View source for Finance:E-commerce payment system

{{Short description|System that facilitates e-commerce transactions}}
An '''e-commerce payment system''' (or an '''electronic payment system''') facilitates the acceptance of electronic [[Social:Payment|payment]] for offline transfer, also known as a subcomponent of [[Electronic data interchange|electronic data interchange]] (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.

[[Finance:Credit card|Credit card]]s remain the most common forms of payment for e-commerce transactions. As of 2008, in North America, almost 90% of online retail transactions were made with this payment type.<ref name=Turban>Turban, E. King, D. McKay, J. Marshall, P. Lee, J & Vielhand, D. (2008). Electronic Commerce 2008: A Managerial Perspective. London: Pearson Education Ltd. p.550</ref> It is difficult for an online retailer to operate without supporting credit and debit cards due to their widespread use.<ref name=Turban/> Online merchants must comply with stringent rules stipulated by the credit and debit card issuers (e.g. [[Company:Visa Inc.|Visa]] and [[Company:Mastercard|Mastercard]]) in accordance with a [[Finance:Bank regulation|bank]] and [[Finance:Financial regulation|financial regulation]] in the countries where the debit/credit service conducts business.<ref>[http://www.mastercard.com/us/merchant/pdf/SPME-Entire_Manual_public.pdf Mastercard: Security Rules and Procedures-Merchant Edition] (PDF). 2009. Retrieved: May 12, 2009</ref>{{better source needed|date=July 2019}}

E-commerce payment system often use B2B mode. The security of customer information, business information, and payment information base is a concern during the payment process of transactions under the conventional [[Finance:B2B e-commerce|B2B e-commerce]] model.<ref>{{Cite journal |last1=Zhou |first1=Kai |last2=Zhao |first2=Weibin |last3=Zhou |first3=Huiyan |date=2022-01-01 |title=Research on model mechanism of B2B transaction based on delivery means of blockchain |journal=International Journal of Technology, Policy and Management |volume=22 |issue=1–2 |pages=114–140 |doi=10.1504/IJTPM.2022.122560 |issn=1468-4322|doi-access=free }}</ref>

For the vast majority of payment systems accessible on the public Internet, baseline [[Electronic authentication|authentication]] (of the financial institution on the receiving end), [[Data integrity|data integrity]], and [[Privacy|confidentiality]] of the electronic information exchanged over the public network involves obtaining a certificate from an authorized [[Certificate authority|certificate authority]] (CA) who provides public-key infrastructure (PKI). Even with transport layer security (TLS) in place to safeguard the portion of the transaction conducted over public networks—especially with payment systems—the customer-facing website itself must be coded with great care, so as not to [[Information leakage|leak]] credentials and expose customers to subsequent [[Identity theft|identity theft]].

Despite widespread use in North America, there are still many countries such as China and India that have some problems to overcome in regard to credit card security. Increased security measures include use of the [[Card security code|card verification number]] (CVN) which detects fraud by comparing the verification number printed on the signature strip on the back of the card with the information on file with the cardholder's issuing bank.<ref>Turban, E. King, D. McKay, J. Marshall, P. Lee, J & Vielhand, D. (2008). Electronic Commerce 2008: A Managerial Perspective. London: Pearson Education Ltd. p.554</ref>

There are companies that specialize in financial transaction over the Internet, such as [[Company:Stripe|Stripe]] for credit cards processing, Smartpay for direct online bank payments and  [[Company:PayPal|PayPal]] for alternative payment methods at checkout. Many of the mediaries permit consumers to establish an account quickly, and to transfer funds between their on-line accounts and traditional [[Finance:Bank account|bank account]]s, typically via [[Finance:Automated clearing house|automated clearing house]] (ACH) transactions.

The speed and simplicity with which cyber-mediary accounts can be established and used have contributed to their widespread use, despite the risk of theft, abuse, and the typically arduous process of seeking recourse when things go wrong. The inherent [[Physics:Information asymmetry|information asymmetry]] of large financial institutions maintaining information safeguards provides the end-user with little insight into the system when the system mishandles funds, leaving disgruntled users frequently accusing the mediaries of sloppy or wrongful behavior; [[Philosophy:Trust (social science)|trust]] between the public and the banking corporations is not improved when large financial institutions are revealed to have taken flagrant advantage of their asymmetric power, such as the 2016 [[Finance:Wells Fargo account fraud scandal|Wells Fargo account fraud scandal]].
==Methods of online payment==

There are varied types of electronic payment methods such as online credit card transactions, e-wallets, e-cash and wireless payment system.<ref name=":0">{{Cite journal|last1=Fatonah|first1=S|last2=Yulandari|first2=A|last3=Wibowo|first3=F W|date=December 2018|title=A Review of E-Payment System in E-Commerce|journal=Journal of Physics: Conference Series|volume=1140|issue=1|pages=012033|doi=10.1088/1742-6596/1140/1/012033|bibcode=2018JPhCS1140a2033F|s2cid=169710429|issn=1742-6588|doi-access=free}}</ref> Credit cards constitute a popular method of online payment but can be expensive for the merchant to accept because of transaction fees primarily. Debit cards constitute an excellent alternative with similar security but usually much cheaper charges. Besides card-based payments, alternative payment methods have emerged and sometimes even claimed market leadership.

=== Bank payments ===
This is a system that does not involve any sort of physical card. It is used by customers who have accounts enabled with Internet banking. Instead of entering card details on the purchaser's site, in this system the payment gateway allows one to specify which bank they wish to pay from. Then the user is redirected to the bank's website, where one can authenticate oneself and then approve the payment. Typically there will also be some form of two-factor authentication.

It is typically seen as being safer than using credit cards, as it is much more difficult for hackers to gain login credentials compared to credit card numbers. For many eCommerce merchants, offering an option for customers to pay with the cash in their bank account reduces cart abandonment as it enables a way to complete a transaction without credit cards.

===[[Engineering:Mobile phone|Mobile]] money wallets===
In some developing countries, many people do not have access to banking facilities, especially in tier II and tier III cities. Taking the example of India, there are more mobile phone users than there are people with active bank accounts. Telecom operators, in such locations, have started offering mobile money wallets which allow adding funds easily through their existing mobile subscription number, by visiting physical recharge points close to their homes and offices and converting their cash into mobile wallet currency. This can be used for online transaction and eCommerce purchases.<ref name=":0" />

==See also==
{{div col|colwidth=18em}}
* [[Social:E-commerce credit card payment system|E-commerce credit card payment system]]
* [[Electronic data interchange]]
* [[Finance:Electronic funds transfer|Electronic funds transfer]]
* [[Payments as a service]]
* [[Finance:Payment service provider|Payment service provider]]
* [[Finance:Online Banking ePayments|Online Banking ePayments]]
{{div col end}}

==References==
{{reflist}}

==Further reading==
* Lowry, Paul Benjamin, Taylor Wells, Gregory D. Moody, Sean Humpherys, and Degan Kettles (2006). "[https://ssrn.com/abstract=879797 Online payment gateways used to facilitate e-commerce transactions and improve risk management]", Communications of the Association for Information Systems, vol. 17(6), pp.&nbsp;1–48 (http://aisel.aisnet.org/cais/vol17/iss1/6)
*Turban, E. King, D. McKay, J. Marshall, P. Lee, J & Vielhand, D. (2008). Electronic Commerce 2008: A Managerial Perspective. London: Pearson Education Ltd. p.&nbsp;554

{{DEFAULTSORT:E-Commerce Payment System}}
[[Category:Electronic funds transfer| ]]
[[Category:Online payments]]

{{Sourceattribution|E-commerce payment system}}