If you have established an e-commerce business, you must be aware of your customer’s expectations of a fast and easy-to-use checkout process. With the advancement of technology and growing competition in the market, every e-commerce business is trying to provide its customers with a smooth checkout process.
Are you wondering how to stay competitive and improve your customers’ shopping experience? Don’t fret! You can easily make your customers happy by offering various online payment options. In this article, we’ll provide you with a complete list of e-payment systems in e-commerce to help boost your earnings.
Table of Contents
What is an E-commerce Payment System?
E-commerce businesses use electronic payment methods to receive money in exchange for their products or services. These payment systems have completely revolutionised the online business process and made it easy for businesses and customers.
An online payment system works by connecting a digital storefront to the payment processing network of your choice using a payment gateway. This processing network works with your bank to clear your funds.
An easy-to-use e-commerce payment gateway cuts out the need to enter card details or personal information multiple times. Instead, it works with third-party processing to smoothen the checkout process.
Related Read: What is ECOM Transaction?- How it works & Benefits
What are the Types of e-Commerce Payment Systems?
1. Credit Card
Credit cards are the base of modern e-commerce payment systems. Consumers use credit cards to fund other payment options like digital wallets. They are some of the most trusted payment systems because payment processors like Visa, American Express, Mastercard, etc., have been around for quite a while and are trusted by businesses.
2. Debit Card
Just like a credit card, a debit card is also a small plastic card with a unique number. It is important to have a bank account before getting a debit card. The primary difference between a debit card and a credit card is that in a debit card, the amount gets deducted from the bank account, which is supposed to have enough balance. This, however, is not the case with a credit card.
3. E-Wallet
An e-wallet is similar to a prepaid account that allows customers to store numerous debit cards, credit cards, etc., in a secure environment. It eliminates the need to enter financial information every time the customer wants to make a payment. The use of e-wallets is rising with each passing day.
4. Smart Card
Smart cards are similar to debit and credit cards in terms of appearance. However, they have a microprocessor chip embedded in them. This chip can store money, as well as a person’s personal and work-related information. Smart cards provide faster processing at lower rates.
5. NetBanking
Customers can easily make purchases by directly paying through their bank accounts. This e-commerce payment system does not require a customer to have a debit card for payment purposes, but it requires registering with their bank for the NetBanking facility. To make a purchase, the customer simply needs to enter their NetBanking ID and PIN.
6. Electronic Fund Transfer
Electronic Fund Transfer (EFT) is a digital transfer method between bank accounts. Users can send and receive money anytime and anywhere without visiting a bank or writing a cheque. All transactions are encrypted and verified by banks. It reduces the reliance on paper, as transactions are recorded electronically and do not require printing or mailing cheques. In simple terms, EFT saves time, money, and the environment.
Related Read: Online Money Transfer: Know All the Options to transfer Fund
7. Mobile Payments
These are transactions conducted using a mobile device, such as a tablet or smartphone, for various goods and services. They have become more prevalent in recent years as they offer convenience and security to both consumers and businesses. Mobile payments can be used in different situations, such as paying for purchases at retail stores by scanning a code or tapping a device, buying digital goods and services within apps, or transferring money between individuals. Mobile payments can also provide benefits such as rewards, discounts, loyalty programs, and cross-border remittances.
Related Read: What is the Difference Between a Barcode and a QR Code?
8. Buy Now, Pay Later (BNPL)
It is a kind of short-term financing option that lets customers make purchases and pay for them at a future date. BNPL is generally structured like an instalment-based money lending process that involves consumers, financiers, and merchants. Consumers can buy something upfront with minimal or no initial payment and clear the balance over 4 or fewer payments. BNPL typically charges no interest or fees, and consumers can choose to link their debit card, bank account or credit card for automatic or manual repayment. BNPL is a flexible and convenient payment option that can enhance consumer spending power and financial inclusion.
9. Cryptocurrency
It is digital money that is not controlled by any central authority. It uses cryptography and computers to secure and verify transactions. Bitcoin is the most popular cryptocurrency, which uses a public ledger called blockchain. To use cryptocurrency, a customer needs a wallet and an exchange. A wallet stores the private keys, which are a type of password. An exchange lets them buy and sell cryptocurrencies. Customers can use cryptocurrency to pay online to other users or merchants who accept it. Cryptocurrency is an innovative way of using money, but it has risks and challenges, such as volatility, security, and regulation.
10. Prepaid Cards
It is a financial tool that lets customers load a specific amount of money onto the card in advance. They can use it to make purchases online or in-store, pay bills, or even give it as a gift card to friends or family. Prepaid cards are versatile and convenient, as they do not require a bank account, credit check, or interest charges. One can only spend the amount they have loaded on the card, which helps them control their budget and avoid overspending. Prepaid cards are also safer than keeping cash. They are replaceable if lost or stolen. Some prepaid cards also offer rewards and discounts for using them.
11. Cash on Delivery
This method enables customers to pay for their online purchases in cash when they receive them. CoD is popular among customers who want to verify the products before paying and who may not have access to digital payment options. CoD reduces the risk of fraud or defective products and eliminates the need for credit or debit cards, bank accounts or online wallets. It provides more flexibility and control over the payment process. It helps customers overcome trust and convenience issues that may stop them from buying online.
Related Read: Different Types of Electronic Payment System
How to Select Which e-Commerce Payment Systems to Offer?
Here are some factors to consider when selecting which payment system in e-commerce to offer:
1. Target audience
You should understand the preferences and expectations of your target customers. This includes their preferred payment methods, their level of trust in online transactions, and their willingness to pay extra fees or charges. To gather this information, you can conduct market research, such as surveys, interviews for focus groups.
2. Geographical reach
Consider the availability and popularity of different payment systems in the regions or countries you operate in or plan to expand to. Some payment systems may not be supported or widely used in certain markets, while others may have specific legal or regulatory requirements.
3. Types of products or services
Look at the nature and value of the products or services that you offer, such as whether they are physical or digital, subscription-based or one-time, low-cost or high-end, etc. Different payment systems may have different transaction features and benefits, such as recurring payments, refunds, chargebacks, dispute resolution, etc.
4. Fees and costs
You should compare the fees and costs associated with different payment systems. This includes transaction fees, currency conversion fees, setup fees, maintenance fees, etc. Consider how these fees and costs affect your profit margin and pricing strategy.
5. Security and fraud prevention
Ensure that adding a payment gateway to your system does not hinder security. It should also be reliable and comply with the relevant standards and regulations for data protection and privacy. Implement measures to prevent and detect fraud, such as encryption, authentication, verification, etc.
Razorpay Provides Access to Multiple e-Commerce Payment Systems
Whether you are just starting your e-commerce business or already have a fully established online footprint, payments are always a core component for staying and succeeding in the market.
Cart abandonment issue is on the rise, and one of the reasons is that customers do not find their preferred e-commerce payment system. With Razorpay, you can enable different e-commerce payment systems to enhance customer experience. If one payment system fails, your customer can immediately switch to another without feeling stuck.
Conclusion
E-commerce payment systems play a crucial role in online businesses by facilitating secure and convenient transactions. Different types of payment methods, such as credit cards, debit cards, cryptocurrencies, and digital wallets, offer flexibility to customers. Choosing the best payment gateway is essential for a seamless customer experience.
Frequently Asked Questions (FAQs)
1. What is an e-commerce payment example?
An example for e-commerce payment is when a customer purchases goods online and completes the transaction using an electronic payment method. This could include using a credit card, a debit card, NetBanking, UPI or a mobile wallet.
2. What is the most popular e-payment system?
The most popular e-payment system in India is the Unified Payments Interface (UPI). UPI allows users to link their bank accounts to a mobile app and make instant payments directly from their bank account using just their mobile number. UPI has gained popularity owing to its ease of use and wide acceptance.
3. How do I add a payment system to my e-commerce website?
To add a payment system to your e-commerce website, you need to integrate a payment gateway. A payment gateway is a service that securely processes online transactions. You can choose from various payment gateways available in India and integrate them into your website through API integration or plugins.
4. How do I create an e-payment system?
Creating an e-payment system involves several steps:
- You need to have a secure platform for processing online transactions.
- You must establish partnerships with banks and financial institutions to facilitate payments.
- You need to develop user-friendly interfaces and ensure the security of customer data during transactions.
