Payments Measurement Toolkit: General Resources

Digital Payments

Digital Payments Glossary

** The world of digital or e-payments has terms which may be unfamiliar to a new reader. This section provides a way of understanding different types of digital payments.**

Digital payments glossary

Payments are made using payment instruments. Cash, for example, is a payment instrument. So too are checks. However, when it comes to digital payments, it can be confusing because of the range of different terms used for similar services, sometimes even within the same country!

In this section, we provide definitions based on the functionality of the main categories of payment instrument, together with the common terms used. A key first step is understanding which instruments are even available, and on what basis, in your country.

To help understand the main differences in categories which affect the functioning of payment instruments, here are two important distinctions:

  • Whether they are real time or not i.e. whether the recipient receives confirmation that he has received funds after transmission within seconds of when the sender makes the payment, or whether it may take hours or even days for this to happen—this matters since the timing affects the ability to confirm and may affect cost; and
  • Who initiates the payment transaction: whether the payer ‘pushes’ the money by entering the details of the recipient and authorizing the payment; or the opposite process, where a recipient, such as a merchant, initiates the process to ‘pull’ the funds from the account of the payer, based on some defined process, such as swiping the payer’s card at a point of sale terminal for a card transaction. This matters since it affects the risks of the transaction to both parties—for example, how it can be reversed or disputed by a payer or payee.

These two distinctions form the axes of the Figure alongside, creating spaces in which the current common payment instruments are shown.


If you want more technical definitions, then download the complete glossary of payment terms developed by the international standard setting body for payments among central banks, the Committee on Payment and Settlement Systems at the Bank for International Settlements.

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Common digital payment instruments

Credit transfers: (which may also be called internet or wire transfers, or EFT credits, or ACH credits or stop orders, SMS banking, mobile banking): “a payment order … made for the purpose of placing funds at the disposal of the beneficiary. Both the payment instructions and the funds described therein move from the bank of the payer/ originator to the bank of the beneficiary…” (CPSS)

Within this category, one can distinguish between:

  • Batch payments: when the payment instruction is delivered (whether singly or in bulk) in a file which is processed with a lag so that the credit to the receiver only happens after an interval, typically overnight although it may be longer in some cases such as international wire transfers.
  • Real time payments: this feature is often offered for payments between parties with accounts at the same financial institution; and central banks often operate a special payment system for high value transactions mainly between banks although it can sometimes be used for larger value transactions of their clients too; although it is rarer for real time retail transfers to be offered widely across financial institutions.

Direct debits: pre-authorized debit on the payer’s bank account initiated by the payee. (CPSS). Direct debits allow the payer to authorize in advance the payment order, which is then presented (digitally) by the payee to her bank at the right time for payment. If the payer’s bank is different, then the payee’s bank will have to present the order to the payer’s bank in order for them to make the transfer. There is usually a lag between presenting the order and receiving the funds. Debits are therefore a pull instrument.

Card payments: card payments are payments involving plastic cards which are often (although not always) branded with the names of the international card associations such as MasterCard or Visa, as well as the issuing financial institution. These payments usually involve the payer presenting his card at a device, such as a point of sale machine or an ATM, and entering a PIN number to authorize a payment transaction via that device. There are various different types of cards, which are subject to different rule sets as to how they work and how the parties are charged:

  • Credit: in which the funds from which the payment is made from a credit account which must be repaid afterwards;
  • Debit: in which the funds belong to the payer and are contained in a linked account at a financial institution which may take a variety of forms;
  • Pre-paid: similar to debit in that the account is already funded by the account holder, but often with a more limited functionality. These cards are also typically available to businesses as well as individuals through issuing banks.


See World Bank, A practical Guide for Retail Payment Stocktaking

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This table provides common definitions of terms you will find in the toolkit

Term Definition
Authentication process The methods used to verify the origin of a message or to verify the identity of a participant connected to a system and to confirm that a message has not been modified or replaced in transit. (CPSS)
Interoperability A situation in which payment instruments belonging to a given scheme may be used in other countries and in systems installed by other schemes. Interoperability requires technical compatibility between systems, but can only take effect where commercial agreements have been concluded between the schemes concerned. (CPSS)
Digital payment A transfer of value using a payment instrument which is at least initiated in digital format. See How to define digital payments?
E-payment See digital payment
Payment grid The table of different payment types formed by different payer-payee combinations
Payment instrument Any instrument enabling the holder/user to transfer funds. (CPSS). For examples, of main categories, see Digital payments glossary
Payment (transaction) device A device that uses the payment instrument and information from the recipient to complete a transaction. Examples include: Â ATM, Point of sale device, PC, mobile phone


If you want more definitions, then download the complete glossary of payment terms developed by the international standard setting body for payments among central banks, the Committee on Payment and Settlement Systems at the Bank for International Settlements, from which some of the above definitions are excerpted.

A term missing? Please let us know