5 Most Commonly Used Ecommerce Payment Systems
When setting up an ecommerce business, it is given that you will need a solid method of online payment for your customers. This system must not only be robust but also easy to navigate for your customers and at the same time secure enough to ensure that there is no breach for your clients as well as your business.
What is an Ecommerce Payment System?
Without going into too much depth of it, an ecommerce payment system is a mode of payment for goods or services, without using cash or cheque. It is popularly called the electronic payment system.
The growing ecommerce business combined with internet banking has also resulted in the growth of ecommerce payments. Businesses prefer it over conventional mediums primarily because it means reduced paperwork, transaction costs, and personnel costs. The systems are user-friendly and consume less time than manual processing and help businesses extend their market reach. Naturally, over the years, technology has been developed to increase, improve, and provide secure e-payment transactions, with end-to-end traceability.
What are the different Ecommerce Payment Systems?
There are various instant payment methods available, like a card or bank transfers. With the advent of systems like UPI, mobile payments, mobile wallets, etc. payment space is shifting more towards the digital side ever more than before. In such a scenario, it is imperative that an ecommerce business provides more than one payment method, by enabling different payment methods, to enhance the opportunities of conversion.
1. Card Payments
Using your debit/credit card is perhaps the most common method of payment in today’s world. As a global payment solution, by enabling payment acceptance via cards merchants can reach out to an international market.
The difference between a debit and credit card payment is that with a debit card, the customer can only pay for purchased goods with the money that is already there in their bank account; whereas in a credit card, the amounts that the buyer spends are billed to them and payments are made at the end of the billing period.
2. Bank Transfers
Internet banking has made bank transfers just a click away. Customers can now use bank transfers to pay for online purchases without any hassle or delay. A bank transfer is secured and assures a customer that their funds are safely used owing to authentication and approvals by the customer and the bank.
3. E-wallets & Mobile App Based Payments
Consider an E-wallet to be like your actual wallet, only digital!
An E-Wallet is a prepaid account that allows the customer to store multiple credit cards, debit cards, and bank account numbers in a secure environment. This means turnkey payments because all your info is available at your fingertips. Additionally, e-wallets can also function in combination with mobile wallets through the use of smart technology such as NFC (near field communication) devices, and by tapping on an NFC terminal, instant fund transfer can be done!
Recently, especially in the Asia Pacific, the concept of e-wallets, especially mobile app-based payments like Google Pay, Paytm, etc. have emerged, with almost the entire online as well as offline shopping sectors comfortably engaged in transacting through these mediums. The funds are directly deposited right in the wallets or the account of the businesses, in an instant.
4. Prepaid Card or Smart Card
More common with minors or people with no bank accounts, a prepaid card or a smart card is embedded with a processor on which a customer’s personal information is stored. It can be loaded with funds at any time to make online transactions. Once the funds are used up, customers can once again load the amount and start using it again.
In E-Money transactions, the amount gets transferred from one financial body to another financial body without any involvement of a middleman. E-money transactions are faster, convenient, and saves a lot of time.
Payments done through credit cards, debit cards, or smart cards are examples of e-money transactions. Another popular example is the e-cash. In case of e-cash, both customers and merchants have to sign up with the bank or company issuing e-cash.
What does an Ecommerce Payment System mean for your business?
If you are an ecommerce business, it is a must for you to have an online payment system. Depending on your requirement, you can individually link these payment systems or create a payment gateway wherein a multitude of options are available to your customers.
It is always a good idea to have multiple options, primarily because it ensures better conversion rates. Your customer can pick whatever payment method they desire, which creates a sense of ease.
Pros and cons of an E-payment System
E-payment systems are made to facilitate good commerce through easy transactions. Some of its many benefits are:
With advantages, come some disadvantages. For example, ecommerce fraud is growing at 30% per year. Also for some people, storage of sensitive financial information on your database is a problem. While it may be secure, the perception of a security breach will always exist. Internet connection is a prerequisite, making it impossible to use otherwise.
With that said, ecommerce payment systems are constantly evolving and getting faster, better, and more secure.
But still, credit/debit card payments remain the most preferred choice. The most important takeaway here is that for your business to become internet friendly, having a good ecommerce payment system is a must. And for you to have an effective ecommerce system, you must know your target audience and their needs in order to provide the most convenient and relevant experience.