At present, a bulk of business transactions is conducted online. When you think of buying music, do you take the trouble of visiting a music store when it is so much easier to simply download from iTunes? Your answer is likely to be ‘no’.
The Internet has not only resulted in better connectivity but has also changed the way people shop. Buying and selling have become much less complicated with deals being sealed at the click of a mouse.
However, for all such transactions, it is essential to have secure payment systems for a smooth and secure flow of funds. Online banking allows a seamless transfer of funds from the customer to the supplier though a secure channel without the rigors of sending in a cheque or paying directly by cash. This is a great advantage especially when both parties are separated by a considerable distance.
Online banking options come armed with tight security measures to protect user data and have either the PIN/TAN security method or are signature based online banking systems.
An online payment gateway is another vital thread in the e-commerce network. It is an application service provider that allows merchants to accept authorized payments online, usually through a credit card. These credit card payments have encrypted sensitive data so that the information is not accessed by unauthorized personnel.
For example, the credit card number of a customer is accessible only to an authorized merchant and the payment processor used by bank acquiring the payment on behalf of the merchant. SSL or Secure Socket Layer encryption is generally used for encryption purposes.
The merchant who accepts online payment forwards details of the online transaction to the online payment gateway of the merchant from where these details are sent to the processor of the bank. The details are then sent to the credit card company which issued the customer his or her card. This is done to seek authorization for sending money to the merchant’s bank.
PayPal is a widely used online payment solution, acting as a mediator between buyers and providers. PayPal payments can be made either through transfer between two PayPal accounts, the sending of a cheque to the merchant from the customer’s PayPal account, or through transfer of funds from the customer’s PayPal account to the merchant’s bank account. At present PayPal allows the sending, receiving and accruing of funds worldwide in 19 different currencies.
Few more best known online payment solutions are: