Electronic Payment Systems

Moving money without cash

An online trade is only complete when the money moves. An electronic payment system (e-payment) is any method of paying for goods or services electronically, without physical cash or a paper cheque changing hands. E-payment is the engine of e-commerce: without a safe, quick way to pay online, buying over the internet would not work.

Common electronic payment methods

• Credit card — the bank lends the buyer money to pay the seller now; the buyer repays the bank later, within a credit period. Useful for larger purchases, but interest applies if not repaid in time.
• Debit card — payment is taken immediately from the buyer's own bank account. There is no borrowing; you can only spend what you have.
• Net banking (internet banking) — the buyer logs in to their bank's website or app and transfers money directly from their account to the seller's account.
• Digital wallet (e-wallet) — money is pre-loaded into an app and then used to pay quickly; it stores value electronically like a purse on the phone.
• Unified Payments Interface (UPI) — an Indian system that lets a person send money instantly from one bank account to another using a mobile app and a simple virtual address or QR code, without sharing full account details. It has made small everyday payments very easy.
• Electronic funds transfer (NEFT / RTGS / IMPS) — bank services that move money electronically from one account to another; IMPS and UPI work instantly at any time, while NEFT and RTGS are used mainly for larger transfers.
• Cash on delivery (COD) — strictly speaking not electronic, but widely offered: the buyer orders online and pays cash when the goods arrive, which reassures customers who are cautious about paying in advance.

How an electronic payment works (in outline) …