More and more customers are preferring to pay digitally even for the smallest denominations. This has further increased after the advent of the Covid-19 pandemic, which brought a paradigm shift in consumer behaviour. People like the ease, speed and assured security that comes with digital transactions. With the worst of the pandemic behind us, payment preferences can have permanently changed. As the volume of online payment grows, merchants are always on the look for reliable and faster payment systems.
Did you know with the right electronic payment system, you can future-proof your business? But what are electronic payment systems? Let’s find out.
What are Electronic Payment Systems?
Electronic payments are digital methods of transferring funds or making payments.
The following are the different types of electronic payments :
Internet Banking:
The payment is made from one bank account to another using the net banking facility provided by the bank. There are various methods of net banking, each with varying costs and transaction speeds like NEFT, IMPS or RTGS.
Card Payments:
Payments are made using debit cards, credit cards, and smart cards.
Mobile Banking:
Payment is made through the mobile application provided by the user’s bank where users need to enter the details of the beneficiary, enter the amount and insert the PIN or password to complete the payment.
E-wallets:
E-wallets are linked to the user’s bank account, and through e-wallets, users can easily transfer funds and also earn rewards on each transaction.
UPI:
Unified Payments Interface allows you to make payments using the beneficiary’s mobile number or UPI ID or just scan the QR code through any UPI application. Further, many mobile banking applications of the banks also support UPI payments.
How Do Electronic Payment Systems Work?
Whenever an online payment transaction is initiated, the following entities get involved in processing the entire payment:
- Customer or cardholder
- Merchant
- Issuing bank
- Acquiring bank
- Payment processor
- Payment gateway
Following is the entire electronic payment procedure from initiation to receipt by the beneficiary:
Payment Initiation:
This is where the customer finalizes the product for purchase and initiates the payment. Here, the customer is directed to the payment page, where he enters the relevant details and initiates the payment.
Payment Authentication:
The payment is initiated If the details are found correct, the operator further processes the transaction.
Payment Settlement:
Once the authentication is successful, the funds ts transferred from the customer’s account to the merchant’s account. However, if the authentication fails for whatsoever reason, the payment transaction fails.
Advantages of Electronic Payment System
Following are the advantages and features of electronic payment systems that are also the reason behind the growing dominance of electronic payments:
- It makes shopping convenient and more accessible. Customers just need to finalize the product or service and make the payment.
- It removes the hassle of carrying cash all the time.
- E-payments have made transactions faster and more efficient.
- E-payments have been the key to the growing success of the Digital India Campaign and cashless economy.
- E-payments have increased the transparency of the flow of money into the system and have helped significantly in curtailing the black economy.
- Merchants doing business both online and offline receive money quickly.
- E-payments facilitate international transactions. Today, sending or receiving money from a foreign country is easier than ever.
In a Nutshell
Electronic payments have become the backbone of trade and business. It has become necessary for many businesses to have a good electronic payment system, as many consumers now prefer online transactions over cash payments. Innoviti can help you do just that!
Innoviti Technologies is one of India’s leading payment solutions and collaborative commerce platforms. It helps businesses use attractive purchase tools to increase revenue manifold. Being one of the most secure payment solutions, it guarantees 100% uptime while cutting down transaction costs at the same time.
How are you strategizing business and accepting payments? If you still feel stuck, it’s time to innovate with Innoviti!