Payment instruments are the methods and tools used to execute transactions and settle obligations. The landscape now ranges from traditional cash to advanced digital solutions. For businesses, understanding payment instruments is critical for both bookkeeping and efficient invoice handling .
Categories of payment instruments
Payment instruments can be grouped in several ways, but the core distinction is between legal tender (compulsory) and voluntary instruments. We can also separate physical from electronic forms.
Legal tender
Legal tender must be accepted as payment for debts denominated in the same currency. In Norway this is regulated by the Central Bank Act and currency regulations.
Norwegian kroner – notes and coins
- Issued by Norges Bank.
- Must be accepted up to set limits (e.g., number of coins).
- Require physical handling and reconciliation.
Voluntary payment instruments
These rely on agreement between parties.
Cards (debit/credit)
- Widely accepted; low friction for consumers.
- Fees vary (interchange, acquirer, terminal).
- Accounting: settlement batches, card fees, chargebacks.
Online banking payments
- Direct account-to-account via bank/PSD2 interfaces.
- Lower fees; good for B2B.
- Accounting: remittance files (ISO 20022), automatic matching possible.
eInvoice / EHF
- Structured invoices with embedded payment details.
- Faster matching, fewer errors.
- Accounting: integrate with ERP; supports automation of incoming/outgoing flows.
Mobile payments (e.g., Vipps)
- Instant, convenient for consumers.
- Accounting: settlements often arrive as bank payouts; map to orders/receipts.
Cash equivalents (gift cards, vouchers)
- Represent a liability until redeemed.
- Accounting: deferred revenue; breakage policies.
Accounting considerations
- Documentation: Keep receipt/invoice links for each payment to support audit trails.
- Fees: Record as costs; separate VAT treatment where applicable.
- Cut-off: Ensure payments are recognised in the correct period (especially settlements after month-end).
- Reconciliation: Automate matching using bank feeds, card settlement files and POS exports.
- Fraud and chargebacks: Maintain controls for card-not-present and mobile payments; monitor disputes.
Choosing instruments for your business
- Retail/HOReCa: focus on fast POS (contactless), mobile; keep minimal cash.
- B2B: prioritise eInvoice/EHF and bank payments to reduce fees and improve matching.
- Subscription/SaaS: card-on-file or direct debit with mandate management.
- Cross-border: ensure IBAN/BIC, PSD2 compliance, and currency handling.
Summary
Payment instruments span cash, cards, bank transfers, eInvoice and mobile options. Choosing the right mix affects customer experience, cost, reconciliation effort and risk. Align your payment methods with your business model and automate reconciliation wherever possible.