preface

Welcome to our GitHub repository Star: github.com/bin39232820… The best time to plant a tree was ten years ago, followed by now

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Hello everyone, I’m a little, fishing for three days, two days the net, the exposure to pay this industry also nearly a year, starting from today began to output their own to pay the related knowledge of and everyone together to learn to pay, pay is a very big and wide application of an industry, it is the foundation of all things! I think the last mile of any product is definitely paid out. One said: “Payment is easy.” One said, “It’s hard to pay.” If you are interested in payment, please follow me! Everybody study together!

Mankind has paid up and down for five thousand years

Since the division of labor in human society, there is exchange, and there is exchange, there is payment, exchange can be said to be the most ancient form of payment

• The earliest ancient people practiced barter, but this method of exchange was very flawed, neither convenient nor economical.
• In the late New Era, during the Banpo and Dawenkou cultures, people used pottery POTS and animal bones as currency. This is the historical evidence of human use of monetary wealth so far found.
• Since the Shang Dynasty, people began to use “natural shellfish” as currency.
• To the Spring and Autumn Period, “natural shellfish” flooding, inflation. The dukedoms began casting “metal shells” to replace “natural shells” to restore economic order. Economic independence not only made the vassal states get rid of the control of the Zhou Dynasty, but also brought about further social prosperity, which laid a solid economic foundation for the warring States hegemony in the future.
• During the Warring States Period, various countries created sovereign coins of various shapes. The situation is similar to that of sovereign currencies printed by countries around the world today.
• After the qin dynasty unified six states, cars with the same rail, literature with books, currency with the system. He created a unified form of national currency and endowed it with the mysterious and metaphysical gene of “round heaven and round earth”.
• During the Northern Song Dynasty, economic prosperity was unprecedented. With frequent commercial exchanges, coins were not easy to carry due to their weight and volume, so a kind of paper money named jiaozi came into being. This is the earliest record of paper money in the world. Marking the paper money this new form of monetary expression officially on the stage of history.
• After the Mongols entered the Central Plains in the Yuan Dynasty, they regarded paper money as one of the magic ways to solve the country’s economic difficulties. Because people had few economic concepts at the time, let alone the principle of “MV=PY” money quantity issuance, paper money was printed without limit. Excessive issuance led to a rapid devaluation of paper money, leading to severe inflation. The people were poor, and the yuan rulers were driven back to the grassland at the end of the Yuan Dynasty when the peasant uprising broke out.
• At the beginning of the Ming Dynasty, due to economic difficulties, the imperial court continued to issue “Daming Bao Banknotes” to maintain the economy, but still fell into the trap of unlimited over-issuance of banknotes, and the rapid devaluation of banknotes. After the middle Period of the Ming Dynasty, with the influx of silver into China, the government’s economy improved and the “Daming Bao Banknote”, which had completely lost its credibility, was abolished.
• In the late Qing Dynasty, the imperial court was forced to open its door to trade under the threat of foreign guns and cannons. With the continuous opening of trade, the Guangxu period of the Qing Dynasty, finally modeled on foreign institutions, the establishment of household bank, the issue of regular paper money. And imitated Mexican silver dollar cast China’s first non – porous silver round. This is the first time in more than 2,000 years that the shape of coins has changed, marking the end of the era of “round heaven and round earth”.
• In 1935, the government of the Republic of China began to implement the legal tender system (the national legal tender system). From the Ming and Qing dynasties “silver standard” system to return to the “gold standard” system, the realization of the international standard “gold standard” system synchronization
• Today, with the revival of the nation, economic prosperity and technological development, the forms of money are increasingly diversified. There are even virtual currencies such as Q Coins.
• Digital currencies are emerging as an international alternative to traditional paper money. Of course, it’s not going to happen overnight. It’s going to take 800 or 900 years for paper money to completely replace metal coinage.
• Nowadays, with the popularity of wechat and Alipay, electronic payment has brought unprecedented convenience to people. It has been less than a decade since paper money went digital and most people now accept electronic payments.

The three most basic elements of payment

Let’s look at an example

Suppose that in ancient times, Little 66 shot a hare, and then his next-door neighbor, Little 77, had a duck, and then Little 66 wanted to trade with him, and little 77 agreed, so let’s see what the steps of this exchange were

• The first step, of course, is that you want to make a deal, so six six and seven seven wants to make a deal with rabbits and ducks, and the goods are rabbits and ducks

• Second step, according to the calculation, sixty-six should pay a rabbit, Seventy-seven should pay a duck, sixty-six should pay a duck, seventy-seven should pay a rabbit

• The third step, complete the transaction delivery, little 66 got the duck, little 77 got the rabbit

The above three steps actually correspond to the three basic processes of payment, transaction, clearing, and settlement, which is also the basic three elements of payment!

Payment of essential elements of the transaction

Trading concept is quite simple, actually trading is caused various economic activities of debt creditor’s rights, trade is the precondition of pay, trading is everywhere, such as shopping online, offline shopping, transfer, etc., in the process of trading, the need to ensure that the generation of payment instructions, validation, and transport, contains the legitimacy of the trading main body, identity, pay channel routing, Payment ability check, transaction message transmission, transaction results query, data landing, compensation mechanism and so on!

The liquidation and settlement of the essential elements of payment

“Clearing (clearing) is the data preparation stage of clearing. It is mainly to summarize, sort out and classify all network transaction data of the day according to the member banks’ own, other’s own, credit, debit, transaction number, amount, net difference and so on. “

From this explanation, we can understand three aspects:

• “Qing Fen” literally means. The so-called “clear separation” is clearly separated.
• The English equivalent of clearing is clearing.
• Define the last part, which says “…… And so on to summarize, sort and classify.” That’s the whole point of the definition.

Therefore, in summary, “sorting” is the process of recording, sorting and summarizing network transaction data.

Generally speaking, the process of payment activities includes transaction, clearing and settlement. Among them, liquidation and settlement are the process and means of paying off the creditor's rights and debts of both parties. In the payment activities, it is ok to directly settle the fund flows between the accounts of the same trade, while the funds flows between the accounts of different trades shall be settled first and then settled

Clearing mainly refers to the currency receipt and payment between different banks. It can be considered as the sending, receiving and verification of payment instructions by the originating bank and the receiving bank before settlement. The result is the comprehensive exchange of settlement instruments and payment information, and the establishment of the final settlement position.

• Clearing is used for the exchange of funds between the accounts of different peers. For the exchange of funds between peers, there is no need for clearing, but direct settlement is ok.
• Liquidation literally. To make a reckoning is to make it clear. Who pays whom, who owes whom, and at last comes to a calculation of who should pay whom.
• The settlement shall include actions such as “send”, “receive” and “check and confirm” by the originating bank and the receiving bank to the payment instruction, that is, a check and confirm action before the final payment to ensure the settlement is correct.
• Finally, liquidation does not involve the transfer of the bond debt relationship.

Settlement of basic elements of payment

Settlement of Accounts refers to the process of accounting the positions to be settled generated in the process of liquidation at the originating bank and the receiving bank respectively, completing the transfer of funds, and notifying the receiving and paying parties.

We can also see from the English words “settlement” and “settlement”, “settlement” is the settlement of accounts, and the English word “settlement” is only the settlement, but does not involve accounts.

Therefore, the definition of settlement in China UnionPay Bank Card Networking Joint Technical Specification V2.1 is: the process of completing the transfer of funds between customer accounts.

What is a payment system

Since ancient times, all commercial activities have resulted in the receipt and payment of money. In the long history of human beings, the way of recording the receipt and payment behavior is constantly iterated: in ancient times, Mr. Accountant kept books manually, and in industrial society, he kept books mechanically through the cash register…

Today, we have entered the Era of the Internet, business behavior has also carried out digital and information evolution, become today’s “e-commerce”.

The payment system appears with the emergence of e-commerce. It is an internal system module with certain independence to realize online payment transaction and transaction fund management for all kinds of e-commerce business activities.

• Platform: the main body of e-commerce economic activities.
• Business system: to achieve platform user registration, commodity pricing, marketing activities and other related functions.

The relationship between the platform and the business system: the business system records the user’s purchase behavior in the form of various transaction orders, and delivers them to the payment system for processing. Finally, the payment system completes the collection and payment.

According to the current regulations of the People’s Bank of China, RMB transaction processing is limited to banks and third-party licensed payment institutions, so the payment system needs to handle transaction funds through external banks and third-party licensed payment institutions to realize the above functions. Therefore, the payment system needs to have:

• Unified encapsulation and processing of the transaction interface, in order to connect with external transaction channels, transaction order processing for the business system.
• According to the capital allocation rules set by the business system, in the case of multiple payees participating in a transaction, the automatic clearing and settlement of transaction funds are completed according to the capital allocation rules, and then the transfer is completed through the connected external transaction channels.
• Accounting data recording function, the above transaction, clearing, settlement of the capital change information, the payment system needs to record through the accounting data recording function, the transaction capital statistics and complete the transaction capital verification and other financial work.

China’s payment and clearing system

If we want to understand payment, we should first understand the participants in China’s payment system, and what are their respective responsibilities

People’s Bank of China

Also known as The Central Mother, the king and creator of the payment field, issued the existence of various policies and norms. The central bank is not involved in the specific business of payment. As a member of the payment industry, it is enough to remember that The Central Mother is the most powerful and does what she says.

China unionpay

To put it simply, it is the only clearing organization in China at present, through which all inter-bank funds clearing can be realized. In essence, it is an agreement organization.

Third-party payment institutions

Formal third-party payment institutions must have the qualification approved by the Central Bank, that is, they must obtain the payment business license issued by the Central Bank before they can carry out business. The types of payment business licenses are generally: bank card receipt, Internet payment, and pre-paid card issuance. Other such as telephone pay, digital TV pay and so on can be ignored basically.

To pay licence enterprise is not, of course, you can rest easy, normally the bank according to the condition of market conditions and the enterprise the management review once every five years, to be paid back for serious violations of payment business license, the requirements for business not good will invite conversation with the strength of the company equity transfer or other forms of cooperation, At present, there are more than 200 payment enterprises of various types in the market.

First, take a look at the Overall Architecture of China’s Payment and Clearing System.

Note, the “central bank payment and clearing system” in the figure is part of the first generation, and the second generation added online payment and inter-bank clearing system (super online banking).

Let’s take a look at the main parts of China’s modern payment system ii

Central bank payment clearing system

Big city real-time payment system and small batch payment system, clearing system, the domestic foreign currency payment system and the national check image exchange system, online payment interbank clearing system (super online banking) (remember the in 0 years, at that time whether transfer, or money, or are not in real time to the account, It seems to be real time after super online banking)

Payment and clearing system of third-party service organization:

Bank card inter-bank payment system (China UnionPay bank card inter-bank transaction System), centralized collection and payment center business processing system, urban commercial bank bill business processing system, RURAL Credit Bank capital settlement center business processing system, other third-party payment organization business processing system.

Banking financial institutions intra-bank payment system

Financial market payment and clearing system

Unionpay’s inter-bank payment system itself is limited to the inter-bank payment and settlement of bank cards. Therefore, it can be said that CUPS is just a subsystem of China’s modern payment system (CNAPS).

A major player in China’s modern payment system

• Direct participants:

The sub-branches (storehouses) of the People’s Bank of China at or above the prefecture level, banks with clearing accounts in the People’s Bank and non-bank financial institutions are directly connected with the CCPC

• Indirect participants:

County (city) branches (repositories) of the People’s Bank of China, banks that have not opened clearing accounts with the People’s Bank but entrust direct participants to handle fund clearing, and non-bank financial institutions approved by the People’s Bank to operate payment and settlement services. It is not directly connected with the city processing center, and its payment business is submitted to the direct participant of its clearing funds, which is submitted to the payment system for processing. A typical example of an indirect player is a third-party payment company.

• Licensed Participants:

Institutions approved by the People’s Bank of China to conduct specific business through the payment system. Opening franchised accounts in local branches of the People’s Bank of China and connecting with local city processing centers UnionPay is a typical representative of franchised participants

Unionpay clearing system

Unionpay settlement method

• Unionpay’s payment settlement includes inter-bank settlement and receipt settlement.
• Inter-bank clearing refers to the clearing of the receipt institution and the card issuing institution.
• Receiving-clearing is the liquidation of merchants and professional receiving-service institutions instead of receiving-institutions.

The liquidation of UnionPay

The payment settlement of UnionPay includes two important links: sorting and capital allocation.

Sorting refers to the successful transactions recorded in the transaction log, the transaction principal and transaction costs (commission, distribution, etc.) are calculated one by one, and then the difference is summarized according to the liquidation object to form the receivable or payable amount. In short, figuring out how much to ask from whom today? How much should be given to whom?

Fund transfer refers to the transfer of receivables and payables through specific channels and methods. In short, it is clear through what channels, take response collection, pay payable.

Among them: clearing is completed within the Union Pay clearing system. The transfer of funds is done by UnionPay through the central bank’s large and small payment clearing system or the city clearing system.

The relationship between UnionPay clearing system and the Central Bank’s large and small payment clearing system

Whether it is inter-bank clearing or receipt-clearing, UnionPay, as a licensed participant, joins the large and small payment clearing system to complete the fund transfer of bank card exchange business.

Through the large amount payment system, UnionPay realizes the two-way fund transfer with the clearing accounts of domestic member institutions, which corresponds to the inter-bank clearing of UnionPay’s clearing method.

Unionpay realizes one-way fund transfer with domestic third-party institutions and merchants through micropayment system and local clearing system. This part corresponds to the receipt settlement of UnionPay’s clearing method.

In the large payment clearing system, UnionPay enjoys greater privileges than commercial banks, because unionPay can debit or credit each other’s accounts, while commercial banks can only credit each other’s accounts. In the large payment clearing system, only the Treasury registrar still enjoys the debit privilege, and its debit operation needs to be secured by Treasury bonds.

Clearing account vs. settlement account

Unionpay’s domestic clearing accounts are all opened at the People’s Bank of China, and the cross-border business clearing accounts are opened at the agent clearing banks (Bank of China and HSBC).

All the clearing accounts of domestic member institutions shall be opened at the People’s Bank of China. Banks generally open reserve accounts and reserve accounts at the People’s Bank of China, and generally use their reserve accounts for the settlement of UnionPay.

Settlement accounts of domestic merchants and third-party institutions are opened in commercial banks.

Bank card receipt (unionPay direct connection) fund flow and information flow

Let’s take a look at the process by swiping a pos card

• The user swipes the card at the POS machine of the receiving institution or bank. (Information flow)
• The receiving institution or the receiving bank sends the consumption message to UnionPay. (Information flow)
• The UnionPay transaction system records the transaction data and sends the consumption message to the issuing bank. (Information flow)
• The issuing bank will deduct the fees from the consumer card in real time, complete the real time settlement, and reply the message to UnionPay. (Capital flow)
• Unionpay updates transaction data and replies messages to the receiving institution or bank. (Information flow)
• Unionpay completes the settlement in its clearing system. (Information flow)
• Through the large amount payment system, UnionPay completes the transfer of funds (inter-bank settlement) (capital flow) from the clearing account of the receiving bank and the card issuing bank.
• Through micropayment system or local clearing system, UnionPay completes the transfer of funds (receipt clearing) (capital flow) from settlement accounts of third-party receipt institutions and merchants.

Even in the case of the closure of large payment system and small payment (such as the Spring Festival upgrade), there will be no impact on users’ cross-bank swiping transactions through POS or ATM (cross-bank support) (only information flow is involved). The transfer of funds involving actual capital flows can be delayed. However, if it is an inter-bank transfer through the bank’s online banking, it cannot be carried out in the case of the upgrade of the central bank system because of the need for large and small payment or inter-bank clearing system of online payment by the central bank.

The end of the

Today to share with you is basically some of the basic concept of payment, small 66 is going to a whole payment design white paper series, the payment design to all aspects to share with you, well today to this, I am small 66, three days fishing, two days sun net!