Which Rail Should a Payment Take? Classifying Payment Systems: Wholesale, Retail and Cross-Border
A single company's payments in one day may run through large-value, bulk, internet banking, card or NetsUnion, domestic foreign-currency and cross-border systems. This article first explains why an economy needs several payment systems, then weighs the pros and cons of classifying them by wholesale versus retail, domestic versus foreign currency, domestic versus cross-border, settlement method, speed and payment instrument. It sets out the two-layer classification used in this series: first by funds tier into wholesale, retail, and cross-currency and cross-border, then splitting retail into bulk payments, fast payments and card networks. Using three layers (infrastructure, scheme rules and front-end services), it shows why names such as PayNow, UPI and NetsUnion should not be listed alongside clearing systems. It ends with seven questions for reading any payment system and a roadmap for the series.