SUBMISSION-1

Internet and Web Optimisation

(Semester – I)

E-Commerce Payment Systems for Business in 2022

NAME – Manisha Gupta

REGISTRATION NUMBER – 202104939

PGCM (DM)-2021

SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

1|Page
Introduction to E-Commerce Payment Systems:-

E-commerce is probably the only industry that grows almost a quarter each year, according to a
study by BigCommerce. People love to shop online and prefer this way of shopping. The global
crisis can hardly be a major factor in this trend. In 2022, people not only love to shop online but
are also forced to do so due to the coronavirus. In any event, businesses from any industry that
establish an eCommerce presence are future-proof and protect themselves against lockdowns.
One of the ways to achieve that is to use electronic payment systems.

The Definition:-

An E-payment system is a system that allows your customers to pay for products and services
online. This complex mechanism works with the purchaser, merchant, purchaser’s bank,
merchant’s bank, payment processor, and payment gateway.

Types of Electronic Payment Systems:-

Depending on the electronic payment method, E-payment systems can be divided into

 Cash Payment Systems that include Direct Debit and E-Checks.

 Credit Payment Systems that include Credit Cards and E-Wallets.

Undoubtedly, cash will be around for a long time — but according to WorldPay, the global part
of E-payment transactions that includes credit cards, debit cards, and mobile wallets, will have
increased to 83% by 2022. Here is some additional information from Infopulse on how the total
transaction value of digital payments will grow.

2|Page
These statistics illustrate why you should pay attention to how electronic payment processing
is organized in your business, and show what you can do to improve it. Let’s talk about it!

How the E-Payment System Can Help Your Business to Earn More:-

Every case is unique and outcomes can differ. However, using the best electronic payment
system solution available can benefit any business to a certain extent. Here’s how:

Revenue Opportunities:-

This is probably the biggest point of them all — E-Payment Systems are providing customers
with a variety of options to pay, which opens up more opportunities to collect revenue. The
easier and more diverse purchasing options that are available, the more likely it is your
revenue flow will increase.

3|Page
Automated Processes:-

When electronic payment processing is performed automatically, there is no room for human
error. It saves a lot of time and effort for the business and allows one to organize recurring
payments as subscription programs.

Greater Flexibility:-

You can easily offer special promotions and discounts or make a quick price change in
accordance with your latest marketing insights in order to make as many deals as you can.

Improved Security:-

At first glance, using an electronic payment system in E-commerce seems like a weak point in
terms of security, but you will also get access to the latest technology to protect your
transactions as much as possible. Also, E-commerce fraud detection and prevention standards
are very high in these systems. With the right approach, these security technologies could
serve as a cost-saver by detecting fraudulent transactions.

Engaging a New Audience:-

You can make your business available to a new audience by accepting payments from all over
the world or by including certain E-Commerce payment methods that are popular in your
target regions.

4|Page
6 Ways in Which E-Payment Systems Improve the Customer Experience:-

Simplified Process:-

Solutions like Amazon 1-Click Ordering, where all the customer needs to do is push one
button to buy or use Apple Pay (where a smartphone needs to be placed against the sensor)
create a whole new level of convenience. If your business supports these types of solutions,
you will make it much easier for your customers to buy your products or services.

Eliminating Repetitiveness:-

If your system still requires customers to enter their personal information each time that they
make a purchase, you can optimize this process. For example, by introducing an option that
allows clients to save payment information and not have to re-enter it for the next order. You
can also introduce the auto-pay approach the way Spotify and Amazon Prime have done, to
ask your customers for the required information just once— when they get registered.

Instant Notifications:-

Using an electronic payment system in E-commerce allows customers to get instant

notifications on whether a transaction has been completed and when they receive the
products.

Minimizing Human Contact:-

When you set up your electronic payment system to provide a customer with all the essential
functions like balance, credit information, or transaction history without the need to contact
your team members, it creates an additional layer of convenience. If the customer needs to
contact your business, you can launch a chatbot (a great example of using Machine Learning
in Finance and E-Commerce) which is available 24/7 to show your clients how much you
value their time.

5|Page
Providing Various Options:-

This is not only a revenue driver, but also a way to improve the customer experience. Let your
clients choose between credit cards, bank transactions, or maybe even cryptocurrencies and
they will pay you with loyalty and respect!

Security:-

Having these multiple options, however, creates a problem — your business is now
vulnerable to hackers. But if you use a third-party service to verify PCI compliance and make
sure you are doing everything to protect customer information, you can build a reputation as a
secure business. This will help build a strong brand image in the long run and make it easy for
your clients to recommend your business to others because they will feel safe making
purchases.

How Does Electronic Payment Processing Work?

We have discussed the importance and benefits of having a modern electronic payment
system. Now, let’s delve into specifics. Whether you run a marketplace, own a big E-
commerce business, or represent any other industry online, you need a payment solution that
will help you and your customers get all the above benefits.

To accept and process E-payments online, businesses need an E-payment gateway. This is a
service that is used for both online and brick-and-mortar stores and enables transactions
between buyers and sellers. A gateway is protected with security protocols and encryption to
provide the safest transactions possible between all the parties involved. The gateway you
choose also defines the currencies your business can accept, the cost of the transaction fees,
and the speed of your transactions.

6|Page
The role of an E-payment gateway in payment processing is very sophisticated. It includes
several tasks that must be executed in mere seconds. Let’s take a closer look at payment
processing:

1. After the buyer enters all the required information and pushes a button to finalize the
purchase, the data is sent to a seller’s web server through an SSL connection.
2. The seller’s web server receives this data and forwards it to the payment gateway via a
different encrypted SSL channel.
3. The gateway sends data to the payment processor that can convey information
between the seller’s web server and payment gateway.
4. The payment processor passes the information to a card network (for example, Visa or
Mastercard) to verify the transaction.
5. After that network receives the data, they decide whether to accept or deny it. When
the decision is made, the issuer bank sends back a code to the payment processor.
6. The payment processor shares the status of the transaction with the payment gateway,
and the payment gateway forwards it back to the seller’s web server.
7|Page
 7. The buyer receives a message about the acceptance or denial of their purchase
transaction through the interface of the E-commerce payment system.
8. In most instances, the issuer bank transfers money to the seller’s account the next day.

Now that we have explained the process, it’s time to decide how to integrate the gateway to
provide payments for an E-commerce website.

Choosing the Best Way to Integrate an E-Payment Gateway:-

There are three methods to integrate a payment gateway. The best fit will depend on the size
of your business.

Small business owners will probably prefer the Hosted Payment Gateway method if they are
fine with processing the payment externally. Like in the previous case, no PCI compliance is
required, as all the processing is handled by the service provider. This method is simple and
fast to integrate. However, the drawbacks here are quite significant —you can’t control a
hosted gateway. To make a payment, customers must leave your website — this is not good in
terms of conversion and marketing in general. Additionally, some buyers may be suspicious
about going to third-party websites, which weakens your brand image.

On the other hand, integration is easy — all you need to do is add JavaScript code that will
serve as your “Buy” button and direct the customer to the third-party website to make a
transaction.

Businesses of any size can use the Direct Post method. After the purchase, the data instantly
reaches the gateway and processor. You don’t need to have PCI compliance, because your
platform will be used only for shopping, and none of the money transaction details will be on
your server. With this approach, you will have room for branding and customization options.
Also, a customer won’t leave your website for the purchase. The downside is that Direct Post
is not the best method in terms of security. To integrate this way, the vendor must make an
API connection between a payment gateway and the shopping cart on your website for
transferring the information.

8|Page
If you have a medium to large sized business, your brand image and user experience are
crucial factors in your revenue and potential growth. That’s why the integrated method can
work best here. This approach will keep your customer on your website the whole time and
you will have complete control over the payment process. You will be able to adjust and
customize the payment system just the way you want. The main drawback is because you
need to support a payment system yourself, this could become very expensive. You will store
the financial information of your customers, so you need to obtain PCI compliance to even be
able to do that. If you have any custom features in mind, they may be quite difficult to
implement. You need a team of experts to successfully execute the integration and add APIs
to your server. While vendors offer detailed guides on this process, it is better to find the right
team to perform it.

The Importance of Having PCI DSS Compliance and How to Get It:-

Among the aforementioned approaches, only the integrated method requires a business to be
PCI DSS compliant. Payment Card Industry Data Security Standard (PCI DSS) was first
introduced over 15 years ago. Presently, it is mandatory for anyone who wants to process card
payments. There is no other option other than to be PCI-compliant if you want to work with
credit card transactions on your server. Obtaining compliance looks like this:

 First, you should determine your level of compliance. There are four of them and they
are defined by the volumes of secure transactions your business has handled. All
transactions should be made through Visa, MasterCard, American Express, or
Discover — the four original creators of the security standard.
 Then you should learn about PCI requirements via the PCI Self-Assessment
Questionnaire. Currently, there are a dozen of them.
 After that, you must take a test called the Attestation of Compliance (AOC). Choose
the one that is most suitable for your business from the available categories.
 The next step is the External Vulnerability Scan procedure. There are many approved
vendors for this. You can learn about them.
 The last step is sending all the documents you have obtained during the process to the
acquirer bank and card associations.
9|Page
Picking the Most Suitable Electronic Payment System:-

Currently, there are hundreds of payment solutions available for business owners. How do
you decide which is the best one for your business? Here are some tips that can help you
make a decision.

Learn About the Reputation:-

The first move is to learn about the history and reputation of a specific payment solution.
With market leaders, it is quite easy, because of all the positives and negatives are simple to
find. But if you need some special payment system that is not so well-known, you should
spend some time reading the reviews.

Compare Fees:-

The pricing structure can be very different, and you should be aware of the hidden costs.
Rigorously study the setup fees, monthly fees, and transaction fees to know the final price.
Also, there could be some additional services or plugins that you could use in the future when
you decide to grow your business.

Ensure Security:-

As we have discussed earlier, this is one of the most important factors for
making an informed decision. The solution must ensure PCI DSS compliance to
effectively protect the transaction data and customer information — this is
standard. Of course, if the payment solution provider offers something else, like,
for instance, Fraud Detection with ML, this is only a plus!

10 | P a g e
Make Sure the System Supports the Payment Methods You Need:-

Undoubtedly, there are leading payment methods like PayPal, E-wallets, or debit cards, but
that doesn’t mean you should limit your business to them. Sure, your gateway must support
the main payment methods available in your area. But also keep in mind your potential
international growth and think about the possibility of implementing multi-currency support.

Think About Merchant Account Possibilities:-

A merchant account is opened with the acquiring bank the merchant wants to use for
transaction processing. Some payment gateway providers offer that account as part of their
service, so you should evaluate this option if you don’t already have one.

Top 5 E-Commerce Payment Systems to Choose From

Amongst the impressive variety of the available payment gateway providers, here are the five
most popular options that are also available in the majority of countries.

  PayPal Amazon Pay Stripe 2CheckOut Authorize.net

Payment Amazon Pay AliPay, Apple PayPal, PayPal, Apple

Methods PayPal, Pay, Android ACH, Pay, E-check,
Apple Pay, Pay, Bitcoin, WebMoney, Visa Checkout
Android Pay, WeChat, Payoneer,
Venmo, ACH, EPS WeChat,
Bitcoin Wire

Credit/Debit Visa, Visa, Visa, Visa,

Card Support Visa, MasterCard, MasterCard, MasterCard, MasterCard,
MasterCard, American American American American
American Express, JCB, Express, Express, Express, JCB,
Express, JCB, Diner's, AMEX JCB, Discover
AMEX, NYCE, STAR, Discover
Diners Club China Union,
EuroCard

11 | P a g e
  PayPal Amazon Pay Stripe 2CheckOut Authorize.net

Setup Fee No No No No $49

Monthly Fee $30 Payments No No No $25 Gateway

Pro Fee

Transaction 2.9% + $0.30 2.9% + $0.30 2.9% + $0.30, 3.5% + 2.9% + $0.30
Fee ACH/Bitcoin 0.35%
Processing
0.8%

Features AVS, SSL, AVS, SSL, AVS, SSL, AVS, SSL, AVS, SSL,
CCV, Virtual CCV CCV, Virtual CCV CCV, Virtual
Terminal Terminal Terminal

Chargeback $20 $20 + Taxes $15 - $25

Number of 202+ 78+ 25 200+ 20+

Available
Countries

International 3.9% + 3.9% + $0.30 3.9% + $0.30 - -

Transaction Currency-
Fee Based Fee

12 | P a g e
What Payment Methods Your Business Needs to Support, Depending on
Your Target Location:-

Selling overseas might not be a priority in your strategy, but for online retailers, it’s easy to
expand on the global market. Buyers tend to buy items they can’t find in their countries on
international websites. Cross-border online purchases are expected to reach $1 trillion this
year, so here are the most popular E-payment types your gateway needs to support in certain
regions.

The United States and Canada:-

Cards are popular here, including Visa, American Express, Mastercard, JCB, and Discover.
The most popular E-wallet service Apple Pay is a must, but you should consider other options
like Android Pay and Visa Checkout. ACH Payments are exclusive to the United States and
are popular there. It is also important to have a Bank Transfer option.
13 | P a g e
Latin America:-

Although Visa and Mastercard are widely accepted, almost half of customers prefer to buy via
local cards like Diners Club or Hipercard. Speaking of E-wallets — Masterpass, PayPal, and
Visa Checkout must be enough. Additionally, you must consider Local and USD Bank
Transfers and the Brazil-exclusive Boleto Bancario.

Europe:-

For the European market, be ready to provide the most popular cards and types of E-wallets
(the top gateway providers have them). But depending on the region, you must be aware of
the local specifics. For example, in Germany, the most popular payment method is Giropay
Bank Transfer.

Asia Pacific:-

The region is a giant market for those, who offer the most common card types as a payment
method. In the E-wallets realm, there are two undisputed leaders — Alipay and WeChat Pay;
you can’t enter the Asian market without them!

Building a Custom E-Payment Gateway:-

Yes, there is a large number of solutions available. However, for large-scale businesses, there
is a reason for developing a custom payment gateway. If your business has millions of
transactions per year, developing your system can quickly become an advantage.

There are three major benefits in doing this:

1. Saving on fees and sign-up costs.

2. Full flexibility to customize a solution.
3. The option to offer your custom gateway as a separate product.

Among the drawbacks, you will have to deal with the settlement reports yourself, and the
system will require a significant time to launch. But the biggest concern is the price of the

14 | P a g e
development and certification. The cost of the development of a custom E-commerce
payment system, according to the market prices, could constitute up to $800,000. You need to
have at least $150,000 for the project to cover all expenses.

If you have a big enough business to cover the expenses, here are the steps you need to take to
create a custom system:

 Get registered through your bank as a payment gateway service provider.

 Contract with multiple banks as payment processors to your system.
 Develop an API and write matching documentation in accordance with the PCI DSS
compliance standards.
 Implement all the required security measures and fraud protection mechanisms to
obtain the PCI DSS certification.
 Integrate separately the additional payment methods you may need — for example,
PayPal.
 Create a web application that will serve as the admin panel for the system.

Our Experience in Implementing E-Payment Systems on a Marketplace

Platform:-

SPD Group has been developing and expanding a marketplace platform for more than 10
years. This marketplace platform supports more than 20 payment systems. Every payment
system we have added opened up some new opportunities for sellers to acquire new clients.
The platform’s smaller clients were fine with using payment solutions that existed on a
platform, but the large-scale clients preferred to connect with the banks they were partnering
with and wished to include their own payment methods.

The need to add some local payment methods was often a reason for the addition of a new
payment system. We have experience in integrating the platform with a host of local payment
systems from Denmark, the Netherlands, Poland, Greece, the United Kingdom, Norway,
Spain, the Philippines, the United Arab Emirates, Canada, and the United States of America.
In each case, we have dealt with different challenges while integrating the marketing platform
15 | P a g e
with each of them. As an example, a Polish payment system sometimes required a significant
time to accept payment because manual processing was frequently required— but we found
the proper solutions for the best user experience even in such cases.

Our platform uses all three payment gateway integration methods — Direct Post, Hosted
Payment Gateway method, and Integrated method for different payment systems. Sometimes,
it is possible to offer the client two payment gateway integration methods for a single
payment system. It was a real technical challenge to make all the possible options work
properly on the platform because each of them had a different flow. Hosted Payment Gateway
was the most difficult one in terms of user experience as we couldn’t control the process
entirely. We had to work on those cases, when payments failed and figure out how to notify
clients if payments were delayed.

3-D Secure integration was another obstacle we had to overcome. 3-D Secure is a protocol
designed to provide an additional layer to the security of credit and debit card transactions
online. Unfortunately, it had some major problems with the mobile user experience. When the
client left our platform and moved to a 3-D Secure frame, the frame wasn’t shown correctly
on mobile screens. This was an inconvenience that could negatively influence buying
decisions. Besides, it also looked suspicious to the user. Although this was beyond the scope
of our participation in the project, we did our best to make the 3-D Secure page look good on
all mobile devices and as optimized as our platform.

So, what is the best payment system to choose?

Based on SPD Group’s experience, it makes sense to be looking at systems that are growing
at a fast pace. You can choose a well-established payment system, but if it doesn’t keep up
with the innovations in the Fintech industry your business will ultimately lose customers due
to some issues and the resulting customer friction in the payment process. There are a lot of
convenient Fintech projects emerging on the market today that make the payment process
easier and more flexible for the customer. Don’t miss out on them!

16 | P a g e
Conclusion:-

If your business is represented online and your goal is to earn more revenue, build a brand
image, and improve the customer experience, it is worth paying attention to improving your
payment systems. Using the services from payment gateway providers and adjusting them to
your needs can help your business grow even in the most challenging times.

17 | P a g e