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[M378]Medicare Prospective Payment System

by Stanley Epstein, Sta

What is a payment system? I am reminded of lengthy debates around the office on just this question - and the heated and, at times, passionate discussion that ensued. My antagonist, who is also my partner, took one view and I took the other. The thrust and parry of the dialogue ebbed and flowed … long into the night over innumerable cups of coffee.

The Bank for International Settlements (BIS) definition of a payment system states; “A payment system consists of a set of instruments, banking procedures and, typically, interbank funds transfer systems that ensure the circulation of money”. (From “A glossary of terms used in payments and settlement systems”, Committee on Payment & Settlement Systems. BIS, Basel, Switzerland. March 2003 (Revised Edition)).

Armed with this definition we can examine the components that make up what we so glibly refer to as a “payment system”. This examination will help us see what a payment system really is.

The BIS definition focuses on “... instruments, banking procedures … interbank funds transfer systems”. Let us examine each in a little more detail.

• Instruments – a mere half century ago this was easy to define. Payment instruments were basically cash and cheques. Today however there is a vast range of payment instruments. Apart from the cheque and cash we now have giro-payments, electronic transfers, internet payments, debit orders, standing orders, credit cards, debit cards, electronic “cash” and so on. And the nature is each is vastly different from the other.

• Banking procedures – these cover a huge area. Anything that is not an instrument or that does not relate to how that instrument is moved, must, by definition, be related to a banking procedure. Here there are internal bank procedures (such as how a branch initiates payments), payments systems rules, the agreements (such as those between banks, between banks and their customers, between banks and the clearinghouse), national and international payment laws and payment regulations. We must also not forget the actual operational procedures, either manual or technology driven within individual banks that are used to initiate, verify and process the payment. All of these procedures are simply to get the payment ready for the next step, to move it to a transfer system.

• Interbank transfer systems – this covers local and national clearinghouses (for physical instruments such as paper), ACHs (automated clearinghouses for the electronic ones), message carriers (such as S.W.I.F.T. – Society for Worldwide Interbank Financial Transactions), switches for ATM transactions, the national and international credit card networks and so on. Missing from the BIS definition is the intrabank systems that give effect to payment instrument transfers within the same bank. These are transfer systems too.

The key word in the definition is “set” - for all these components have to be combined to make up a complete unit which achieves the desired outcome – just like a tea set with its cups, saucers, tea-pot, strainer (or perhaps a tea-bag holder), milk jug and sugar bowl are just the thing for carrying out correct ritual for brewing and serving tea.

Sure, one can have tea without all this but it's not really the same.

The analogy, while useful as a description ends here - in a payment system the missing components give rise to a serious problem – Risk.

Risk takes on many forms; credit risk, liquidity risk, legal risk, operational risk, settlement risk, systemic risk and put the whole fabric of the payment system in danger.

Despite this we often associate the word “system” with only the technology; the bits and bites, the hardware and the software. We tend to forget that there is a lot more that goes into making up a payment system.

So the next time that you write out a check or take that credit card from your wallet, give a thought to the process that you are initiating in a complex structure that we take so for granted - the payment system.

To start with, you need to set up an account with AdSense . Fill the online form, provide your personal information, furnish all tax details, select a mode of payment, enter PVN (phone verification number) and PIN (personal identification number). After furnishing these details, your account gets set up in Google AdSense .

When you generate an unpaid income of $100, Google sends you the payment check. For instance, if your entire unpaid income reaches $100 in January and you have furnished all the details as mentioned above, then you get a payment check in February end.

However, if your unpaid income has not touched the $100 mark, whatever earnings you have generated gets rollover to subsequent month. The amount accrues until total earnings reach $100. After this, you will receive the payment within 30 days.

How to Track the Income:

You can easily track your AdSense performance and income through the reports tab present in your account. This tab has, two more sub tabs, overview reports and advanced reports. To get general information of your income, refer to the overview tab. If you want comprehensive details of your account, go through advanced tabs.

To check previous records of the payment, refer to payment history. Now, click the link that reads out earning details. Check this link to know about payment details of each month. However, your name appears on the link only after you receive the first payment.

You can also view exchange rate to convert the payment in your local currency and check whether you have received the payments accordingly.

How to Calculate the Earnings:

At the last day of each month, Google AdSense system identifies your account and checks for generated amount, which has to be at least $100. Now, if your account contains $100 or may be more than that, the account is sent for verification and approval. Within few days of the subsequent month, the system sends you all details, which you can view by checking the history page.

Earning Issues:

After few days, the system processes your income and sends your payment, depending on the mode of payment you have chosen. If you do not receive this payment within 30 days or until 25th of next month, you will need to apply for reissue.

How to Hold the Payments:

If you do not wish to receive your check the other month, opt for payment holding. Here you just need to set up a self-hold in AdSense account. Although, you will not receive the unpaid income, the system accrues your earlier earnings. However, if you want to hold your account, you need to make the changes before 15th of the ongoing month.

Thus, you can keep a track of your Google AdSense payments.

Article Source : Pg. 236

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