Payout system: general definition and main features

Aug 27, 2021

iCrowdMarketing powered by iCrowdNewswire

In the modern world, economic transactions between legal entities and individuals are impossible without the movement of money. Just a few decades ago, for this movement, partners had to either personally transfer banknotes to each other or use very slow and time-consuming banking procedures.

With the advent of digital technologies and such financial services as payout systems, the situation has changed dramatically. Now everything happens much faster, easier, and safer. Funds that are transferred electronically are credited to the recipient's account within a few minutes.

Features of payout systems

In the most general terms, a payout system is understood as a kind of mechanism for transferring money between enterprises, organisations, individuals, and government agencies. Today, in every developed country in the world, a traditional paper money system and a set of electronic payout systems operate simultaneously. Advances in technology enable payments to be made online in real time without risk and without delays. This provides great convenience for the business and the clients.

Currently, there are dozens of major payout systems. The most common are:

• SWIFT;


• MasterCard;


• Visa;


• PayPal;


• JCB.

The number of payout systems is constantly changing. Perhaps, soon these systems will be superseded by other more convenient and better solutions.

General principle of operation

An electronic payout system is a type of payment system, which is used for the transactions made over the Internet.

The simplified scheme of the system is as follows:

• the user selects a product or service and goes to the corresponding web page of the payment system;


• enters the bank card details and makes the payment.

If the transaction partners want to use the payout system, they have to connect to it. The connection process is quite long and laborious. But, after going through all the procedures, users are able to make payments using ATMs and the Internet very quickly.

When connecting to the system, the user has to conclude a bilateral agreement and provide a whole package of documents that confirm the legitimacy of the business and identity. Waiting for the completion of the verification processes can take several days.

Developers pay great attention to improving the security of information with which payout systems work. Good results are achieved by the use of the PCI DSS certificate, which provides information security to payment cards. 3D-Secure technology creates an additional level of security for payments made on the Internet.

Modern payout systems are one of the most important components of the economy, both global and local. Many specialists are working on ensuring their security, protecting them from fraud and expanding the range of services.

---