card tap, a salary deposit or money sent to family abroad, is really two journeys: a message that says who pays whom, and the movement of money between banks that makes it final. The guides here follow both journeys in plain English. Start with how card payments work to meet the four parties behind every card payment, then see who earns what in interchange fees explained. Fees are not trivial: before the EU capped them, interchange fees were worth about €13 billion a year in the EU⁠^[1].

#Why payments are changing fast

Bank transfers used to take a working day or more. Instant payment systems now settle in seconds, any day of the year: the Federal Reserve's FedNow Service went live in July 2023⁠^[2], and EU law now requires euro-area banks to send instant euro transfers that arrive within 10 seconds⁠^[3]. Our guide to instant payments explains how they work and why their speed also attracts scammers.

Sending money across borders is still slow and costly by comparison. The World Bank measured the global average cost of sending $200 at 6.36% in Q3 2025⁠^[4]. Read cross-border payments explained to see where that money goes, and ISO 20022 explained for the shared message standard that modern bank transfers are written in.

#Where do open banking and digital currencies fit in?

Two newer routes sit alongside cards and transfers. With open banking, you let an app connect to your bank account through an API so it can start a payment straight from that account, with no card involved; what is open banking explains the permissions, and pay by bank explained shows how a checkout uses it. The second route changes the money itself rather than the message: a central bank digital currency, or CBDC, would be a digital claim on the central bank, while a stablecoin is issued by a private firm. Our comparison of stablecoins, CBDCs and bank deposits sets out who stands behind each one.

#How to use these guides

Each article starts with a short answer, defines every technical word the first time it appears and links to the glossary for terms such as settlement and chargeback. Comparisons such as debit vs credit vs prepaid cards set out the facts side by side; they do not recommend products. Numbers come from regulators, central banks, statutes and the official documents of the organisations involved, listed at the end of each page. To estimate merchant card costs yourself, use the card fee calculator.

Sources for this introduction (4)

Sources

Antitrust: Regulation on Interchange Fees (fact sheet MEMO/16/2162) — European Commission, 2016 Primary
Federal Reserve announces that its new system for instant payments is now live — Board of Governors of the Federal Reserve System, 2023 Primary
Clarification of requirements of the Instant Payments Regulation (Q&A) — European Commission (DG FISMA), 2024 Primary
Remittance Prices Worldwide — main report and annex, Q3 2025 — World Bank, 2025 Primary

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