Payment instruments allow funds to be transferred between different parties. The most common distinction is between cash and alternative instruments. The development of innovative payment instruments is particularly important in Italy, where the use of payment instruments rather than cash is less widespread trend compared to other European countries. The availability of a wide range of payment instruments offers flexibility of use, lower costs, and increased security.
Cash (banknotes and coins) allows an immediate transfer of value between two parties and is generally used for transactions of limited amounts. Alternative instruments are instead offered by authorized intermediaries (such as banks) and allow a transfer of funds from the debtor to the creditor through, the transmission of a payment order, the transit within a circuit and the crediting to the beneficiary.
A bank cheque contains the written order given by an account holder to the bank to pay a sum of money. Over 1,000 €, it must bear a non-transferability clause. A cashier’s cheque is issued for sums available at the time of issue.
A bank transfer is an order given by a debtor to transfer a sum to a creditor’s account. Since August 1st 2014, the standard used is the European credit transfer (SEPA credit transfer – SCT), using the IBAN of the beneficiary.
Direct debit is an order given by the creditor to transfer a sum of money to its own account, debiting the debtor’s account: it is usually used for repetitive payments (e.g. utility payments).
The evolution of the computer age has brought about greater development and change in the technology sector and consequently also in the payments sector. The development of hardware, software, communication, and systems management has led traditional means of payment to an extension of their function, creating new ways of paying. This specialization has led the modern era to develop unconventional payments referred to as ‘new digital payments’, which include various products that are nevertheless based on traditional payment products, which can be grouped into two types. The two categories are:
New information technologies have favored the development of payment services on the Internet, supporting electronic commerce. As a result, transactions typically take place using Internet connections. To strengthen the security of payment transactions, intermediaries adopt more robust user authentication methods than simple passwords, such as double-factor credentials or even biometric elements. Factors are represented by something that the user: i) knows (e.g. a password), ii) possesses (e.g. a token or similar), or iii) is intrinsically (e.g. biometric elements). The presence of the double factor makes it more difficult for fraudsters to capture credentials and then use them for unauthorized payments.
The most common payment tools used on the web are:
Mobile payments include those types of payments, different from traditional ones, that use mobile devices such as, Smartphones (i.e. new generation mobile phones), tablets or other technological devices, in order to buy or sell, goods and services. Services for making payment transactions via smartphones or tablets are becoming increasingly popular.
The use of a payment card virtually inserted in the device (via an ‘app’) or associated with the sim card (charged to the phone credit) is a clear example. In this case, purchases relate mainly to digital goods or services that can be used via the mobile device, as well as – within certain amount limits – to public transport and parking services. If the mobile device allows it and the payment card is enabled, it is also possible to pay in contactless mode, by simply placing the device next to the acceptance machine in the shop (POS).
Mobile wallets are e-wallets for smartphones, Apps that can handle the transfer of money exclusively from your mobile phone. Like traditional e-wallets, mobile wallet applications allow payments to be finalized, either locally or remotely, by entering a password.
According to the Legislative Decree No. 11 of 27/1/2010, payment service providers must identify and mitigate threats of technological nature and identify security measures and controls to ensure the objectives of confidentiality, integrity, and availability of information systems and associated data.
In particular, specific safeguards must include at least: