In everyday life I pay for things like groceries in Cash or with my ATM card/credit card.
I am assuming that when wealthy people pay for big things, like billion dollar mansions, yachts, business deals or transferring a few hundred thousand to someone else that they don't work with the same instruments that we do.
What processes do they go through when paying for things that cost more than what most people earn in their lifetime?
This is second hand information as I am not a millionaire, but I work with such people everyday and have an understanding of how they handle cash:
The wealthy people don't.
Simple.
Definitely not if they don't have to.
Cash is a tool to them that they use only if they get benefit of it being a cash transaction (one of my friends is a re-seller and he gets a 10% discount from suppliers for settling lines using cash).
Everything else they place on a line of credit.
For people who "dislike" credit cards and pay using ATM or debit cards might actually have a very poor understanding of leverage. I assure you, the wealthy people have a very good understanding of it!
Frankly, wealthy people pay less for everything, but they deserve it because of the extreme amount of leverage they have built for themselves.
Their APRs are low, their credit limits are insanely high, they have longer billing periods and they get spoiled by credit card vendors all the time.
For example, when you buy your groceries at Walmart, you pay at least a 4% markup because that's the standardized cost of processing credit cards.
Even if you paid in cash!
A wealthy person uses his credit card to pay for the same but earns the same percentage amount in cash back, points and what not.
I am sure littleadv placed the car purchase on his credit card for similar reasons!
The even more wealthy have their groceries shipped to their houses and if they pay cash I won't be surprised if they actually end up paying much less for fresh (organic) vegetables than what equivalent produce at Walmart would get them!
I apologize for not being able to provide citations for these points I make as they are personal observations.
While you would probably not use your ATM card to buy a $1M worth mansion, I've heard urban legends about people who bought a house on a credit card. While can't say its reliable, I wouldn't be surprised that some have actual factual basis. I myself had put a car down-payment on my credit card, and had I paid the sticker price, the dealer would definitely have no problem with putting the whole car on the credit card (and my limits would allow it, even for a luxury brand).
The instruments are the same. There's nothing special you need to have to pay a million dollars. You just write a lot of zeroes on your check, but you don't need a special check for that. Large amounts of money are transferred electronically (wire-transfers), which is also something that "regular" people do once or twice in their lives.
What might be different is the way these purchases are financed. Rich people are not necessarily rich with cash. Most likely, they're rich with equity: own something that's worth a lot. In this case, instead of a mortgage secured by the house, they can take a loan secured by the stocks they own. This way, they don't actually cash out of the investment, yet get cash from its value. It is similarly to what we, regular mortals, do with our equity in primary residence and HELOCs. So it is not at all uncommon that a billionaire will in fact have tons of money owed in loans. Why? Because the billions owned are owned through stock valuation, and the cash used is basically a loan secured by these stocks. It might happen that the stocks securing the loans become worthless, and that will definitely be a problem both to the (now ex-)billionaire and the bank. But until then, they can get cash from their investment without cashing out and without paying taxes. And if they're lucky enough to die before they need to repay the loans - they saved tons on money on taxes.
I was once the personal assistant to two wealthy NYC sisters. They did not pay for anything. For example, if we were riding the subway, I would pay, and be reimbursed by the Company. They had multiple residences and investment properties. Each property was purchased through a separate Limited Liablity Corporation, and paid for by the Company.
When they purchased, donated or sold art, it was through their family Foundation.
Their income primarily came from a draw of funds from the family estate, although one of them worked as an architect, which provided further income.
Most likely Cashier's Check, Certified Check, or a Wire Transfer if they are paying in "cash" (in full- e.g. a 40 million dollar house in Palm Beach) through their private bank services.
