With the advancement in telecommunication, electronic payment systems are rapidly replacing the traditional modes of payment that involved personal contact between buyers and sellers. Electronic payment systems entail online financial transactions that utilize some form of a digital financial device, such as e-tokens, e-cash and checks. E-payment systems present a number of benefits to both individuals and businesses.
Variety of Choice
Electronic payment systems allow financial institutions, businesses and the government to offer a variety of payment options to their customers. These systems include automated teller machines, debit cards, credit cards, mobile banking and payment of bills through the phone. Traditional business payments systems depends mainly on a limited number of the business outlets situated in different locations. This limits the client coverage, however – through Internet services – systems that rely on e-payment are available to a large number of clients.
E-payments systems result in reduced costs for both businesses and individuals. Businesses save on operational and processing expenses mainly due to reduction in technological costs – for example, the use of the Internet and the acquisition of computers and other machines. Expenditures in paper and postage is cut down along with time spent in executing personal transactions. These reduced costs are often passed down to customers who in turn pay less fees associated with transferring money or making payments. Customers also save on time spent in dealing with personal transactions as in traditional payment systems.
The use of e-payments cancels out the use of drafting checks, transmitting cash and invoices for both businesses and customers. This allows for faster execution of transactions – for example, you do not have to wait for the 30 days required in invoicing transactions. Credit cards also allow for customers to partake in transactions without immediate cash.
The traditional payment systems mainly involved clients sending their confidential information via post or physically visiting the transaction site. This presented a number of security risks – for example, your mail may get lost or fall into the wrong hands. Additionally, places where financial transactions take place are targets for criminal attacks. E-payment systems offer encrypted services which protects the clients’ private information during transmission and you do not even have to leave your home.
Although e-payments are convenient, they do have some inherent drawbacks. First, you must have internet connection, whereas with traditional methods of transferring money, you only need to go to a physical location. Also, your information could be compromised online through data breeches or your personal computer being hacked. When conducting any form of e-payment transaction, always make sure you are using the most up-to-date software and that you have some sort of virus protection on the device.