What are the Types of Electronic Payment Systems?
Electronic payment system is a system that enables buyers and sellers to exchange finance online or an exchange that does not involve any cash or paper check. These financial exchanges may take place through digital financial instruments like credit cards or debit cards. There are many types of electronic payment systems that are in use all over the world.
Credit and Debit Cards
The most common type of electronic payment system is use of credit or debit cards. Some studies show that 90% of all e-commerce transactions in the United States are through credit or debit cards. Credit cards can be used for transactions on the Internet as well as transactions through credit cards readers.
Smart Cards
A more secure type of electronic card was recently introduced. The popularity of smart card is increasing as it offers more secure electronic transactions. Unlike credit cards or debit cards, smart cards contain microprocessors with volatile memory. As smart cards provide users with more authentications, identification, data processing and data storage, many new users prefer smart cards over credit or debit cards.
Automated Clearing House
This new system in the market is more convenient for consumers especially for online transactions. The process and transaction cycle is simpler and safer and includes direct debit, direct deposit and electronic checks. As automated clearing house method is very simple and offers quick transactions, the use of this system is becoming increasingly common.
Online Transactions
One of the most common types of electronic payment system is exchange of money through the Internet. There are a number of methods available to choose from for online transactions that involve credit cards, smart cards, automated clearing house method and third party service providers like PayPal. Online transactions are now used for different purposes like online banking, online buying, online electronic bill payment (EBPP) and even for running your own online business.