According to estimates, over 80% of transactions across the country use other payment modes other than cash. These payments are being channeled through payment gateways (merchant services), which can simplify and accelerate payments, helping customers and businesses alike. With increasing digitization, these numbers are set to increase in the coming years. Read on to learn more about the types of online payment processing services available today and how they work.

What are the various types of online payment gateway systems?
There are three major types of online payment gateways that businesses can introduce:

• On-site payments
  These systems are mostly used by large-scale businesses that host the payment process on their servers. This gives them more control and responsibility over the checkout experience.
• Checkout on-site, payment off-site
  Several small-to-mid-level merchants use this system where the front-end of the checkout process is hosted on their website, but the payment processing occurs on the backend of the payment gateway. This helps simplify the process for the vendor and increases backend security. However, businesses cannot control the customer experience from start to finish.
• Redirects
  These payment options include options for alternative payment methods. On choosing this payment option, the customer is redirected to the third party’s payment page to complete the transaction.

These payment options are great for small businesses to enable secure transactions. However, resorting to these platforms requires vendors to give up some amount of control when it comes to customer experience.

What are some popular modes of online payment?
Customers can use several alternative modes of online payment for their purchases. Some of the most popular options include:

• Credit cards
  Credit cards are a mode of payment issued to users by a financial company. This tool lets users borrow funds to make their payments. With several security measures in place, they are often considered the safest and easiest mode of online payments. They also negate the customer’s liability in case of fraudulent purchases.
• Debit cards
  This payment card is directly attached to a customer’s checking account. When used, it deducts money from the customer’s account to pay for the purchase. With consumer protection guidelines, they are as secure as most credit cards. Most online merchants accept payments made via credit and debit cards.
• Bank transfer
  This payment method is similar to a debit card wherein the cash is directly transferred from one bank account to another. While the process is similar, a bank transfer eliminates the need for a physical card, making the transaction faster as well as more secure.
• Electronic check
  An electronic check is used in lieu of a paper check to deposit money from one bank account to another. They may also be referred to as ACH or eChecks. These checks require details such as the payer’s name and the amount of payment, as well as the routing and account number of the individual checking account. This transfer of funds is authorized via the user’s bank website.
• Electronic bill payment
  This is another way of sending money electronically from an existing bank account. It is generally used to make credit card and bill payments only.
• Third-party payment services
  This is one of the most popular methods of online payments. These payment services allow users to make or receive online payments without setting up a merchant bank account with them.

What are the benefits of using online payment services?
Online payment processing can be beneficial to customers and businesses alike. Some of the advantages of these payment services include:

• Security
  Online payment services have multiple safety measures in place, making them more secure and reliable. These transactions are generally encrypted, which helps protect consumer information. With every transaction needing prior authorization, these payments help keep the customer’s funds safe.
• Efficiency
  Online transactions are also a faster way of making payments. Not only do they offer an improved customer experience, but they also help reduce one’s carbon footprint by reducing labor and stationery costs. It also allows merchants to make their accounting more efficient, allowing them to increase their sales through discounts, waivers, and more.
• Convenience
  With online payments, vendors get instant payments for their products and services. They decrease the risk of late payments as customers can make payments anytime and anywhere.
  Online payments also reduce the need for checks and cash, saving time and making transactions a hassle-free process.
• Contactless option
  Purchases can now be made through smart devices by scanning QR codes and using OTPs. This eliminates the need to stand in long lines to make payments, enhancing operational efficiency.

With most transactions being conducted over the Internet, it is no surprise that online payment methods have evolved to make buying and selling a seamless experience.