Online payment refers to the exchange of electronic money through the Internet. These payments typically involve the transfer of monetary funds from a customer’s bank or debit or credit card account to a seller’s bank account in exchange for a product or service. These funds can come directly from the customer’s credit card or checking account, or from an online payment system linked to the buyer’s and seller’s bank accounts.
Here are the articles to explain, What is online payment? There are these types and benefits
Online payments use by buyers of goods and services as well as sellers of those goods and services. Several steps take place when funds transfer and receive, especially between two parties, often requiring different types of software to successfully facilitate the transaction.
Steps of online payment
Typical steps are as follows:
Making an Online Purchase:
The customer (buyer) provides the necessary information (debit or credit card, checking account information, etc.) to pay for goods or services. This data is then sent to the payment processing software or payment gateway.
Information encrypt:
The payment gateway encrypts payment details such as the customer’s name, address, and bank account information, which provides a level of security and makes it harder for this information to steal.
Verification of details:
After the transaction data is encrypted, the information is sent to the payment processor to ensure that the transaction is valid. Once the transfer verifies, the information is sent to the buyer’s and seller’s banks.
Funds Approved:
Assuming no red flags are raised by the payment gateway or processor, the bank authorizes the transaction. However, there are several reasons why either bank may not be able to approve the transaction:
- Insufficient funds
- Freeze account status
- Invalid credit card number or expiration date
- Transaction limit
- The card has stood reported missing or swiped
- The address does not match the card
- Also, Invalid Card Code Verification (CCV)
Request Funds:
After the funds and corresponding transfer are approved, the payment processor requests that funds be sent from the buyer’s funding source to the seller’s bank account.
Seller Receives Funds:
The fund’s transfer is complete and the purchase price has stood sent from the buyer to the seller.
Types of Online Payments
Credit Card:
This is a form of payment by which financial institutions lend money to cardholders, allowing them to purchase products and services online. Shopping with a credit card is a popular online payment method because buyers typically have little liability for fraudulent charges and most sellers accept it.
Debit Cards:
Use a debit card (sometimes called a check or bank card) to make online purchases, debiting the price directly from the user’s bank account. Similar to credit cards, where buyers are generally protected from unauthorized charges, debit cards are widely accepted online.
Third-Party Payment Services:
These online and mobile services help facilitate buyers and sellers sending and receiving payments online. After linking a bank account to a third-party payment service, transactions can often be made through phones, tablets, smartwatches, and apps.
Electronic Checks:
This form of online payment (sometimes called eChecks or ACH) debits cash from a checking account, eliminating the need for a buyer to write a paper check or a seller to deposit a check. Also, Electronic checks require the payer’s name, checking account routing and account number, and the payment amount.
Bank transfer:
A bank transfer is similar to the debit card method in that it transfers funds directly from one bank account to another. Unlike bank transfers, no physical debit card requirements, provide a faster and more secure method of payment.
Benefits of using online payments
Online payments offer many benefits to buyers and sellers, such as security, efficiency, convenience, and contactless options.
Security:
Online payment options use encryption to protect consumer information and ensure the safe transfer of data and funds from buyer to seller. These security protocols also reduce the chance of personal information standing stolen.
Efficiency:
Online payments are efficient because they are fast, sometimes instant, and have no constraints such as distance, time, or location.
Convenience:
Vendors that accept online payments are making it easy for their customers to pay for goods or services, improving the buying experience. If a supplier accepts credit card payments, customers can buy items on credit and pay later. Payments can also make at any time, anywhere without going to a bank or other financial institution.
Contactless option:
Contactless online payments allow buyers to pay for items simply by holding their smart device close to the terminal that processes the transaction and transfers the funds to the seller via the internet. Customers can also pay using a QR code or a one-time password (OTP), both of which require no human intervention.
Software for Facilitating Online Payments
Depending on the type of online payment method used, there are several categories of software that can benefit both buyers and sellers, which help facilitate the sending and receiving of funds for online purchases. What do you know about Payment Card Industry (PCI) Compliant or Compliance?
Payment Gateways:
Payment gateways automate payment transactions between shoppers and merchants, securely transmitting transaction information to banks. E-commerce businesses rely on payment gateways to protect customer information through encryption and ensure their information travels securely from the customer to the merchant to the payment processor.
Payment Processing Software:
Payment processing software provides businesses with the means to process many types of business-to-business (B2B) payments. Also, Companies use this type of software to manage payments received from business customers and paid to suppliers.
Installment Payment Software:
Installment payment software helps businesses offer their customers the option to purchase items over time through a set number of recurring payments.
Payment Analytics Software:
Payment analytics software tracks online payments for e-commerce or subscription-based companies. Also, This type of software consolidates payment data from multiple sources to monitor customer prices.
Payment Card Issuance Software:
Payment card issuance software helps industries and financial institutions generate physical and also virtual payment cards. While banks issue payment cards for their customers, companies use such software to generate cards for their employees.
