Industries

 
   

 

 
     
 
 
 

Payment Systems

 
 

 

  
 

Different types of payment systems have been used and are used for payment. Broadly speaking, two types of payment systems are used at present:

  • Low value purchases that can be covered through credit card payments (usually up to $2,000).

  • Higher value purchases that cannot be covered through credit cards.

Credit Card Payment Systems: Payment systems in many e-commerce sites take credit cards. The merchant has the following choices:

  • Buy or rent and install a credit card processing system. For example, credit card payment systems such as Miva (Miva.com) and Cybercash (cybercash.com) can be bought or rented and installed at a merchant site.

  • Connect to an ASP that specializes in credit card processing. In this case, the merchant does not install anything, just accesses a remotely located payment system. Paypal is a popular payment system. Cybercash (www.cybercash.com) also provides a variety of credit card processing software as a hosting service.

  • Use complete business packages, such as Amazon.com Zmarkets or Yahoo Small Business, that handle hosting, payment and other services. For example, user of Amazon.com Zmarket pays a monthly fee to sell his products through Amazon.com website and also take advantage of Amazon payment system.

  • A merchant can develop his own credit card processing system. But this is not an advisable solution at present due to the aforementioned options.

But how does a merchant get the money. Most credit card processors need a merchant account to transfer money into. Merchant accounts can be setup by banks or a merchant can use companies such as cybercash or authorize.net for setting up merchant accounts.

For additional information on credit card payment systems, refer to the following websites:

Other Payment Systems. In addition to credit cards, payment systems do use other means such as electronic fund transfer, letter of credits, loans, and purchase orders, etc.

Many businesses use an accounts payable (AP) system for these payment systems. In an AP system, the following procedure is used:

  • a customer purchases a product by using a purchase order or another pre-arranged agreement

  • the merchant sends an invoice to the customer for the amount owed

  • the customer sends the payment to the business

  • the business adjusts its books to settle the accounts.