Payment methods are broadly classified into two types. Exchanging and Provisioning. In provisioning a third party must be involved from one party's account to another party. This is where Electronic Payments, more commonly known as Plastic Money comes into play.
Credit card, debit card, instant money transfers, and recurring cash or ACH (Automated Clearing House) disbursements are all electronic payments methods. Electronic payments technologies are magnetic stripe card, smartcard, contactless card and mobile handset. Mobile handset based payments are called mobile payments.
Electronic payment systems are software systems that enable online credit/debit/cash/smart card processing. Via an electronic payment system, users can browse an online catalog and purchase items online through automated online transactions. Launching an e-commerce website ultimately improves the way of doing business, increases level of sales, expands business to local and foreign markets and improves relationships with existing customers.
- Speed and Convenience: Consumers can find what they want to buy and purchase it quickly.
- Flexible Payment Arrangements- Electronic payments are also flexible. Many payment schedules allow for later billing or payment installments using a third-party vendor. Business websites typically give several options for customers to buy using a credit card, debit card or even a direct transfer from a bank account. This also allows several types of transactions that are only available online, such as peer-to-peer electronic transfers.
- Security- The flexibility that e-payments enjoy can also create security hazards. Malware and other hacking attempts can track keystrokes in order to copy account passwords and access payment information. Online databases can be hacked and important information can be stolen. Money can be stolen from online accounts.
- Payment System Collision- Since online payment systems are new and global in their perspective, problems can occur when it comes to applying them to all e-commerce businesses. Some types of payment that customers are used to depending on may not be available in other countries, even when purchasing online from those countries is an option.