Overview of an E-Payment System

electronic-payment system

As the name suggests, an electronic payment system or e-payment system refers to the payment of goods or services over the internet without the use of cash or cheque and however promotes the use of credit or debit card and other online payment methods.

The journey from the barter system to the electronic payments system has been a rocky ride yet a ride that has enabled us to make payments smooth and secure that today, we can pay for anything, to anyone from any part of the world in the blink of an eye. To be honest enough, we are soon going to be a global village where cash would be a thing of the past.

The sudden rise in the number of consumers preferring to pay via online transfers and many retailers selling over the internet rejecting COD or charging a certain amount of sum extra for every COD not only encourages electronic-payments but marks a drift from the traditional cash to card scenario.

E-payment cycle:

And before we proceed any further, let’s understand the e-payment cycle: the e-payment system cycle is a complicated and elongated process outside the realms of the common man like you and me and therefore let’s try to pictorially describe the scene that goes behind every successful e-payment system:

Customer action – the process begins with the customer initiating the first move of visiting the merchant’s site and adding goods or services to their cart, followed by filling out the payment form with certain information based on the payment option selected by him. For e.g., if it’s a UPI transaction, the customer can simply enter the VPA.

Payment authentication & authorization by the operator – this stage involves the payment gateway provider’s entry in the big picture. The Payment gateway provider checks whether the payment information entered is valid and make sure funds are available in the customer bank account for the payment. And reports back the transaction status accordingly.

Settlement of Payment in the seller’s account – If the transaction is successful, the online payment service provider transfers the same into the merchant’s account thereby completing the electronic-payment cycle.

Safety Tips to Follow While Doing Online Transactions

Types of e-payment system-
payments can be initiated in the following ways

Card Payment System: the card payment system involves initiating payments online or through an electronic device and requires the use of a credit or debit card issued by a financial institute to the cardholder for making payments.

Net Banking or internet banking system involves the transfer of funds digitally to one another via the internet without having to physically visit the bank or any of its branches. Few modes of net banking include IMPS, RTGS, NEFT.

Alternate Payments Methods: other than those methods mentioned above, transfers of funds can also be processed under the below mentioned ways:

E-wallet: the latest and the widest used form of payments wherein account information of the individual is stored beforehand, like an individual’s debit or credit card, therefore, enabling smooth flow of the online transaction.

Smart card: a plastic card with a microprocessor chip inserted that can be loaded with funds to make transactions safe and hassle-free.

Direct Debit: an arrangement made with a bank that allows a third party to transfer money from a person’s account on an agreed date for an agreed sum- electronically to pay for goods or services.

Stored-value card: this card involves a certain sum amount of money that is stored in the card beforehand and can be used to perform a transaction at the issuer store. A typical example of stored-value cards is gift cards.

UPI or Unified Payments Interface is an instant real-time payment system developed by the National Payments Corporation of India facilitating inter-bank transactions of funds

QR (Scan and Pay): QR or Quick Response Code is a machine-readable code that consists of a matrix of dots in a black and white square, which can be scanned by the camera on a smartphone to initiate payments.

Pro’s of Electronic payment system

E-payment system has stunned the financial market in a way which people could have never thought of. Payments could be made so effortlessly and efficiently without the dispatch of real-time cash is what merchants are bowled upon.
Discussed below are some of the Key benefits for merchants adopting e-payment:

  • When retailers or online shoppers promotes/supports e-payments system in their website or retail store, they can reach out to more clients from all over the globe, therefore resulting in increased sales and revenue growth.
  • The e-payments system is a channelized and systematic structure of money collection and transfers for transaction here are conducted in a jiffy topped with high speed and accuracy.
  • Convenience is yet another feather to its hat. Customers today can access any websites, any day, anytime and anywhere, 24*7 with only an internet connection and pay for them irrespectively!
  • Lower transaction cost and decreased technology costs only adds more profits in the business, therefore, encouraging regular discounts on products and encouraging bulk purchase by consumers.
  • E-Payment gateways providers offer high security and anti-fraud tools on the payments gateway page to make transactions more reliable, safe and secure for both- the merchants and the consumers!

10 Reasons to start accepting digital payments!


With the rapid change in technology every second and consumer welcoming the changing wholeheartedly, merchants should not be left behind in the rat race. Ignorance towards digitalization of fund collection and transfer can lead to your competitor pouncing upon your customers anytime and sweeping them off their feet. Why wait and watch, when you can act upon!
Also, e-payments are considered a fast and secure alternative to most traditional payment methods like cash & cheques, and accepting electronic payments comes with lots of benefits for both merchants and consumers. Come, join hands with atom payment gateway and start accepting online payments.

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