Credit Based Payments
Credit Based Payments is a financial technology concept where transactions are authorized based on pre-approved credit limits rather than immediate fund availability. It enables deferred payment mechanisms, such as credit cards, buy-now-pay-later services, and lines of credit, by allowing users to make purchases up to a set credit threshold. This system underpins many consumer and business payment solutions, facilitating cash flow management and spending flexibility.
Developers should learn this concept when building e-commerce platforms, fintech applications, or payment processing systems that require credit-based transaction handling. It's essential for implementing features like installment plans, credit card processing, and risk assessment algorithms, as it directly impacts user experience, security, and compliance with financial regulations.