Financial Operation and Banking Transaction

A financial transaction is any operation involving the making of a payment between parties, or ensuring that a payment is made.

A financial transaction is a deal, link or movement of funds carried out between a buyer and a seller in order to exchange an asset for payment. It entails a change in the financial status of two or more businesses or individuals. The buyer and the seller are separate legal entities or parties exchanging items of value, such as information, goods, services and money. A financial transaction is a two-way interaction: the first party gives money, and the second party receives goods.

A transaction, or bank transaction (from Latin transactio, meaning agreement or contract), is, in the general case, any deal made using a bank account. A distinction is made between online transactions, which are carried out in real time among all the parties concerned, and offline transactions.

As the final part of a banking operation, a transaction can be initiated by submitting a written order to the bank, by an electronic order through internet banking systems or other communication systems, or by means of some payment instrument.

History

In ancient times, non-monetary transactions were usually conducted through credit systems, in which goods and services were exchanged for a promise of future repayment. Credit has some drawbacks, including the requirement that traders or their intermediaries trust each other. Debts must eventually be settled, either with goods or by paying money or a substance of agreed value, such as gold and silver.

Credit systems have existed throughout history, as far back as archaeology can trace. By contrast, little evidence has been found of widespread use of pure barter, in which sellers meet face to face and the deal is completed in a single exchange.

After the creation of cities, states and empires, coins and paper money with set denominations were brought into circulation, making it possible to accumulate assets that did not spoil over time, unlike goods, which were perishable. As fixed currencies were gradually replaced by floating currencies in the 20th century, and thanks to the development of computer networks, the use of electronic money became a reality, and financial transactions grew sharply in speed and complexity.

Types

• making or withdrawing a deposit;
• transferring money from one account to another ;
• currency exchange ;
• providing services for the issue, purchase or sale of securities and other types of financial assets;
• granting or receiving a loan or credit ;
• insurance (reinsurance);
• providing financial guarantees and commitments;
• trust management of a securities portfolio ;
• financial leasing ;
• issuing, circulating and redeeming (distributing) state and other money lotteries ;
• providing services for the issue, purchase, sale and servicing of checks, bills of exchange , payment cards, postal money orders and other payment instruments;
• opening an account.

See also

• Accounting entry
• Transaction