How do credit/debit cards, checks and money transactions (including paypal) work?
In: Other
Well those are all different systems with different methods and requirements so it would be a lot to explain all of it piece by piece.
In very simple terms:-
A cheque/check is a written instruction from you to your bank to pay out money from your account. You fill it out and give it to the other party, they take it to their bank who contacts your bank to arrange for the money to be transferred from your account to theirs.
Debit cards are similar, but the instructions are handled electronically, bank to bank.
Credit cards allow you to transfer money to the other party that you don’t yet have. The bank allows you a sum that you can spend up to. Later they send you a bill for the amount and you can pay it off all at once or bit by bit. You can add to the total you owe later as long as you keep with in the limit the bank sets. They charge a fee (interest) on the amount you owe.
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