Mechanism of making payment through internet: online payment mechanism

Online Payment Mechanism

One of the most popular payment forms online are credit and debit cards. Besides them, there are also alternative payment methods, such as bank transfers, electronic wallets, smart cards or bitcoin wallet (bitcoin is the most popular cryptocurrency).

E-payment methods could be classified into two areas, credit payment systems and cash payment systems.

  1. Credit Payment System

  • Credit Card: A form of the e-payment system which requires the use of the card issued by a financial institute to the cardholder for making payments online or through an electronic device, without the use of cash.
  • E-wallet: A form of prepaid account that stores user’s financial data, like debit and credit card information to make an online transaction easier.
  • Smart card: A plastic card with a microprocessor that can be loaded with funds to make transactions; also known as a chip card.
  1. Cash Payment System

  • Direct debit: A financial transaction in which the account holder instructs the bank to collect a specific amount of money from his account electronically to pay for goods or services.
  • E-check: A digital version of an old paper check. It’s an electronic transfer of money from a bank account, usually checking account, without the use of the paper check.
  • E-cash: is a form of an electronic payment system, where a certain amount of money is stored on a client’s device and made accessible for online transactions.
  • Stored-value card: A card with a certain amount of money that can be used to perform the transaction in the issuer store. A typical example of stored-value cards are gift cards.


E-payment systems are made to facilitate the acceptance of electronic payments for online transactions. With the growing popularity of online shopping, e-payment systems became a must for online consumers — to make shopping and banking more convenient. It comes with many benefits, such as:

  • Reaching more clients from all over the world, which results in more sales.
  • More effective and efficient transactions— It’s because transactions are made in seconds (with one-click), without wasting customer’s time. It comes with speed and simplicity.
  • Convenience. Customers can pay for items on an e-commerce website at anytime and anywhere. They just need an internet connected device. As simple as that!
  • Lower transaction cost and decreased technology costs.
  • Expenses control for customers, as they can always check their virtual account where they can find the transaction history.
  • Today it’s easy to add payments to a website, so even a non-technical person may implement it in minutes and start processing online payments.
  • Payment gateways and payment providers offer highly effective security and anti-fraud tools to make transactions reliable.


  • E-commerce fraud is growing at 30% per year. If you follow the security rules, there shouldn’t be such problems, but when a merchant chooses a payment system which is not highly secure, there is a risk of sensitive data breach which may cause identity theft.
  • The lack of anonymity: For most, it’s not a problem at all, but you need to remember that some of your personal data is stored in the database of the payment system.
  • The need for internet access: As you may guess, if the internet connection fails, it’s impossible to complete a transaction, get to your online account, etc.

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