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Payments over the Net

An integral part of E-commerce is to make electronic payments over the Internet.

These payments represent all non-cash financial transactions, which take place between two or more parties. The exchange of value is often facilitated through one bank - where the two parties share the same banker. However, it is more common for the two parties exchanging value to hold accounts with alternative banks, in which case both banks become parties to the payment.

 

Electronic payments represent an efficient means of:

·         Changing funds and cash flows

·         Offering improved security

·         Assuring value

·         Minimizing manual intervention

·         Reducing costs

·         Simplifying record storage and handling

 

Consumers

 

To a consumer, an electronic payment system is a convenient way of making a purchase or paying for a service without holding cash or having to go through the process of completing a check and producing some form of acceptable identification. This parting of wealth can be achieved with a token (plastic card).

 

Authenticating an EFT (Electronic Funds Transfer) post transaction to pay for groceries is an electronic payment, as can be arranging a telegraphic transfer to an overseas account via your microcomputer.

 

Suppliers

 

To a supplier of goods or services an electronic payment is the receipt or outward movement of funds, perhaps linked to an inventory management, ordering or accounting system, eliminating much of the need for large cash holdings, time consuming clerical activities and offering easier management of cash flows.

 

These payments may be from consumers as bill and fee payments, outgoing payments to suppliers for materials or to employees as salary payments or expense reimbursements.

 

Banks

 

For an account/payment manager or Bank, an electronic payment is a series of processes by which value exchange is secured, verified and accepted. It is a series of checks, balances and reconciliation's to ensure integrity, sometimes accommodated through interchange with another institution and always in conjunction with a series of accounting entries.