A Beginner’s Guide to Payment Systems For E-Commerce
October 25th, 2010
Author: Mark Wilston
Category : ecommerce
Online Business has become rifer and has given a good exposure to plastic money. E-commerce has changed the trend and prospectus of business; it facilitates the acceptance of electronic payment for online transactions. E-commerce online payment system is being widely used with the increase in the use of Internet-based shopping and banking. In the early years, Business to Customer transactions were not so easy because people were afraid to use their credit and debit cards over the Internet because of the perceived risk of fraud but in a recent research shows that most of people prefer online shopping through their credit or debit cards.
To make the trade easy today there are several e commerce platform available in market like Magento, OsCommerce, and Payment Gateway etc. that provide numerous ways to transect online which include traditional credit, debit and charge card but also new technologies such as digital wallets, e-cash, mobile payment and e-cheque. Another form of payment system is allowing a 3rd party to complete the online transaction for you. These companies are called Payment Service Providers (PSP); a good example is Pay Pal or WorldPay. (Note PayPal also offers its own payment system)
Different Modes of E-commerce Payment System—
1- Credit Card and Smart Cards
Credit Cards and Smart Cards have become the most common forms of payment for e-commerce transactions. In North America almost 90% of online B2C transactions were made with this payment type. Now a days, to decrease the risk of fraud, more security steps are being taken by the government and banks to increase the use of plastic money, such as the use of the card verification number (CVN) which detects fraud by comparing the verification number printed on the signature strip on the back of the card with the information on file with the cardholder’s issuing bank.
A Smart card is similar to a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash which transfers from the consumers’ card to the sellers’ device. A popular smart card initiative is the VISA Smart card. Using the VISA Smart card you can transfer electronic cash to your card from your bank account, and you can then use your card at various retailers and on the internet.
2- Electronic Bill Presentment Payment (EBPP)
There are significant number of bills that consumer pay on regular basis, EBPP allows the consumer to view and pay bill online after checking the payable amount.
Following are three broad models of EBPP—
- Consolidation: Where numerous bills for any one recipient are made available at one Web site, most commonly the recipient’s bank.
- Biller Direct: Where the bills produced by an organization are made available through that organization’s Web site.
- Direct mail Delivery: Direct email delivery, where the bills are emailed to the customer’s In Box.
It has relieved the customer from the ache of sending check through post or visiting self.
3- Digital Wallet
A Digital Wallet’s function is much like a physical wallet. It was first conceived as a method of electronic money.
4- Mobile Payment
Mobile Payment is one of in haste electronic mode of payment which is growing all over the world especially in Asian and European countries. Instead of paying through other means of payment consumer can pay directly through his/her mobile for wide range of services and digital or hard goods such as:
- Music, videos, ring tones, online game subscription or items, wallpapers and other digital goods.
- Transportation fare (bus, subway or train), parking meters and other services.
- Books, magazines, tickets and other hard goods.