Transitional economies are moving from being centrally-planned to being market-directed. To appreciate the structural and behavioral changes that payment systems in transitional economies face, it is necessary to first have a basic understanding of how payment systems actually operate in both centrally-planned and market economies. While there are some similarities in payment system operation between centrally-planned and market economies, the differences are more numerous. These differences, of course, are where the problems lie for transitional economies.