Understanding E-commerce Payment Systems and Their Types
4 min read
The e-commerce industry in India has been growing at tremendous rates. This has been heightened by the increase in smartphone and internet availability, and India is the second-largest internet market in the world. It has 950 million users and recorded 131.16 lakh crore UPI transactions between 2023 and 2024. Additionally, almost all pin codes throughout the country have adopted e-commerce.
As such, adapting your business for e-commerce is essential to reach a wider audience. It is also important to look for e-commerce payment systems that allow secure transactions, enhance customer experience, and suit your business needs. Let us explore what e-commerce payment systems are, their different types, and how to select the best one for your business.
What is an E-Commerce Payment system?
E-commerce payment systems are electric or online modes of accepting customer payments. They are mainly used for purchasing goods and services online and don’t require cash or cheques. They also come with a plethora of benefits, including reduced paperwork, personnel costs, and transaction costs and fees.
There are several different types of e-commerce payment systems. It is important to research the different methods and find one that best suits your business requirements.
Types of E-Commerce Payment Systems
1. Credit card
Credit cards are some of the most popular e-commerce payment systems. Customers can purchase an item when required and pay for it later. They can also fund digital wallets, be used with UPI, and more. Credit cards are also secure and well-trusted since Visa, Mastercard, and other providers have stringent guidelines, have been around for a long time, and are widely used across the world.
2. Debit card
Debit cards, like credit cards, are also widely used. They come with a unique number and function by withdrawing money from the customer’s account to make a transaction. They can also be used to recharge digital wallets or be linked to UPI platforms. Customers must have a bank account with sufficient balance to use a debit card.
3. Net Banking
With net banking, buyers can easily pay directly from their bank accounts. It does not require customers to have a debit or credit card but does require registration with their banks for net banking facilities. To make purchases, customers only need to enter their PIN and Net Banking IDs.
6. E-Wallets
Similar to prepaid accounts, e-wallets allow buyers to store their debit and credit cards securely. The software takes customer information, encrypts it, and allows them to make payments through contactless terminals. It also eradicates the need for buyers to enter their information every time they have to make a payment.
5. Unified Payments Interface (UPI)
UPI (Unified Payments Interface) platforms and apps are real-time payment systems. They allow buyers to transfer money between bank accounts using mobile devices and apps. Since UPI was developed by the National Payments Corporation of India (NPCI) and is regulated by the RBI, this e-commerce payment system is highly secure. It encrypts sensitive data, has user-defined PINs, and has strict security guidelines.
How to Select the Best E-Commerce Payment System for Your Business?
Determining the best e-commerce payment systems can be a lengthy process. After determining your business requirements, there are certain other factors to consider. These include:
Analyse your target audience: Find out which payment methods your target audience uses, whether you have clients who use foreign currencies, and their locations.
Consider the type of products/services you sell: The right e-commerce payment system for you can depend greatly on your type of product or service. For example, will customers purchase subscription-based items or single-purchase items?
Address security concerns: Security and safety are some of the most critical factors to look for. Payment systems will collect sensitive financial and personal data from your customers. Your e-commerce payment system should be secure, encrypt data, prevent fraudulent transactions, and ensure that sensitive information is not susceptible to attacks.
Look for other fees and costs: Some platforms may charge high platform and processing fees. It is important to determine what your business’s budget is and which platforms best fit your budgetary needs.
When looking for an e-commerce payment system, it is essential to research which platform or method would best suit your requirements. Multiple payment methods are also important and can help you reach a wider audience.
