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A Comprehensive Guide to E-Payment Systems

person using card to pay for something online

A Comprehensive Guide to E-Payment Systems

If you buy goods and services online, you will more than likely have a good understanding of how to make a payment, purchase whatever it is you want, and then wait for it to arrive either via an immediate download or through the post or courier service.

How it all works, however, is something more of a mystery. For many, the fact that it does work is enough – they don’t need to know the ins and outs and the more technical aspects. For a business owner contemplating using such a system, it is useful to know more about how it all works to enable you to run your business. And that is what this guide is all about. By the end, you will hopefully have all the information you need to ensure that you choose the right payment system for you, and you make your customers happy in the process. What more could you ask for?

What Is An ePayment?

The word ePayment stands for ‘electronic payment’, and, as mentioned above, the most simple definition is a payment made online for goods and services. This is, technically, exactly what it is, but there is, of course, a lot more to it and a lot more involved than what we can all see.

How Does The Electronic Payment System Work?

When you make an online payment, it seems to happen instantly, which is why many people don’t ever think about everything that is involved in the process. But if you do want to know, we’ve broken it down for you.

The Customer

Every purchase begins, of course, with the customer. That customer adds items from the merchant’s site to their virtual basket or cart, and then they proceed to the checkout where they will need to fill in their name, address, and payment details (their card number, expiry date, and the CVV code, which are the three digits on the back of the card). If they have used the site before they may be able to log in and have all of that information already in place, stored securely from a previous transaction.

Once they complete this action, their bank may carry out an additional layer of security checking.

Payment Authentication

The next step is authentication for the payment. The payment gateway starts to open and will open further still if all the card details and address details match up. If not, the gateway will close and the transaction won’t be made. Although this can be a frustration for people who have simply typed in the wrong expiry date or digit of the card number, it is an excellent safety feature and, should something go wrong at this stage, it is far better to stop the entire transaction than to continue down the line and cause problems elsewhere.


Once the payment has been authenticated and authorised, it can then be sent to the merchant’s account. The online payment provider is the middleman, in this case, receiving the payment from the buyer’s bank account and then sending it to the merchant’s bank account. Although the process may sound like a long one, it all happens in an instant, making ePayments fast as well as secure.

What Are The Different Types of Payment Methods?

As with anything and everything these days, there are a variety of different ePayment options open to vendors and buyers, depending on the amount spent and the goods bought. We’ve already mentioned credit and debit cards, but as well as the physical means of paying, there are different versions of the ePayment system too. Here are some of the most popular.

One Time Payment

The one-time payment is the most commonly used form of ePayment around. This is what happens when you make just one payment for something – you have browsed the internet, found something you liked and bought it using ePayment. That’s it. All the processing happens as we’ve already explained, and you should receive an email confirmation and receipt and, in time, the goods themselves.

Recurring Payment

Next comes the recurring payment. This is the type of payment used to pay a monthly bill, for example. It’s a regularly scheduled payment in the form of a direct debit, and the money is taken automatically when it is due (usually once a month). This works in the same way as the standard ePayment system, only it is done on a more automated basis, meaning that the payment won’t be forgotten by either party. The only complication comes when there is not enough money to cover the payment – depending on the system used, there might be an automatic second attempt to obtain the money, or there might not. It is important to know which it is so that the payment can be arranged as soon as possible if it is not going to be taken automatically.

Online Bank Payment

If you want to withdraw money from your bank account online, you want it to happen instantly, and for the amount that you requested. This is what happens with an online bank payment. Log on as normal to your online banking site, fill in the details of what you want to be transferred, and it should happen straight away. This could be to pay a bill or to transfer money into a different account of your choosing, such as a savings account.

What Are The Advantages of the Electronic Payment System?

As a business owner, there are many advantages to be had from using an ePayment system so that customers can easily and quickly buy from you.

Faster and More Convenient

One of the biggest advantages of using an ePayment system is the speed and convenience it offers customers. They can choose to buy items from your site at any time of the day or night, whenever suits them. They don’t have to wait for a cashier to be present to take their money or process their card payments since it is all automated. Customers can also buy from any website in the world giving them more choice.

Using websites to buy goods means that customers don’t have to leave their own homes in order to get what they want. This is much more convenient; it means they don’t have to worry about public transport, parking, standing in line or finding that the item they want is out of stock after the effort of getting there, and so on. They can buy what they want at any time from anywhere, quickly and easily.

More Sales

For the merchant, ePayment systems certainly result in more sales. Making it easier and easier for people to part with their money means that they are much more likely to spend it online than ever before. Not only that, but the safety and security of ePayments have increased markedly over the past few years, so not only do they know they are saving time by buying online, they will also be able to do without worrying that their payment and contact details will fall into the wrong hands.

Lower Costs

Something that merchants are always keen to find out more about is lower costs. When it comes to ePayments, they can easily save money on all of their transactions. Although it’s true that they will need to pay a percentage of each payment to their provider, this still works out to be much more convenient, and less expensive than the cost of processing cash or even cheques.

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