An electronic payment system is a mutual settlement system where buyers can make payments and sellers can accept electronic payments for goods and services.
The term “Internet payment system” is also frequently used. Such systems can be considered electronic analogues to traditional payment systems, where cash transactions are excluded, and payments are conducted over the Internet using bank cards or electronic money.
Examples of Internet payment systems. The most popular electronic payment systems involving the use of regular bank cards are Visa and Master Card. Electronic wallet systems such as QIWI, WebMoney, Visa Checkout, and Masterpass are also widely used. The world’s most popular payment systems facilitating online payment solutions are PayPal, Moneybookers, and Payoneer. The Alipay payment system holds a significant share of the Chinese market.
Types of payment systems
E-commerce is actively developing, the number of people wishing to conduct financial transactions online is constantly growing, and consequently, the number of payment systems is also increasing. These tools are becoming faster, more user-friendly, and more secure. Simultaneously, the number of cash transactions is steadily decreasing worldwide.
Currently, according to the type of electronic payment methods, payment systems are divided into the following categories:
- Specializing in online credit or debit card transactions. Internet acquiring enables such payments (for more details, see the link). This category also includes online payments made through banking applications, mobile wallets, and wireless payment systems;
- Working with electronic money. These can be either direct electronic wallets or payment intermediaries. This provides a straightforward option for businesses to interact with electronic money without traditional bank intermediation. This category also includes systems that utilize cryptocurrency wallets for payments.
Additionally, all payment systems can be classified as either national (operating within a single jurisdiction) or international.
Problems solved by electronic payment systems
The introduction of electronic payments has revolutionized business processes, significantly reducing paperwork, transaction costs, and overall workload. Furthermore, online payment systems solve the following problems:
- save time for both sellers and buyers, making payments simpler and faster;
- help business organizations expand market coverage;
- facilitate account management and statistics tracking;
- increase the reliability and security of payments (provided that proven payment systems are utilized);
- reducing the influence of the human factor when processing payments, resulting in a reduction in the number of errors.
Electronic payment systems are essential for all online stores, businesses offering online services, financial organizations, and individuals.
