Payments

How Money Moves: A Beginner’s Guide to Payment Methods

Nithya T

• 4 min read
How Money Moves: A Beginner’s Guide to Payment Methods

In a world where a transaction can happen in seconds, the systems that move money behind the scenes often go unnoticed. But for businesses—especially those expanding across borders—understanding how payments work is not optional. It’s essential.

This guide is for anyone who wants to make sense of the growing landscape of payment methods, whether you’re sending an invoice, building a checkout flow, or simply trying to grasp what happens when someone clicks “Pay Now.”

What Are Payment Methods Really?

At its core, a payment method is any mechanism that allows a transfer of money from one party to another. From a bank wire to a mobile wallet tap, these methods differ in how they move funds, the networks they run on, their costs, speed, security, and user experience.

You’re probably familiar with many of them already: credit cards, UPI, bank transfers, PayPal. But knowing which ones to use, when, and why—that’s where it gets interesting.

The Four Primary Types of Payment Methods

1. Bank Transfers

This is the original digital payment method. Whether it’s a domestic ACH payment in the U.S., a SEPA transfer in Europe, or a NEFT transaction in India, bank transfers are the standard for moving money securely between accounts.

Bank transfers are typically used for high-value B2B payments, payroll, and vendor settlements. Internationally, these often run on the SWIFT network—a messaging protocol that coordinates transfers across banks globally.

But they’re not always fast. A single international transfer might involve up to five intermediary banks, each adding time and fees. For businesses that depend on quick settlement and low transaction costs, this can become a bottleneck.

2. Card Payments

Credit and debit cards are the most common consumer-facing method of payment worldwide. They’re accepted nearly everywhere, settle quickly, and offer built-in fraud protection.

But for businesses, especially those operating globally, cards can introduce friction:

  • Processing fees often range from 1.5% to 3.5%
  • Cross-border transactions incur additional surcharges
  • Card fraud and chargebacks can introduce risk

Virtual cards are increasingly popular among companies looking to manage vendor payments or recurring subscriptions more securely, with enhanced control and reconciliation features.

3. Digital Wallets and Online Platforms

Payment platforms like PayPal, Google Pay, Apple Pay, and region-specific wallets (like Alipay or Paytm) take away much of the traditional complexity of payments. They offer speed, convenience, and increasingly strong security.

They’re especially valuable for consumer payments and online checkouts. These wallets store your payment credentials and use tokenization to ensure sensitive data is never directly exposed.

But for businesses, the story depends on where your customers are. Not every wallet works in every market. Supporting multiple options means better conversion—but also more complexity.

4. Real-Time and Local Payment Methods

The rise of real-time payment systems has fundamentally changed how money moves. Systems like UPI in India, PIX in Brazil, Faster Payments in the UK, and SEPA Instant in Europe allow for instant settlement—often at minimal or zero cost.

They’ve shifted user expectations: instant, 24/7, frictionless. Businesses that rely on outdated rails quickly feel the difference.

But local systems are, by design, local. Accessing them requires either having a local bank account or working with a provider that can connect you to these systems through local integrations.

Why Customer Preferences Are Non-Negotiable

Every market has its own norms—and payment methods are no exception.

In the Netherlands, consumers prefer iDEAL. In Germany, Giropay and SEPA Direct Debit dominate. In India, UPI is the default. In the U.S., cards still rule, but digital wallets are closing in.

For any business expanding into new regions—or just trying to improve their conversion rate—offering the right payment method is a straightforward yet impactful lever.. According to multiple industry reports, checkout abandonment rates can drop significantly when local or preferred payment methods are offered.

The takeaway: what works in one market can fail in another. Tailoring payments to match local behavior isn’t just smart. It’s required.

What’s Actually Happening Under the Hood?

When someone makes a payment, there’s a lot going on in the background: data routing, authorization, security checks, regulatory compliance, and, ultimately, the movement of funds.

This all happens over payment rails—the underlying infrastructure that connects banks, processors, and platforms.

There are two primary types:

Global Payment Rails

These include card networks like Visa and Mastercard, as well as SWIFT for international wires. They’re reliable and universal—but not always optimized for speed or cost. A SWIFT wire, for example, can take days and incur several layers of fees.

Local Payment Rails

These are region-specific systems designed for domestic speed and efficiency—like India’s UPI or the UK's Faster Payments. They offer lower costs, instant settlement, and higher reliability—if you’re integrated with them.

Many modern fintech platforms (Glomo included) operate by stitching together local rails across multiple countries. This allows businesses to send and receive payments globally while leveraging the benefits of local systems: speed, trust, and lower costs.

Security and Compliance: The Stakes Are High

Handling payments means handling trust. It also means dealing with data, regulation, and risk.

Key compliance concepts include:

In addition, businesses operating globally must stay on top of local regulations like PSD2 in Europe or data protection laws like GDPR. Non-compliance isn’t just expensive—it can erode customer trust in seconds.

So, What Should Businesses Do?

Understanding the payment landscape helps businesses:

  • Choose methods that match customer expectations
  • Optimize for speed, cost, and reliability
  • Navigate the complexity of operating across borders
  • Build systems that scale with them, not against them

At Glomo, we sit in this ecosystem, offering bank transfers, card-based payments, and pay-by-bank flows to help businesses manage how money moves—especially in B2B contexts.

Final Thoughts

Payment methods may seem like background noise—until they slow you down, cost you money, or lose you a customer.
Understanding them isn't just helpful. It’s strategic.

From traditional bank wires to real-time local payments, from global card networks to mobile wallets, the right mix of methods and rails can reduce friction, build trust, and unlock entirely new markets.

Money doesn’t move on its own. It needs systems, rails, and rules. Now you know how they work—and how to work with them.