What type of payment is referred to as a push payment?

A push payment refers to a transaction where the payer initiates and sends the funds to the payee. In this context, direct credits exemplify push payments because the sender authorizes their bank to transfer a specified amount of money to the recipient’s account, thus pushing the funds from their account directly to the payee's account.

Direct credits are characterized by the payer's action to initiate the payment, which is a clear distinction of a push payment. This process ensures that the payer is in control of the transaction, deciding how much money is sent and when, which aligns with the fundamental concept of a push payment.

In contrast, other payment types might involve different characteristics, such as debit card transactions, where the classification can vary based on whether the transaction is initiated by the consumer at a point of sale or not. PayPal payments may also involve nuances depending on whether the funds are transferred from one account to another or if they are held in the PayPal account before being moved, making the nature of the payment less definitive. Wire transfers, while they can be considered push payments since the sender is typically sending money directly, are often seen in contexts involving larger amounts or more formal banking processes rather than routine transactions.