What is the e-payment system?
- Laxmi Mathur
- Mar 24
- 2 min read
In today's era, most of the transactions in daily life are done online, from buying groceries to paying various bills. All this has been possible due to electronic payment systems (e-payment systems). E-payment systems facilitate electronic payments for the purchase of any goods or services through internet-based shopping. It is also called online payment systems. E-payment systems settle payments directly from banks or e-wallets without using physical cash or cheques. The use of e-payment systems is increasing rapidly as everything is now available online.
The introduction of online payment services has brought forth different opportunities for different businesses, especially after the lockdown in many areas due to the COVID-19 pandemic. During the lockdown, people could not go out of their homes to get their essential goods and services and were dependent on buying things online. Today, a large part of India's population has moved to online platforms for various needs.
What is the working process?
It mainly involves five participants, through which the amount is transferred from one person/account to another person/account.
E Payment Banner
The e-payment system involves the following participants:
Merchant: The business entity or owner provides a platform to buy various goods or services online. The merchant performs various functions such as displaying the products available for sale, fulfilling the requirements of the customers based on the trending environment, timely delivery options, managing storage facilities and financial aspects.
Customer/Cardholder: The customer is the buyer of the products or services available online and is also the person who holds the card to make payments.
Issuing Bank: It is the customer's bank or financial institution that provides credit or debit cards to its customers. The payment is debited from this bank.
Acquirer: It is the bank or financial institution in which the merchant has an account. The payment is credited to this bank account. It is responsible for processing payments when cards or other payment options are used.
Payment Processor: This partner helps connect the acquirer to the merchant and settle payment transactions. It decides the routing for the transaction and provides risk management solutions while processing payments through the payment gateway.
Now, let us see how an e-payment transaction takes place:
When a customer visits a website or an application for shopping and finalizes the products or services after entering the delivery address and providing other details, Once one of the e-payment methods is selected, the bank, card and other related details have to be entered. After this process, payment settlement is done by transferring funds from the customer’s bank account to the merchant’s bank account.
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