The payment system of a transitional economy need not evolve in a pre-determined way. Indeed, different countries have at times chosen to rely upon different payment instruments for non-cash payments. They have also sometimes allocated payment system functions and responsibilities differently between commercial banks and the central bank. The proximate causes of these differences are more historic and political than economic and are best illustrated by noting the differing evolution of the payment systems of the U.S. and Europe. The choices facing transitional economies in improving their payment system are outlined and their interrelationships noted. Issues important to this process, particularly in letting market needs influence the payment arrangements permitted and developed, are discussed. A summary checklist of information needed to adequately plan for payment system change is presented in an Appendix.