Payment Systems and Ecommerce - PowerPoint PPT Presentation

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Payment Systems and Ecommerce


Here is how payment systems and e-commerce works. Kindly refer the document to know in detail about the process. – PowerPoint PPT presentation

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Title: Payment Systems and Ecommerce

Payment Systems and Ecommerce
  • A payment system is a system for the transfer of
    money. What makes it a "system" is that it
    employs cash-substitutes traditional payment
    systems are negotiable instruments such as drafts
    (e.g., checks), credit cards and other charge
    cards, documentary credit (such as L/C) and
    electronic funds transfers. Some payment systems
    include credit mechanisms, but that is
    essentially a different aspect of payment.
    Payment systems are used in lieu of tendering
    cash in domestic and international transactions
    and consist of a major service provided by banks
    and other financial institutions. In the US, they
    are regulated by different state statutes (UCC)
    and Federal regulations.
  • Additional forms of payment systems (including
    physical or electronic infrastructure and
    associated procedures and protocols) are used to
    settle financial transactions in automated teller
    machine networks, stored-value card networks,
    bond markets, currency markets, and futures,
    derivatives, or options markets, or to transfer
    funds between financial institutions. Due to the
    backing of modern fiat currencies with government
    bonds, payment systems are a core part of modern
    monetary systems.

  • The term electronic payment can refer narrowly to
    e-commerce - a payment for buying and selling
    goods or services offered through the Internet,
    or broadly to any type of electronic funds
  • An e-commerce payment system facilitates the
    acceptance of electronic payment for online
    transactions. Also known as a sample 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. In the early years of B2C
    transactions, many consumers were apprehensive of
    using their credit and debit cards over the
    internet because of the perceived increased risk
    of fraud. Recent research shows that 90 of
    people in the United Kingdom still do not shop
    online because they do not trust online payment
    systems. However, 54 do believe that it is safe
    to shop online which is an increase from 26 in

  • There are numerous different payments systems
    available for online merchants. These include the
    traditional credit, debit and charge card but
    also new technologies such as digital wallets,
    e-cash, mobile payment and e-checks. Another form
    of payment system is allowing a 3rd party to
    complete the online transaction for you. These
    companies are called Payment Service Providers
    (PSP), a good example is Paypal or WorldPay.
  • A payment service provider (PSP) offers
    merchants online services for accepting
    electronic payments by a variety of payment
    methods including credit card, bank-based
    payments such as direct debit, bank transfer, and
    real-time bank transfer based on online banking.
    Some PSPs provide unique services to process
    other next generation methods (Payment systems)
    including cash payments, wallets such as PayPal,
    prepaid cards or vouchers, and even paper or
    e-check processing.
  • Typically, a PSP can connect to multiple
    acquiring banks, card, and payment networks. In
    many cases, the PSP will fully manage these
    technical connections, relationships with the
    external network, and bank accounts. This makes
    the merchant less dependent on financial
    institutions and free from the task of
    establishing these connections directly -
    especially when operating internationally.

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