The importance of researching the payment system is due to the need for its constant monitoring to determine the level of growth of the banking sector and the quality of banking services provided. It is necessary to note the high dollarization of national banking systems due to their linkage to international payment systems and the use of generally accepted world currencies. Improving the payment system is necessary to develop the national economy, improve the investment climate, and increase its competitiveness in the global world. The relevance is caused by the need for its constant modernization and adaptation to the growing requirements of contemporary realities. The purpose of this research is to determine the development of the payment system of the Kyrgyz Republic and its impact on the development of the banking sector to improve the investment climate of the national economy. Modernization of the payment system stimulates the introduction of technological innovations in all operations of the banking sector to maintain the entire banking system at a highly competitive level.