Payment Systems and Ecommerce

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Payment Systems and Ecommerce
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• A payment system is a system for the transfer of
  money. What makes it a "system" is that it
  employs cash-substitutes traditional payment
  systems are negotiable instruments such as drafts
  (e.g., checks), credit cards and other charge
  cards, documentary credit (such as L/C) and
  electronic funds transfers. Some payment systems
  include credit mechanisms, but that is
  essentially a different aspect of payment.
  Payment systems are used in lieu of tendering
  cash in domestic and international transactions
  and consist of a major service provided by banks
  and other financial institutions. In the US, they
  are regulated by different state statutes (UCC)
  and Federal regulations.
• Additional forms of payment systems (including
  physical or electronic infrastructure and
  associated procedures and protocols) are used to
  settle financial transactions in automated teller
  machine networks, stored-value card networks,
  bond markets, currency markets, and futures,
  derivatives, or options markets, or to transfer
  funds between financial institutions. Due to the
  backing of modern fiat currencies with government
  bonds, payment systems are a core part of modern
  monetary systems.

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• The term electronic payment can refer narrowly to
  e-commerce - a payment for buying and selling
  goods or services offered through the Internet,
  or broadly to any type of electronic funds
  transfer.
• An e-commerce payment system facilitates the
  acceptance of electronic payment for online
  transactions. Also known as a sample 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. In the early years of B2C
  transactions, many consumers were apprehensive of
  using their credit and debit cards over the
  internet because of the perceived increased risk
  of fraud. Recent research shows that 90 of
  people in the United Kingdom still do not shop
  online because they do not trust online payment
  systems. However, 54 do believe that it is safe
  to shop online which is an increase from 26 in
  2006.

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• There are numerous different payments systems
  available for online merchants. These include the
  traditional credit, debit and charge card but
  also new technologies such as digital wallets,
  e-cash, mobile payment and e-checks. Another form
  of payment system is allowing a 3rd party to
  complete the online transaction for you. These
  companies are called Payment Service Providers
  (PSP), a good example is Paypal or WorldPay.
• A payment service provider (PSP) offers
  merchants online services for accepting
  electronic payments by a variety of payment
  methods including credit card, bank-based
  payments such as direct debit, bank transfer, and
  real-time bank transfer based on online banking.
  Some PSPs provide unique services to process
  other next generation methods (Payment systems)
  including cash payments, wallets such as PayPal,
  prepaid cards or vouchers, and even paper or
  e-check processing.
• Typically, a PSP can connect to multiple
  acquiring banks, card, and payment networks. In
  many cases, the PSP will fully manage these
  technical connections, relationships with the
  external network, and bank accounts. This makes
  the merchant less dependent on financial
  institutions and free from the task of
  establishing these connections directly -
  especially when operating internationally.

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