Financial transaction

A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment.

The most common type, purchases, occur when a good, service, or other commodity is sold to a consumer in exchange for money.

[3] The other main form of payment is credit, which gives immediate access to funds in exchange for repayment at a later date.

[6] Official systems of credit and debt were first created around 1800 BCE by the Babylonians, who established the first formal interest rate limits with the Code of Hammurabi.

[8] These often included gold or silver coins, along with non-metal objects such as cowrie shells, beaver pelts, and dried corn.

The lender agrees to give out a lump sum (the "principal") to the borrower, who pays back the loaned amount over a set period of time (called a "term").

[22] Mortgages are similar to loans, but are usually for a larger amount of money and over a longer term, often for buying real estate.

If the borrower fails to make the necessary payments on the mortgage, the lender has the right to claim and sell the property in a process known as foreclosure.

Financial transaction involving money and agricultural goods at a farmers' market
Silver coin of the Maurya Empire , from the 3rd century BC
Purchases can be made through the use of physical currency, such as cash.
Transactions are associated with accounts.