E-commerce Payment System
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E-commerce Payment System

An e-commerce payment system (or electronic payment system) facilitates the acceptance of electronic payment for online transactions. Also known as a subcomponent of Electronic Data Interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.

Credit cards remain the most common forms of payment for e-commerce transactions. As of 2008, in North America almost 90% of online retail transactions were made with this payment type.[1] It is difficult for an online retailer to operate without supporting credit and debit cards due to their widespread use.[1] Online merchants must comply with stringent rules stipulated by the credit and debit card issuers (e.g. Visa and MasterCard) in accordance with bank and financial regulation in the countries where the debit/credit service conducts business.[2][better source needed]

For the vast majority of payment systems accessible on the public Internet, baseline authentication (of the financial institution on the receiving end), data integrity, and confidentiality of the electronic information exchanged over the public network involves obtaining a certificate from an authorized certification authority (CA) who provides public-key infrastructure (PKI). Even with transport layer security (TLS) in place to safeguard the portion of the transaction conducted over public networks--especially with payment systems--the customer-facing website itself must be coded with great care, so as not to leak credentials and expose customers to subsequent identity theft.

Despite widespread use in North America, there are still many countries such as China and India that have some problems to overcome in regard to credit card security. Increased security measures include 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.[3]

There are companies that specialize in financial transaction over the internet, such as Stripe for credit cards processing, Smartpay for direct online bank payments and PayPal for alternative payment methods at checkout. Many of the mediaries permit consumers to establish an account quickly, and to transfer funds between their on-line accounts and traditional bank accounts, typically via Automated Clearing House (ACH) transactions.

The speed and simplicity with which cyber-mediary accounts can be established and used have contributed to their widespread use, despite the risk of theft, abuse, and the typically arduous process of seeking recourse when things go wrong. The inherent information asymmetry of large financial institutions maintaining information safeguards provides the end-user will little insight into the system when the system mishandles funds, leaving disgruntled users frequently accusing the mediaries of sloppy or wrongful behavior; trust between the public and the banking corporations is not improved when large financial institutions are revealed to have taken flagrant advantage of their asymmetric power, such as the 2016 Wells Fargo account fraud scandal.

Methods of online payment

Credit cards constitute a popular method of online payment but can be expensive for the merchant to accept because of transaction fees primarily. Debit cards constitute an excellent alternative with similar security but usually much cheaper charges. Besides card-based payments, alternative payment methods have emerged and sometimes even claimed market leadership. Wallets like PayPal and Alipay are playing major roles in the ecosystem. Bitcoin payment processors are a cheaper alternative for accepting payments online which also offer better protection from fraud.{Accept Bitcoin |date=April 2019}}

Bank payments

This is a system that does not involve any sort of physical card. It is used by customers who have accounts enabled with Internet banking. Instead of entering card details on the purchaser's site, in this system the payment gateway allows one to specify which bank they wish to pay from. Then the user is redirected to the bank's website, where one can authenticate oneself and then approve the payment. Typically there will also be some form of two-factor authentication. Some services, like Trustly and Smartpay, let merchants embed its iframe on their website so consumers can pay without being redirected away from the original site.

It is typically seen as being safer than using credit cards, as it is much more difficult for hackers to gain login credentials compared to credit card numbers. For many eCommerce merchants, offering an option for customers to pay with the cash in their bank account reduces cart abandonment as it enables a way to complete a transaction without credit cards.

PayPal

PayPal is a global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as cheques and money orders. It is subject to the US economic sanction list and other rules and interventions required by US laws or government. PayPal is an acquirer, a performing payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee. It may also charge a fee for receiving money, proportional to the amount received. The fees depend on the currency used, the payment option used, the country of the sender, the country of the recipient, the amount sent and the recipient's account type. In addition, eBay purchases made by credit card through PayPal may incur extra fees if the buyer and seller use different currencies. On October 3, 2002, PayPal became a wholly owned subsidiary of eBay. Its corporate headquarters are in San Jose, California, United States at eBay's North First Street satellite office campus. The company also has significant operations in Omaha, Scottsdale, Charlotte and Austin in the United States; Chennai in India; Dublin in Ireland; Berlin in Germany; and Tel Aviv in Israel. From July 2007, PayPal has operated across the European Union as a Luxembourg-based bank.

PayKun

PayKun is a secured digital payment solution that enables online transactions to be conducted in an easy and seamless manner. It provides a hassle-free onboarding and easy setup without any kind of physical paperwork. Numerous payment options are made available for the acceptance and transmitting of the online funds. PayKun is an India based law-abiding company that also makes it possible for any company to be compliant with the legalities and Indian policies.PayKun Payment Gateway can be integrated on the websites with the relevant integration kit and SDKs. But there is no compulsion for having a website in order to receive the payments. Its payment links allow you to receive the payment in such a manner; it can be used as an embedded pay button on the blogs and other social media platforms.

MovoCash

MovoCash is a digital payments company that offers a multi-featured e-wallet app.[4] MovoCoin enables customers to conduct a one-time purchase with a digital card number. MovoChain is a web-based service that allows bitcoin and Bitcoin Cash holders to convert their crypto-currency into a prepaid account.[5] MovoCash accounts are FDIC insured in the United States.[6]

Google Wallet

Google Wallet was launched in 2011, serving a similar function as PayPal to facilitate payments and transfer money online. It also features a security that has not been cracked to date[when?], and the ability to send payments as attachments via email.[7]

Mobile Money Wallets

In developing countries many people don't have access to banking facilities, especially in tier II and tier III cities. Taking the example of India, there are more mobile phone users than there are people with active bank accounts. Telecom operators, in such locations, have started offering mobile money wallets which allow adding funds easily through their existing mobile subscription number, by visiting physical recharge points close to their homes and offices and converting their cash into mobile wallet currency. This can be used for online transaction and eCommerce purchases. Many payment options such as Zaad Services by Telecoms company in Somaliland (Independent State in Northern Somalia), Airtel Money and M-Pesa in Kenya and Tanzania, ATW are being accepted as alternate payment options on various eCommerce websites.

Stripe

Stripe supports more than one hundred currencies and it offers a few methods of online payment. Apart from debit and credit cards, Apple Pay, and Android Pay, Stripe support Bitcoin and American Express Checkout.In 2015, Stripe added a Relay product that allows developers to create a Purchase button in the third-party apps like Facebook, Pinterest, and Twitter.[8] Also, only Stripe allows users to receive payment via AliPay.

Other

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See also

References

  1. ^ a b Turban, E. King, D. McKay, J. Marshall, P. Lee, J & Vielhand, D. (2008). Electronic Commerce 2008: A Managerial Perspective. London: Pearson Education Ltd. p.550
  2. ^ Mastercard: Security Rules and Procedures-Merchant Edition (PDF). 2009. Retrieved: May 12, 2009
  3. ^ Turban, E. King, D. McKay, J. Marshall, P. Lee, J & Vielhand, D. (2008). Electronic Commerce 2008: A Managerial Perspective. London: Pearson Education Ltd. p.554
  4. ^ Scott-Briggs, Angela (2019-01-26). "Instant Money Transfer and Payments: Interview with MovoCash CEO and co-founder, Eric Solis". TechBullion. Retrieved .
  5. ^ "MovoCash's MovoChain Means Rapid Mobile Payments with Cryptocurrency". Payment Week. 2018-05-16. Retrieved .
  6. ^ "Next Gen Prepaid Cards are Here!". PaymentsJournal. 2018-09-12. Retrieved .
  7. ^ "Google Pay - A better way to pay". www.google.com.
  8. ^ "How Stripe is letting merchants turn their tweets into storefronts | WIT". WIT. 2015-09-04. Retrieved .

Further reading


  This article uses material from the Wikipedia page available here. It is released under the Creative Commons Attribution-Share-Alike License 3.0.

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