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This method allows businesses to receive payments globally.
According to Statistas 2026 projection, e-commerce sales are expected to exceed 8.5 trillion U.S. dollars worldwide.
Transactions are secured by cryptography, meaning information is encrypted and sent as unique codes.
Online retailers like Rakuten, Shopify, etc.
widely accept cryptocurrencies like Bitcoin and Ethereum.
Here are the quick steps to set up your crypto payments.
Reduces fraudulent transactions and the risk of personal data theft with its high-grade encryption.
Ability to accept payments from customers with no bank accounts.
Challenges with Cryptocurrency
Volatile prices due to fluctuations in the crypto market.
No one is answerable in case of fraud and unregulated payments.
Unable to process numerous transactions at once.
Payments are processed bycredit card processing companieslike Stax, Stripe, PayPal, etc.
However, businesses must stay PCI-compliant when accepting credit card payments.
The processing fees range from 1.5% to 3.5% per transaction.
How Credit Card Payments Work
Heres a simplified breakdown of how credit card payments work.
Benefits of Credit Card
All merchants and online retailers accept credit card payments worldwide.
Credit card processing companies offer fraud protection like 2FA and CVV.
Offers a wide range of incentives for shoppers, such as discounts and reward programs.
High-interest rate charges associated with credit cards.
Remittance is the best e-commerce payment method for cross-border transactions.
For seamless international transfers, many businesses also rely onvirtual IBAN providers.
This streamlines remittance and simplifies global financial operations.
Different countries have different regulations and laws for cross-border remittance, leading to limits in transactions.
However, the charges are still lower than those for credit cards.
After the transfer of funds, the foreign currency is converted, and exchange rates are levied.
Some transfers may take up to 34 days to complete, while others may take only a few hours.
Tracking your money is simple and accessible.
Many countries have strong regulations on the outflow and inflow of currency.
However, this is relatively going to be stable after 2026.
Different countries have different regulations and acceptance laws for cards such as Visa, Mastercard, and AMEX.
How Debit Cards Work
Debit cards work in the same way as credit cards.
Widely accepted across various countries and used by the majority of online shoppers.
Allows direct spending from the account without any third-party involvement.
Keeping it does not require a bank account or a good credit history.
Shoppers can purchase the prepaid cards from a store or an e-commerce website.
For this reason, young generations and GenZ have embraced the use of prepaid cards.
The adoption of prepaid cards is estimated to increase at a CAGR of 16% from 2023 to 2030.
Prepaid card transactions have different regulations than banking cards, and hence, they require additional fraud protection measures.
How Prepaid Cards Work
Prepaid cards work the same way as debit cards.
Upon approval, the funds transfer seamlessly from the card provider to the merchants bank account.
Additionally, businesses may usevirtual card providersto issue prepaid virtual cards.
This helps businesses control spending limits and minimize the risk of fraud during e-commerce transactions.
Quick and convenient payout for the merchants without much authorization.
The provider offers protection under Consumer Financial Protection Bureau provisions in case of theft.
Challenges with Prepaid Cards
Not widely adopted by the customers everywhere.
Transaction charges can range from 1% to 3%, along with a fixed fee of $0.30.
Smart cards offer higher security than other cards, with features like biometrics and high-grade encryption.
Smart cards contain microchip processors embedded in a contact pad.
Smart cards interact with the card reader through swipe or tap.
However, online transactions work in the same way as credit and debit cards.
Here, the payment gateway connects with the microprocessing chip.
This chip participates in the transaction and encrypts the card number as well as the PIN.
Benefits of Smart Cards
Smart cards are less expensive than debit cards and credit card transactions.
Offers various identification features such as government licenses, employee cards and more.
Not widely accepted by all the merchants.
The customer has the flexibility to pay the full amount later or divide them into small investments.
Because of this payment model, BNPL is growing rapidly among the millennials and GenZ.
BNPLs user base will reach 900 million users by the end of 2027, according to Juniper Research.
However, customers hesitate to embrace BNPL because of security risks such as identity theft and data leaks.
Boosts customer loyalty as the customers will repeatedly come for upfront purchases.
Merchants will have to pay a refund back in case the customers file for a 100% refund.
Lacks regulations in certain regions.
As the name says, the customer pays the amount to the courier provider at the time of delivery.
Most customers with no bank accounts or a lack of access to online payments prefer paying through cash.
Some percentage of customers prefers it because they feel paranoid about using online methods for security reasons.
How Cash on Delivery Works
Cash on delivery doesnt provide instant payment to the merchants.
After the buyer chooses the payment method of COD, the seller prepares an invoice and dispatches the order.
The delivery agent collects the amount at the time of delivery.
Next, the logistics company deposits the cash at the e-commerce portal or their local office.
Then, the e-commerce company transfers the amount to the sellers account.
Benefits of Cash On Delivery
Boosts customer retention and customer loyalty.
Helps reach out to customers in remote locations who do not prefer online payments.
Research shows CODs have higher ROI and order flows.
Challenges with Cash On Delivery
Merchants are vulnerable to loss because of delayed payments or order cancellation.
Merchants face a risk when customers reject products, resulting in potential losses for the merchant.
The increased adoption of smartphones has encouraged mobile payment technologies.
Mobile payments can be made using features like near-field communications, voice commands, or a QR scan.
Regulations and compliance have resulted in wider adoption, making it a unified global payment method.
Mobile payments are quick, and payments are processed in real-time.
Customers may also face a poor user experience because of the slow payment processing.
Net banking facilitates a seamless connection between the customers accounts and digital marketplaces.
Users can make secure purchases, track their transactions, and manage their accounts using this payment method.
With around 71% of US customers embracing Internet banking, e-commerce merchants are widely accepting this payment system.
Banks charge around 1-3% of the transaction amount for accepting net banking as payment.
The merchant then integrates a payment gateway into their e-commerce website, where the payment authorization takes place.
When the customer chooses net banking on the checkout page, they are redirected to the Internet banking portal.
The customer selects the main account and proceeds with the payment authorization.
After the authorization, the customers bank redirects the customer to the merchants website.
The transfer may take several hours to a few days to initiate the payment.
Benefits of Netbanking
Internet banking is available round-the-clock for transfer of funds and other tasks.
The transactions are regulated under Federal Acts & Banking Regulations, safeguarding user information and privacy.
Convenient to use and make payments.
Sometimes, technical issues with banks may cause delays in payments.
This is slightly different from Internet banking, where users have to register and generate a username and password.
It remains the fourth most popular e-commerce payment system in e-commerce.
Bank transfers offer the same level of protection as net banking.
How Bank Transfers work
Similar to net banking, customers can accept bank transfer payments.
All you need is a merchant bank account to accept payment and integrate it into your e-commerce website.
Upon checkout, the customer initiates the payment with a transfer amount.
Benefits of Bank Transfers
Offers round-the-clock customer support in case of downtime or stuck payments.
Bank transfers are generally cheaper than other payment methods.
Challenges with Bank Transfers
Some bank transfers may take several days to clear.
Banks charge hefty fees for sending and accepting international transfers.
Customers can transfer the funds through a QR code scan or merely a virtual wallet number.
For this convenience, digital wallets account for around 49% of global e-commerce transactions, as per Statista.
This is projected to increase to 54% by the end of 2026.
How E-Wallet Payments Work
E-wallets work the same way as mobile payments for accepting and sending payments.
To accept payments via e-wallet, take these actions.
Benefits of E-Wallet
Merchants can receive payments within a few minutes or seconds.
Widely adopted by customers because of its convenience and secured transfer.
Most digital wallets charge zero to a small percentage of fees from the customers and merchants.
Challenges with E-Wallet
Adopting e-wallets comes with certain risks, including the possibility of identity theft.
How E-checks Work
Heres a typical process of how merchants can accept payments via e-checks.
Offers faster funds transfer compared to paper checks.
Regulated by US laws, offering a structured dispute resolution process and extra fraud protection.
Challenges with E-Checks
ACH payments are mostly confined to the North American regions.
Regulations and compliance make it a bit challenging for small businesses to follow the ACH regulations.
Hence, it is important to consider some factors when deciding how to accept online payments.
Consider the following factors when selecting an e-commerce payment method.
Security
Security plays a significant part in safeguarding merchants and customers sensitive information.
Some payment methods, like mobile wallets, go the extra mile by using biometrics and real-time payment authentication.
Fees and Pricing
Pricing is significant for small businesses that have low-volume transactions.
Different payment methods have different structures and costs, such as processing fees and transaction fees.
Depending on your business key in and transaction amount, the cost structure may impact your profit.
Some payment options charge a monthly or a contractual fee, while others charge per-transaction fee.
It is always profitable to enter into a monthly subscription or contract for high-volume transactions.
These factors can significantly impact customer loyalty and result in brand reputation.
Regulatory Compliance
Regulatory compliances and laws vary from one region to another.
Merchants should consider an e-commerce payment method that follows regulatory laws and complies with country-standard laws.
Ensure that the payment method aligns with the regional regulations of your target audience.
The integration process should be seamless and free of technicalities.
The e-commerce payment method should offer a mobile-friendly experience and faster payment options for shoppers.
Different age groups prefer different payment methods.
Younger generations like Genz and millennials are more inclined towards cryptocurrency and digital wallet payments.
What Is the Commonly Used E-commerce Payment System?
Digital Wallets, Credit cards and debit cards are the commonly used e-commerce payment systems.
What is the Rarely Used E-commerce Payment System?
How Does an E-commerce Payment System Work?
These elements include payment gateways, payment processors, merchant accounts, and security measures.
Payment gateways act as a bridge between the merchants and the payment processor or buyers bank.
What are the Types of Online Payment Systems?
Digital wallets are popular because of their fastonline payment processingand low transaction fees.
Each of these payment systems varies in terms of processing time, security, regulatory compliance and user experience.
What are the Best Payment Processors?
Currently, it has more than 430,000 merchants, handling more than 1 billion transactions.
Furthermore, Authhorize.net also provides several tools to merchants to be PCI DSS compliant for processing.
What Are the Other Best Enterprise Software?
#1.
It provides AI personalization and integration capability with technologies like ERP, OMS, CRM, and marketing automation.
Salesforce offers API integration for custom software.
The platform manages the traffic and can scale the resources up and down effectively.
#2.
SAP Hybris
SAP Hybrisis an omnichannel commerce platform that manages marketing, commerce, and sales operations.
It integrates with other SAP products and third-party platforms such as Salesforce, Adobe Experience Manager, and Marketo.
