E-COMMERCE

How effective is Electronic Payment System in the Global Banking System

How effective is Electronic Payment System in the Global Banking System

Introduction

Electronic payment system is a mechanism that is responsible for facilitation of electronic payment for transactions made online. These systems are a model of Electronic data interchange or EDI. Electronic systems are gaining popularity around the world, especially in the developing countries due to the rise of the Internet and Internet banking.

Electronic payment systems offer ease of accessibility to online consumers and vendors. These payments are credited for the development of debit cards, credit cards along with technologies such as mobile payments, e-checks, e-cash and digital wallets. The latest in electronic payment systems enables a third party to complete transactions for a person. This form of system is Payment Service Providers or PSP.

In this modern age, e-commerce has become popular due to facilities such as computer systems and Internet. For a corporate point of view, companies are seeing this as a component of their global strategy. For this Internet provides organisations with an opportunity to service customers faster which ease of accessibility. These systems also render assistance in terms of openness and a serving a wide base of customers (Floyd, 2008, pp. 115).

For e-commerce to be successful, the payment system must also adopt the technological advancements in the payment mechanisms. This need has given rise to various forms of electronic payment systems. The demand for advanced electronic system remains high to this date. The fact that there is a high demand for such systems does not guarantee success of the organisation. Statistically the rate of failure of such systems of payment is higher than that of success. This led us to the question as to what factors contribute to the success of an electronic payment system.

Since every banking organisation has its unique needs when it comes to electronic systems, therefore the concept of a global system is inapplicable. Banking organisations must also keep in mind the dynamics and the external environment in which the bank operates. Banks all over the world now provide Internet banking services, which compels them have a modern payment system. In an effort to construct a system applicable of integrating all components, banks now allow customers to make payments online.

In order to have an electronic system of payment banks need to have the required critical mass of customers. Since the cost of implementing such a system is high, an inadequate number of customers to use the system would prove to be ineffective and costly for the bank. Electronic system benefits to both customers and banks should outweigh the costs associated with the project (Liebena & Khiaonarong, 2009, pp. 110).

An overview of the electric payments systems

Since the banks require varying requirements for payment systems, there are several types of systems that have emerged. In the traditional system of payment, a buyer purchases goods or services from a vendor. The vendor then transfers these goods to the buyer against the certain amount of payment to the ...