A transaction is a money transfer from a payer to a payee. Person A gives person B an agreed amount of money for a product/service. The transaction, though, can also take place between private individuals. For example, you are sending money to a relative/friend.
Examples of transactions in daily life:
- You pay for lunch at a Chinese restaurant. Once you swipe a credit card at POS, the transaction happens.
- You send money to your French tutor for her service via your mobile banking app.
- You pay an electricity bill via your mobile banking app.
- You purchase clothing online and enter your credit card details to accomplish the payment.
- An external transaction is an exchange between the company and another entity.
Transaction fees for merchants
Merchants who sell their products/services online face the transaction fees. Per-transaction fees vary. For example, PayPal merchants pay 2.9% per transaction + a fixed fee based on currency, while PaySpacelv merchants pay 1.2% per transaction. That is to say; whenever someone buys a product/service from a merchant’s website, he is obligated to pay a fee.
Transaction fees for individuals
Individuals also face transaction fees. Usually, they appear when you send money overseas. Fees are also being implied when transferring money to a person who holds a credit card from a different bank than yours.