E-commerce payment system

Short description: System that facilitates e-commerce transactions

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An e-commerce payment system (or an electronic payment system) facilitates the acceptance of electronic payment for offline transfer, also known as a subcomponent of electronic data interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internet-based shopping and banking.

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 B2B e-commerce model.[1] Payment methods on B2B platforms sometimes offer transaction protection for international business-to-business transactions that may arise due to product or shipping issues. For example, websites like Alibaba.com and Amazon Business offers customers extra support in the form of payment insurance. Alibaba.com has trade assurance which is similar to a escrow-based secure payment system for cross-border deals.[2] Amazon Business has Amazon’s A‑to‑z Guarantee, which can reimburse the buyer for defective products sold on through its marketplace of third-party sellers.[3]

For the vast majority of payment systems accessible on the public Internet, baseline authentication (of the financial institution on the receiving end), data integrity, and confidentiality of the electronic information exchanged over the public network involves obtaining a certificate from an authorized 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 leak credentials and expose customers to subsequent 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 the use of the 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.[4]

There are companies that specialize in financial transactions over the Internet, such as Stripe for credit card processing, Smartpay for direct online bank payments and 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 bank accounts, typically via 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 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; 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 Wells Fargo account fraud scandal.

## Contents

* 1 Methods of online payment
* 1.1 Bank payments
* 1.2 Mobile money wallets
* 2 See also
* 3 References
* 4 Further reading

## 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.[5] 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.

### 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 Bangladesh, 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.[5]

## See also

* E-commerce credit card payment system
* Electronic data interchange
* Electronic funds transfer
* Payments as a service
* Payment service provider
* Online Banking ePayments

## References

1. ↑ Zhou, Kai; Zhao, Weibin; Zhou, Huiyan (2022-01-01). "Research on model mechanism of B2B transaction based on delivery means of blockchain". International Journal of Technology, Policy and Management 22 (1–2): 114–140. doi:10.1504/IJTPM.2022.122560. ISSN 1468-4322.
2. ↑ Kyung-min, No (2025-07-07). "Alibaba debuts protection service for Korean sellers’ global outreach" (in en). https://www.koreaherald.com/article/10526045.
3. ↑ Perez, Sarah (2021-08-10). "Amazon says it will now compensate consumers for defective products sold on its marketplace" (in en-US). https://techcrunch.com/2021/08/10/amazon-says-it-will-now-compensate-consumers-for-defective-products-sold-on-its-marketplace/.
4. ↑ 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
5. ↑ 5.0 5.1 Fatonah, S; Yulandari, A; Wibowo, F W (December 2018). "A Review of E-Payment System in E-Commerce". Journal of Physics: Conference Series 1140 (1). doi:10.1088/1742-6596/1140/1/012033. ISSN 1742-6588. Bibcode: 2018JPhCS1140a2033F.

## Further reading

* Lowry, Paul Benjamin, Taylor Wells, Gregory D. Moody, Sean Humpherys, and Degan Kettles (2006). "Online payment gateways used to facilitate e-commerce transactions and improve risk management", Communications of the Association for Information Systems, vol. 17(6), pp. 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. 554

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