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So personally I pretty much just use a credit/debit card for most purchases, but cash is not uncommon, and checks are often used for paying rent to landlords or some small businesses. Then there are money orders which I know nothing about pretty much. But wondering if there is anything else, and wondering what people do for larger transactions. The only other thing I can think of is direct deposit, or wire transfer (if that's different from direct deposit).

Say there are two small businesses doing a transaction. Business A is buying 10 products and 1 service from Business B, for a combined total of $10,000 (case 1) or $100,000 (case 2), $1M (case 3), and $1B (case 4). I chose these four cases because $10k would be a pretty sizable check, while there are examples like a contract between Sprint and Apple (or something like that) for $2B recently.

I'm wondering for these different "scales" if you would (a) pay in cash, (b) pay with check, (c) direct deposit, (d) wire transfer, or (e) something else. I don't think you would use a debit or credit card here, but I could be wrong. If it's (e), I wonder what the typical options are or ways of paying.

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    Slightly relevant: $2B contracts are usually not a single payment. – Ben Voigt Dec 24 '18 at 5:45
  • For the older generation traveler's checks was a thing and may still be useful for backup when traveling internationally. When you are around 100K+ checks (tellers & cashier's) is still a valid way of paying at point of transaction like a house or car. I would not be surprised if checks weren't still used for large infrequent transactions where the setting up electronic payment isn't justified. – Morrison Chang Dec 24 '18 at 5:50
  • It's not unknown for personal checks to be written for rather larger sums, e.g. Harold Hamm's $975 million divorce settlement. I suppose there's no reason why a business wouldn't write checks for similar, or even larger, amounts. – jamesqf Dec 24 '18 at 18:27
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Property transactions in Australia are typically settled via bank cheques. These transactions can run into multiple millions of dollars, so that covers all but your billion-dollar scales.

At the billion-dollar scale, you’re probably on a first name basis with the bankers’ bosses, giving you a lot of flexibility in relation to payment mechanisms.

Legal tender is so named because you can use it for transactions. I’m not aware of any legal limit to using cash, but you’d spend a lot of time counting $100 notes at the billion-dollar scale.

It appears that you may write cheques to any amount, so long as you are physically able to write the amount on the cheque and you have sufficient funds in your account, and the bank is willing to process your cheque. On that last point, knowing your bankers’ bosses can come in handy.

In Australia, internet banking is associated with a maximum daily transfer amount. You can split the transaction over multiple days, or you can try to persuade your bank that you need to temporarily increase your limit to the billion-dollar range.

By “wire transfer” I’m assuming you’re referring to telegraphic transfers. Since you pay your bank in full upfront (and the bank handles the inter-bank details from there), I don’t see any banking reason a legitimate billion-dollar transfer would be knocked back. There may be reporting issues or government limits, particularly if transferring funds across borders.

As for “something else”, barter is a valid mechanism for payment. For example, one company can pay for the purchase of another company’s shares by issuing its own shares. If the quantum is sizeable, though, this may affect shareholding-related control, thereby raising management issues, reporting, and regulatory matters etc.

So while I haven’t tested them personally, your options (a) to (e) are all available at the billion-dollar scale.

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Several years ago, I made a purchase for over $40K (US dollars), where it was important that the transaction go through very quickly. The vendor would have taken a credit card, but would have charged an additional 2% or 3% to cover the credit card fee. This was a transaction at a distance, so I could not physically hand him $40,000 in cash or a $40,000 check. Even if I could have handed him a $40,000 check, he did not know me, and I think he would have wanted to wait until the check cleared.

A wire transfer worked quickly and smoothly. (It was not for a car. We write personal checks for our rare car purchases, but we are well known at the dealer.)

At some point, and it probably varies from vendor to vendor, you will have to pay the credit card fee if you want to charge the item or service to your credit card. My feeling is that this point is at about $10,000 to $15,000. The wire transfer cost something like $35.00 (thirty five dollars).

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In the UK, there’s a banking transfer service called CHAPS that’s used for large transactions like house purchases. Unlike the BACS service used for normal bank transfers, CHAPS payments are guaranteed to arrive on the same business day. But there’s a fee of around £25, so it’s not used for small transactions.

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