Whether you’re a local merchant looking to dominate your market or a global company planning on expanding your reach, you have to provide your customers with convenience. And nothing is more convenient for them than streamlining electronic payments.
Customers, be it an individual or a business, hate jumping through hoops to make payments. They want the ease of submitting payments within a few clicks and knowing that their money is safely through to your end.
However, to please your customers, you need to offer them a range of electronic payment methods so that you can keep your business at an advantage.
Here are the key electronic payment systems you need to adopt to help your business make the most out of its payment gateway. But firstly, let’s break down what is an electronic payment…
Your Guide to Key Electronic Payment Types
What is an Electronic Payment?
In layman’s terms, electronic payments allow customers to pay for goods or services electronically, which in modern terms means online. The process is simple and secure (more on that below), so customers prefer it over traditional methods.
The process involves the following:
- The customer submits their payment (such as a credit card, debit card or e-transfer details) into the online payment system. This can include online payments (filling out the payment where you provide your payment details) or in-store (where you can tap or use EFTPOS).
- The “issuer”, which is the financial institution (e.g. the bank) connected to the card or account, transfers the money from the cardholder’s account to the payee (your business), which is another bank.
- The merchant receives the payment from the customer and it appears in the bank account. The process should take a minimum of several minutes to a few hours, depending on the amount transferred.
Although the process takes several minutes, it takes a few days for the customer’s and your business’ account to show the final transaction details. That’s because financial institutions take two to three business days to officially confirm the payment – even though it already went through!
The Three Main Types of Electronic Payments
There are essentially three types of electronic payments that you should offer to your customers, both locally and internationally:
1) Credit or Debit Card Payments
The standard preferred payment option for many individuals and businesses, which can be used the world over. Cards are easy to use and can be applied to all forms of transactions, including in-store, such as “tap” or “insert”, and obviously, online. Ensure that your business accepts major credit and debit cards from major institutions, such as Mastercard, Visa, American Express and Discover.
2) E-Wallet Payments
Thanks to the likes of Apple, “e-wallets” are now a thing. Millennials love the idea of a wallet as part of their phone, so it makes sense that your business should cater to it. E-wallets store your credit or debit card information on a mobile device, allowing you to merely “tap” for in-store purchases or make automatic payments online. It’s fast becoming the simplest and most convenient electronic payment method available.
3) Bank Transfer Payments
Known in Canada as “Interac e-transfer”, this process involves transferring money from one account to another. All that is required is that the business provides the customer with an email address or phone number to send that money to. Customers can then send the money, and any messages or notes, to the business. When receiving the payment, companies can double-check if the amount is correct or reject the payment entirely. Passwords are also used as part of the protection process. This payment is also very common for person-to-person transactions.
Are Electronic Payments Safe?
Perhaps the biggest concern for businesses regarding electronic payments is their safety and protection. Stories about hacking and people losing their money scare most people, let alone companies.
However, electronic payments are very secure and safe. Many financial institutions implement and utilize any of the following security systems:
- Secure Electronic Transaction systems (SET), which are security protocols to facilitate payments
- Secure socket layer (SSL) technology for payment encryption and authentication
- API technology to ensure safe and encrypted access and transfer funds
As a business, it’s your job to ensure that any electronic payments are secure and safe. Doing your research into business payment solutions and determining which payment system works best for your customers and business is vital.
Only then can you experience the full benefits of electronic payments from around the globe!