Physical payment instruments

Payment instruments are tools that facilitate payments and fund transfers. They are offered by banks and work with established payments flows to make it easy for end parties to move money around.

Studies find that the size of a transaction is a leading factor in payment instrument choice at the POS. Other influential factors include consumer attributes and financial characteristics.


Cash is the most traditional form of payment. It requires no technology and can be used immediately. But it has its downsides, such as being hard to track and the potential for theft.

In accounting, cash refers to the current assets in a company that are ready for use to pay for recurring business expenses. It is usually listed first in the balance sheet, since it is the most liquid of all current assets. Other forms of cash include bank balances, money orders and post-dated checks. Also, there are non-cash payments like demand deposits and teller cheques. But most of these are based on the same principle as cash, and are simply different ways of transferring funds from one account to another.


Although digital payment methods are becoming more common, there are still occasions when it’s preferable to use a check. For example, when paying rent or a utility bill, some individuals find it easier to pay with a personal cheque than a credit card or electronic cash withdrawal.

A cheque is a paper document that orders a bank to transfer money to another person or company. The person writing the cheque, known as the drawer, has a transaction banking account (also called a checking or chequing account). They write various details including a monetary amount and a name of the payee on a check and sign it.

Debit Cards

Debit cards, also known as bank cards or ATM cards, allow users to access the money in their checking accounts with ease. They can be used at millions of stores and online merchants, and some work with digital wallets. Debit cards help consumers avoid running up debt, because they only spend the money that is in their checking account at the time of a purchase.

Be careful when using a debit card, as anyone who knows the card’s account number and security code can make fraudulent transactions with it. It is important to report a stolen debit card promptly. If it is lost, your bank may give you a replacement card for free or charge you a fee.

Credit Cards

Credit cards provide a convenient way for consumers to pay for goods and services without having to carry cash. They also reduce resistance from consumers compared to checks, and they can be more secure than cash, depending on the card issuer and type of card.

The card number and the cardholder name were originally embossed on cards, allowing them to be copied easily onto carbon paper slips for transaction recording. Nowadays, most cards feature holograms and watermarks that fluoresce under ultraviolet light to prevent counterfeiting. Some cards are affiliated with affinity partners such as universities, sports teams and charities, while others offer insurance coverages such as travel or purchase protection.

Prepaid Cards

A prepaid card, also called “general-purpose reloadable,” is loaded with cash or money transfers from other sources and works like debit cards linked to checking accounts. It can be used at ATMs, at stores and online — even for direct deposit or paying bills.

Prepaid cards are a good choice for teens who want to build credit in a low-risk way, or people with bad or no credit history who cannot qualify for a conventional credit card. They help avoid fees that are typically associated with credit and debit cards.

Prepaid cards are now required to offer liability protections similar to those offered to credit and debit card holders.


Digital wallets, such as Apple Pay, PayPal and Venmo, give consumers the ability to make fast, secure online payments. They can also store credit cards, airline tickets, coupons and more.

During a transaction, the wallet sends the payment data to point-of-sale terminals. They then process the payment with credit card networks and banks.

E-wallets can also provide valuable customer insights for companies, including shopping patterns and preferences. They are considered more secure than keeping cards in a physical wallet because they use tokenization, encrypting and two-factor authentication. These security measures protect a consumer’s DPAN, or device primary account number, which differs from their actual credit card or bank account number.