Payment in kind

Payment for goods and services made in the form of other goods and services, not cash or other forms of money. Usually, payment in kind is made when the payee returns with the same kind of good or service. For example, if someone's tire blows out, the payee will buy another tire to replace the first one. In the securities world, Payment-In-Kind Securities pay bondholders in more bonds instead of cash interest. Payment in kind is different from Barter because the payer gets the same goods and services in return, not other goods or services of equivalent value, as is the case in barter.

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See also: PIK loan

Payment in kind refers to payment for goods or services with a medium other than legal tender (anything can be used as money, but legal tender is what the State accepts for all debts).

Etymology

Look up payment in kind in Wiktionary, the free dictionary.

“Kind” (or sometimes kine) in this context is an archaic noun meaning cattle, from the Middle English word kyn. The term originates from a period in history when livestock were a common means of exchange.^{[citation needed]}

Finance

Main article: PIK loan

In modern finance, when a bond pays in kind (PIK), it means that the interest on the bond is paid other than in cash, most commonly by increasing the principal. When cattle was used as collateral any calf born would be kept by the lender as the payment, or better said, interest. This how "in kind" became a term used in finance.

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