Payment systems – principle of operation and opportunities

Nowadays, when e-commerce is taking an increasingly strong position in the global economy every day, the question inevitably arises of how to accept payments and make money transfers online. In this area, payment systems are becoming an excellent assistant.

A payment system, in simple terms, is a way to carry out financial transactions without the use of cash, through bank cards and electronic money. Here we can talk about paying for goods and services at various online stores, money transfers, and more.

Electronic payment system is a subset of the payment system. It provides an online payment process.

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As e-commerce develops, so does the number of payment systems. They become faster and safer. This suggests that the number of cash transactions in the world will steadily decrease.

Payment systems

Possibilities of using an electronic payment system

Bank cards and payment gateway. Paying online using bank cards is the most common way. The most popular for this type of payment are international payment systems Visa and Master Card. To make a payment by credit card, you need to enter your card details, security code CVV2 / CVC2, and authenticate, for example, by entering the 3D Secure code.

To make the process of buying goods in your favorite online store convenient and take several minutes, there are payment gateways. This is a great tool that helps to make the purchase process comfortable for the user, and the seller to quickly receive money in his account. And it allows you to expand the geography of customers, thereby increasing sales.

This is a kind of intermediary responsible for sending transaction information from the buyer to the payment processor and vice versa. You can connect a payment system to your business and accept payments for goods or services online. After payment by the buyer, the money will be available in your internal account. You can manage funds within the system or withdraw them.

Money transfers and electronic wallets

Payment systems also allow you to make money transfers. Modern technologies allow you to send money transfers to the beneficiary’s bank accounts, to a card or inside the payment system itself. Transfers are carried out instantly, regardless of the day and time of day, in different currencies, for a small commission.

Many payment systems also include electronic wallets among their services. This is a place where you can store electronic money. Electronic wallets you can also to pay for services and make transfers. Electronic wallets often are not country-specific and work with different currencies. One of the advantages of e-wallets is that you do not need to pay for their service. Commission is charged only for transactions.

In addition to standard e-wallets, there are also bitcoin wallets. Their purpose is similar to traditional electronic wallets, except for the fact that a cryptocurrency is stored in a bitcoin wallet and transactions are carried out only in bitcoins. After creating a Bitcoin wallet, you will receive an address with which all operations are performed.

Payment systems

Payment systems security

One of the main issues when choosing a payment system is security. In order to ensure reliability, payment systems use various methods of client authentication. When connecting a payment gateway, you will need to confirm the legality of the business by providing documents and concluding an agreement with the payment system provider. On the side of the payment system, identification takes place, after which you get the opportunity to conduct transactions in this payment system. To use e-wallets, you also need to provide documents and pass verification.

In addition to the formal part, there is also the technical side of ensuring the security of Internet payments. This is a rather complex and specific process to which modern payment systems pay special attention. Information protection in electronic payment systems is ensured, including through various security certificates, due to encryption of the Internet connection, confidentiality of personal data, and so on.

As a rule, electronic payment systems are well protected. Often, hacks and other illegal actions occur due to fraud, which results in inattention on the part of the user. Therefore, pay due attention to the safety of personal information.

Which payment systems exist?

One of the most popular electronic payment systems in the world is PayPal. It has many opportunities for both the seller and the buyer. Among the international payment systems are the British EcoPayz system, the electronic system Neteller, Skrill, the international payment system of American origin Payoneer and others. The most used payment systems in Russia are Qiwi, Webmoney and Yandex.Money. In Europe, payment systems ELV, Sofort and GiroPay, iDEAL and others are widespread. Alipay Chinese payment system occupies the lion’s share of the Chinese market and dominates among all possible payment methods.

Which payment system to choose?

At the moment, there are many payment systems in the world, and, judging by experience, each of them has its own advantages and disadvantages. Therefore, choosing a payment system, you should proceed from the specific tasks of your business: what are your sales volumes, what is the geography of your customers, the currency of payment, and so on.

We should not forget that payment systems earn at the expense of the commission that they receive from each payment. Therefore, the size of this commission is an important criterion.

Checking how secure the system is is a little trickier. To evaluate this parameter, you can check the information about it on the Internet. If the company’s reputation is trustworthy, then it is more likely that you can entrust your money to it.

In addition to such obvious parameters as commission and payment security, you should also pay attention to the interface and speed of data processing. No one wants to delve into the depths of the site in search of the desired operation.

Payment systems

Payment systems Visa and MasterCard

In conclusion, I must say that every year the technology develops more and more, and payment systems have new opportunities. In the near future, Visa will launch the Visa B2B Connect platform, with which corporations can make large international payments quickly and safely.

Facebook has created its own cryptocurrency Libra, which they plan to put into use as early as 2020. The partners of Facebook are international payment systems Visa, MasterCard, as well as many technology companies. Russian giants are also not far behind. Telegram, led by Pavel Durov, is launching the Telegram Open Network blockchain platform, which will be integrated into the popular messenger.

With the development of information technology and the growth of fintech startups, payment systems are becoming an increasingly optimal alternative to banks.