Skip to content

New payment instruments that come about because of incentives

Do you have rewards? Nowadays, rewards have a different meaning that is no longer that of something that is given because of achievement. We can gain rewards from our purchases. When you have a retail app such as that of a supermarket, you’ll be engaged to spend more because you can earn points. There are rewards for spending in a store and those points are considered as payment instruments.


Accepted as payment 

A payment instrument is accepted for making a payment transaction. The new payment instruments like reward points. The most common payment instrument that we use is that of banknotes and coins. There are other payment instruments such as debit cards and credit cards. 

Reward points 

Then, there are those reward points. These points are considered as payment instruments because it can be used to make a payment transaction. These rewards points are typically earned when there is a purchase done and the points are added to the account. Shopping sites have apps that do not only have the catalog but payment methods and those incentives such as rewards.

Paper payment instruments 

Gift certificates are also payment instruments. Just like checks, these have an indicated amount to show its value. There are other similar paper payment instruments such as traveler’s cheques. These paper payment instruments are not acceptable in all establishments but only at selected stores and their affiliated network of retail stores. These days, there are still paper payment instruments like gift certificates but there are also a lot of those that e-gift certificates that may be purchased and used online.

Who issued the payment instrument? 

The acceptance of a payment instrument is not global. Like currency, there is no one-world currency that can be used in all nations and accepted in all facilities and establishments. However, there are various payment instruments are accepted in the locality or specifically by the one that issued it. Government-backed payment instrument such as banknotes and coins that are issued by their central bank is the local currency of the country. For a store, the reward points might only be used exclusively for their store and possibly with other stores that are under the same mother company or in their network. 

As good as cash

When you have points or gift certificates, these are as good as cash. Though not widely accepted, it has the value that is required to make a purchase. Even if these reward points have to be earned by doing certain activities or are given for free, it still has value. Such points can be used to deduct from the total amount due or for full-payment. 

Payment instruments 

The traditional way to pay is by using cash. There are different payment instruments and some are called cash, such as dollars. There are physical payment instruments and virtual payment instruments. In the world of money, as long as it is accepted for a payment transaction and has a standardized value, whatever form it takes, it is considered as a payment instrument.