Everybody in this digital era needs convenience, especially when making payments. With the rise in e-commerce, the use of electronic payment systems has become popular. Such systems are creating big opportunities for businesses to expand in diverse locations without the worry and challenges of security during the transactions. Here is a comprehensive overview of Electronic Payment Systems and everything you need to know about them.
What does electronic payment involve?
Electronic payment refers to a process where customers make payment for services or products electronically. It allows people to pay for goods online without necessarily having to visit the physical store. Often, electronic payment is associated with e-commerce.
How it works
Electronic payment systems operate based on different systems — participants include the cardholder (consumer making the payment), merchant (business or individual selling services or products), issuer (financial institution offering the card), acquirer, payment processor (makes the official transaction), and payment gateway. For the optimal efficiency of the electronic payment systems, all the participants must be involved.
Types of electronic payment transactions
Electronic payment transactions are divided into two categories: recurring customer-vendor payments and one-time vendor payments.
- One-time vendor payments
These types of transactions are common among e-commerce websites. It involves a case where the holder of the card keys in their information on an e-commerce checkout page to allow remittance of money from their account to the merchant’s account in payment of a given product or service.
- Recurring customer-vendor payments
This category of transaction is available for customers who make regular payments for a certain product or service. However, you have to specify that the payment will recur for a certain period.
Types of electronic payment methods
Any transactions you make require you to use a given method of payment. Traditionally, you could use different payment methods such as checks and cash, among others. However, there is a slight difference in the way electronic payments are made. An electronic funds transfer (EFT) orchestrates the electronic payments, ensuring the transfer of money electronically between the cardholder and the merchant. Some of the common payment approaches that use electronic payment transfer include credit and debit cards, and eChecks.
Tips for keeping your data secure during electronic payment
The security of your payment and card information is important. All you need to do is make sure that you understand the standards of operations and the required security details. The following tips will help your transactions remain secure and effective all the time:
- Understand how the secure electronic transaction system works
- Make sure that any transaction you make is Payment Card Industry (PCI) compliant — it ensures secure transactions.
- Ensure that your e-commerce is based on SSL encryption technology to prevent fraudsters from stealing your data.
- Have a unique digital signature (an electronic fingerprint that is different for every cardholder) to enhance the security of your transactions.
Perhaps you have used a couple of electronic payment systems in the past, but now you know a few things about such systems and how to use them effectively and safely. Never make any electronic transaction over sites that are not SSL encrypted.