types of electronic payment systems

Abstract

With the advent of online shopping , most modern businesses have invested a considerable amount to be able to ply their goods and services to consumers without the latter having to leave the comfort of their homes or go to a business establishment for a product or service that they need . Since E-Commerce has become prevalent , businesses have had to come up with ways to facilitate payment electronically . The types of electronic payment systems are discussed in this , as well as how each mode of payment plays a part in E-Commerce nowadays

. The advantages and disadvantages of these types of electronic payment systems to both the consumer and the businesses are also discussed

Classifications of Electronic Payment Systems

Abrazhevich (2001 , classified electronic payment systems into two major categories electronic currency systems and credit-debit systems Electronic currency is similar to that of the regular money that we use Abrazhevich (2001 ) likened electronic cash as tokens ' that represent actual monetary value , much like banknotes affect the value of the actual money that we use . With this system , the customers use smart card systems and online cash systems to pay for whatever goods or services they wish to buy online . Mondex , Chipper , and Proton are some examples of smart card systems while Netcash , Ecash , and Millicent are examples of online cash systems

Electronic Currency Systems

Smart cards are similar to credit cards but they contain a chip embedded in the card which stores the customer 's account information , as well as how much electronic cash is left on the smart card . Customers are generally required to charge money into their smart cards in advance , either by transferring money from their bank account or purchasing token credits by depositing actual money to their smart card account . This particular feature has helped smart cards slowly gain popularity because it runs less of a risk for the customer to accumulate thousands of dollars in debt , either by overspending , or if their card falls into the wrong hands

Online cash systems , or e-cash are similar to smart card system except that they were developed primarily to provide anonymity for the customer . With it , online shoppers can purchase goods or services without having to divulge any more information about themselves than they have to . The lax security requirements of online cash systems can pose several problems for financial establishments , particularly money laundering issues . The banks also have to maintain a massive database which generally impedes growth and popularity of these types of systems

Credit-debit Systems

Credit-debit systems are described by Abrazevich (2001 ) as being represented by numbers in a customer 's bank account . These numbers are then transmitted between the business and the customer in an electronic manner , typically using the internet . This type of system can further be subdivided into generic systems , specialized systems , and credit-debit systems . Paypal , NetCheque and NetBill are kinds of generic systems Specialized Systems can also be referred to as e-mail based systems MasterCard , Cirrus , and Visa Electron are some examples...