What is a Payment Protocol?

What is a Payment Protocol?

We all conduct transactions every day, it can be directly in cash or through different payment protocols like credit cards, debit cards, internet banking and e-commerce. Let’s learn more about it today


Payment Method

Payment method is the method of performing property obligations. This includes the institutions, instruments, people, rules, procedures, standards, and technologies that make its exchange possible.

Payment methods can be made in the form of cash payment, check, payment via bank, letter of credit, payment in kind… or as agreed by the parties.

The method of implementation can be one-time payment or installment payment or periodic payment… or depending on the way agreed by the parties.

Payment Protocol

Payment protocol is a protocol created to implement payment methods, developed to be suitable for use case

What can be a use case here? The answer is credit card and automated teller machine (ATM) networks, settle financial transactions for products in the equity markets, bond markets, currency markets, futures markets, derivatives markets, options markets.

It will depend on the needs of the customer and the features that the developer provides. So there can be many payment protocols in one payment method.

For example in the crypto market we have many different blockchains and each protocol will be different when built on a separate blockchain.


Payment system

A payment system is any system used to settle financial transactions through the transfer of monetary value.Payment systems may be physical or electronic and each has its own procedures and protocols. Standardization has allowed some of these systems and networks to grow to a global scale, but there are still many country-specific and product-specific systems.


An efficient national payment system reduces the cost of exchanging goods, services, and assets. It is indispensable to the functioning of the interbank, money, and capital markets. The technical efficiency of the payment system is important for the development of the economy.

An automated clearing house (ACH) system processes transactions in batches, storing, and transmitting them in groups. An ACH is considered a net settlement system, which means settlement may be delayed.

Real-time gross settlement systems (RTGS) are funds transfer systems where the transfer of money or securities takes place from one bank to another on a “real-time” and on “gross” basis. Settlement in “real time” means that payment transaction does not require any waiting period. The transactions are settled as soon as they are processed.


Globalization is driving corporations to transact more frequently across borders. Consumers are also transacting more on a global basis—buying from foreign eCommerce sites as well as traveling, living, and working abroad. For the payments industry, the result is higher volumes of payments—in terms of both currency value and number of transactions.

The ways these payments are made can be cumbersome, error prone, and expensive. Payments systems set up decades ago continue to be used sometimes retrofitted, sometimes force-fitted—to meet the needs of modern corporations. And, frequently, the systems creak and groan as they bear the strain.

The challenges for global payments are not simply those resulting from volume increases. A number of economic, political, and technical factors are changing the types of cross-border transactions conducted.

⇒ So what can be a solution for better payment method? Borderless & Bankless Payment? Keep following for more information.

Solareum team