Electronic Payment System - a Factor That Grow eCommerce

1. What is e-Payment?

With the development of the internet industry in general and eCommerce in particular, we should notice that everything can access and use through the internet. One of them is e-Payment – an essential application of the internet.

E-Payment term can be defined as the transaction of money and perform via the internet

2. Factors That Determine a Method of e-Payment

  • Interoperability and Portability
  • Security. How safe is the transfer?
  • Ease of Use
  • Transaction Fees
  • International Support
  • Regulations

3. e-Payment Methods

a. Payment cards online

Electronic card that contains information that can be used for payment purposes


The convenience of payment is the result of the development of mobile devices and also eCommerce

Three common cards:

  • Credit cards: give you credit to makes purchases up to a limit fixed by the cards issuer
  • Debit cards: when you paid, the money comes directly from your checking account.
  • Charge cards: have to pay in a period, usually monthly

b. Smart card

A smart card, chip card, or integrated circuit card (ICC) is a physical electronic authorization device, used to control access to a resource


It can be used to save the information of users, it is popular nowadays not only because of its application in payments, but also it impacts on all aspects of life: e-ticket, attendance, marketing (loyalty program), Stored-Value Card, etc.

All traditional paper nowadays can be replaced by a smart card. You don’t need to prevent the bus or library card from the water or cockroach.

c. Cryptocurrency

A useful online currency. The first cryptocurrency is Bitcoin, released in 2009. After almost ten years, cryptocurrency has grown and has been believed by everyone. But because of its high transaction cost and also instability, it isn’t used much for payment purposes.

4. Applications of e-Payment

a. E-micropayment

Can be defined as an eCommerce transaction with a low amount of money, usually less than $10. E-Payment help merchant and users so much on this, the market nowadays full of small transactions: when you buy a game on Steam, when you download a song from Spotify or own a book on Amazon, it all example of e-micropayment. Imagine you must go to the bank to transfers a 5$ music CD you bought on the internet, it costs not only money but the time you spend on the transaction. e-Payment helps market that need micropayment to grow

b. Convenience

Can’t be denied the comfort of electronic payment, it makes smartphone more power when equipping for smartphone one more utilization. Nowadays, in big cities, the convenience of e-Payment in particular and mobile in general can see clearly. When you go out, the only thing you have to bring is a smartphone and identification. The store accepts payment through mobile using QR code, no more cash holder problems.

c. Lower transaction cost

Traditional transactions usually cost more money and time than e-Payment, and the conventional transaction can't work 24/7.

5. How Does It Work?

It has three terms contains in the electronic payment process:

  • Payment gateway: a software that approves or declines transactions between merchant and customers, connects your eCommerce store to the payment processor.
  • Payment Processor (payment service provider – PSP): facilitates the transaction, the data center that processes card transactions and settles funds to merchants — third-party service connecting a merchant to the appropriate acquiring bank or financial institution.
  • Merchant account: is one type of bank account that allows a business to accept payment in multiple ways.

Here is the e-Payment process:

The Process When Customers Order