Digital Financial Tools

Electronic Payment System

Issues of trust and acceptance play a more significant role in the e-commerce worldthan in traditional businesses as far as payment systems are concerned. Traditionally, a customer sees a product, examines it, and then pays for it by cash, check, or credit card (Figure 3.1). In the e-commerce world, in most cases the customer does not actually see the concrete product at the time of transaction, and the method of payment is performed electronically.

EPSs enable a customer to pay for the goods and services online by using integrated hardware and software systems. The main objectives of EPS are to increase efficiency, improve security, and enhance customer convenience and ease of use. Although these systems are in their immaturity, some significant

development has been made. There are several methods and tools that can be used to enable EPS implementation

While customers pay for goods/services by cash, check, or credit cards in conventional businesses, online buyers may use one of the following EPSs to pay for products/services purchased online:

Electronic funds transfer (EFT): EFT involves electronic transfer of money by financial institutions.

Payment cards : They contain stored financial value that can be transferred from the customer's computer to the businessman's computer.

Credit cards : They are the most popular method used in EPSs and are used by charging against the customer credit.

Smart cards: They include stored financial value and other important personal and financial information used for online payments.

Electronic money (e-money/e-cash): This is standard money converted into an electronic format to pay for online purchases.

Online payment: This can be used for monthly payment for Internet, phone bills, etc.

Electronic wallets (e-wallets) : They are similar to smart cards as they include stored financial value for online payments.

Micro-payment systems : They are similar to e-wallets in that they include stored financial value for online payments; on the other hand, they are used for small payments, such as kurus in Turkey .

Electronic gifts : They are one way of sending electronic currency or gift certificates from one individual to another. The receiver can spend these gifts in their favorite online stores provided they accept this type of currency.