Emergence of Payment Systems in The Age of Electronic Commerce: The State of Art
Emergence of Payment Systems in The Age of Electronic Commerce: The State of Art
ABSTRACT The emergence of e-commerce has created new financial needs that in many
cases cannot be effectively fulfilled by the traditional payment systems. Recognizing this,
virtually all interested parties are exploring various types of electronic payment system and
issues surrounding electronic payment system and digital currency. Broadly electronic
payment systems can be classified into four categories: Online Credit Card Payment System,
Online Electronic Cash System, Electronic Cheque System and Smart Cards based Electronic
Payment System. Each payment system has its advantages and disadvantages for the
customers and merchants. These payment systems have numbers of requirements: e.g.
security, acceptability, convenience, cost, anonymity, control, and traceability. Therefore,
instead of focusing on the technological specifications of various electronic payment systems,
the researcher have distinguished electronic payment systems based on what is being
transmitted over the network; and analyze the difference of each electronic payment system
by evaluating their requirements, characteristics and assess the applicability of each system.
INTRODUCTION:
As payment2 is an integral part of mercantile process, electronic payment
system is an integral part of e-commerce. The emergence of e-commerce
(table 1) has created new financial needs that in many cases cannot be
effectively fulfilled by traditional payment systems. For instance, new
types of purchasing relationships-such as auction between individuals
online-have resulted in the need for peer-to-peer3 payment methods that
allows individuals to e-mail payments to the other individual. Recognizing
this, virtually all interested parties (i.e. academicians, government,
business community and financial service providers) are exploring various
types of electronic payment system and issues surrounding electronic
payment system and digital currency. Some proposed electronic payment
systems are simply electronic version of existing payment systems such
as cheques and credit cards, while, others are based on the digital
currency technology and have the potential for definitive impact on
today‟s financial and monetary system. While popular developers of
electronic payment system predict fundamental changes in the financial
sector because of the innovations in electronic payment system (Kalakota
& Ravi, 1996). Therefore, electronic payment systems and in particular,
methods of payment being developed to support electronic commerce
cannot be studied in an isolation. A failure to take place these
developments into the proper context is likely to result in undue focus on
the various experimental initiatives to develop electronic forms of
payment without a proper reflection on the broader implications for the
existing payment system.
Micro Payment (less than $ 10) that is mainly conducted in C2C and B2C e-
commerce.
Business Payment that has the value more than $ 500. it is conducted mainly
in B2B e-commerce .
Systems that can support tiny value transactions have to trade-off between
conveniences of transactions (the major part of a cost in an extremely cheap
transaction) vs. the security or durability of transactions. On the other side of
the amount range, large value transactions will require highly secure
protocols whose implementations are costly: be on-line and/or carry
traceability information. Finally, nearly all the system can perform medium
value transactions.
CONCLUDING REMARKS :
Technology has inarguably made our lives easier. It has cut across distance,
space and even time. One of the technological innovations in banking,
finance and commerce is the Electronic Payments. Electronic Payments (e-
payments) refers to the technological breakthrough that enables us to
perform financial transactions electronically, thus avoiding long lines and
other hassles. Electronic Payments provides greater freedom to individuals in
paying their taxes, licenses, fees, fines and purchases at unconventional
locations and at whichever time of the day, 365 days of the year. On the
basis of present study, first remark is that despite the existence of variety of
e-commerce payment
systems, credit cards are the most dominant payment system. This is
consequences of advantageous characteristics, most importantly the long
established networks and very wide users‟ base. Second, alternative e-
commerce payment systems are some countries are debit cards. In fact, like
many other studies, present study also reveals that the smart card based e-
commerce payment system is best and it is expected that in the future smart
cards will eventually replace the other electronic payment systems. Third,
given the limited users bases, e-cash is not a feasible payment option. Thus,
there are number of factors which affect the usage of e-commerce payment
systems. Among all these user base is most important. Added to this, success
of e-commerce payment systems also depends on consumer preferences,
ease of use, cost, industry agreement, authorization, security, authentication,
non-refutability, accessibility and reliability and anonymity and public policy.