What are the various electronic payment systems?
The electronic payment system is a means whereby payment for goods and services are made possible in online business and as a tool to facilitate e-commerce on a global scale. Without electronic payment system, it will be difficult to transact business online and will substantially limit borderless economy where citizens of different countries can do business together as though they reside in the same economy.
The hallmark of a healthy business is the availability of choices for people to choose from in dealing with one another in business transactions. Without options in the electronic payment system, the same bottleneck the traditional currency as means of payment would have posed would be the fate of the online business. As a result, there are different types of electronic payment system as discussed below.
Types of electronic payment system
The payment system is a mixture of traditional and modern payment system adapted for online commerce. We can categorize the payment system according to methods of the transaction, and we can look at it from a single payment option. From credit card to debit card and smart card and e-money and electronic funds transfer (EFT). The type of electronic payment to be used will depend largely on the kind of transaction whether it’s a B2B, B2C or C2C transaction. As you have established businesses online so are the non–established people who are catching in on online business opportunities. The different types of electronic payment systems include:
- Credit card. Electronic payment offers international forex to automatically convert the exchange rates according to the country where the transaction originates. Credit card includes different actors including the cardholder, the merchant and issuing bank and the acquirer, and the brand. A credit card is a plastic card with unique user identity as provided by the issuer to the user to draw approved sum of money in payment for goods and services to be settled on a monthly cycle.
- Debit card. This is the same with a credit card except that the cardholder is expected to draw his spending from the amount already in his account with the issuing bank. As the cardholder spends, his account balance at the bank is being deducted to the amount withdrawn from it.
- Smart card. The appearance is much like the credit and debit cards. The way this works is to preload the card with some amount before spending it, and it reduces as the cardholder draws from it as he spends on purchasing goods and services.
- E-Money. Apart from the traditional means of money used every day, the advent of e-commerce and the internet came with its new form of money called e-money. The way this works is for an interested person to sign up for the account and fund their account using the traditional method of using their debit cards to buy e-money. When you have e-money, you need to look for merchants who accept your type of e-money to be able to spend. Examples include PayPal, Perfect Money, E-Cash, etc.
- ETF. Electronic fund transfer is a type of electronic payment where you use your traditional banking system to send money by transfer to the recipient’s account. The system works with individual country monetary policy.