Every individual and business entity these days has dealt with at least one international payment system (IPS). Yet, even though it is something used daily by millions of people, not many can explain what exactly this term entails.
This guide contains practical information on international payment systems that will help you understand how they work and which one is best for your personal use.
Before delving into the subject of international payment systems, it’s important to talk about a more general term that encompasses them.
Electronic payment systems, or e-payment systems, enable people worldwide to pay for goods and services digitally. Common methods of e-payments include:
Speaking of the latter, bank cards are the most popular e-payment method in the world. In 2021, there were approximately 25.2 billion credit, debit, and prepaid cards in use globally, and this figure is expected to increase up to 30.6 billion by 20251.
That’s where international payment systems come in. This term refers to any payment card schemes that power debit and credit card transactions - more on this below.
International payment systems are global networks that provide plastic card holders, trade and service enterprises, and financial and government institutions in different countries with access to fast, secure, and reliable electronic financial transactions.
These networks develop general rules and determine a specific sequence of technical procedures for conducting transactions to ensure that the exchange of data and funds between the merchants and consumers is successful.
The main revenue stream of international payment systems comes from the contributions of banks participating in the network and is proportionate to the volume of card transactions processed.
In general, international payment systems perform the following functions:
Among the external operational functions performed by international payment systems for their members is authorization, that is, obtaining a transaction permit from the issuing bank if the purchase amount exceeds the one-time limit or if the merchant has doubts about the identity of the client and the legality of their card use.
Another weighty function of an IPS is the organization of final settlement and repayment of debts for card transactions.
The status of an international payment system is obtained if the network provides an opportunity for individuals and organizations to conduct transactions on the territories of most countries across the globe.
To do this, the international payment system must include operators from different countries. Their role is usually performed by the heading government banks. Some of the most famous international payment systems are:
While the main task of any IPS is to ensure settlement operations between merchants and buyers who pay with bank cards, they also have an obligation to issue cash to cardholders in traditional forms at financial institutions and ATMs.
Three of the leading international payment systems are VISA, Mastercard, and UPI. The first two are US-based multinational corporations, while the third network originates from China. In 2019, UPI accounted for 45% of purchase volumes worldwide, followed by Visa with 27% and Mastercard with 18% of the global share2.
Let’s take a look at the key IPS players in more detail:
Visa is one of the biggest international payment systems. Here are some important things to know about it:
Mastercard is an international corporation with its head office in the USA. Here’s some information you need to know about it:
This US company, founded in 1850 in New York, is one of the first international payment systems out there. Here are some facts about this card scheme:
UnionPay International (UPI)
UPI is a subsidiary of China UnionPay, the main purpose of which is to support the growth of the card scheme’s global operations. Some important details about it are:
The Japanese payment system JCB, formerly known as Japan Credit Bureau, was founded in 1961 and ranks among the top five major international payment systems. Some characteristics of JCB are:
All in all, the largest payment systems that control the biggest shares of the international market are Visa, Mastercard, and UPI. Their main advantages are a huge reception infrastructure, the ability to make cross-border payments, and an excellent brand reputation.
The operational principles of these payment systems are very similar, so account holders would not face major differences when it comes to aspects like data exchange, authentication procedures, risk management, encryption techniques, regulatory standards, and so on.
The choice between the systems fully depends on subjective consumer preferences, their lifestyle and spending habits, and the offers that local financial institutions have.
With Which Payment Systems Should Merchants Partner?
When it comes to merchants, it’s highly recommendable to cooperate with as many international payment systems as possible to be able to cater to the vast majority of potential customers.
With Payneteasy’s Fintegrate solution, you will be able to unify multiple payment service providers under one smart and convenient cashier system. It will enable you to effectively accept e-commerce, m-commerce, and alternative payment methods. Connect any wallets and payment systems and process transactions in various currencies seamlessly in a PCI DSS-certified environment.
Reach out to us today to transform the way you accept and process payments!
1 - Statista - Number of credit, debit and prepaid cards in circulation worldwide
2 - Payments, Cards, and Mobile - UnionPay accounts for 45% of global cards spending
3 - Visa - Fiscal Year 2021 Key Statistics
4 - Statista - Number of Mastercard credit cards in the United States and worldwide
5 - PYMNTS - China’s UnionPay Provides Tuition Refunds To International Students Studying In Australia
6 - JCB - JCB expands partnership with Nets Group to grow JCB Contactless acceptance in the Nordics