What are the steps for electronic payment?

Electronic payment, abbreviated as e-payment, is a new generation of payment methods that are based on Internet and communication technology on the one hand and smart systems linked together by banks and specialized financial companies on the other. Through electronic payment, anyone can transfer money or make a purchase from anywhere in the world without leaving their home and in record time.

The urgent need for electronic payment systems emerged with the advent of the concept of e-commerce, and today the idea of electronic payment enters many fields, starting with the payment of salaries and invoices, through purchasing, whether from electronic stores or stores on the ground, and ending with the emergence of what is called independent digital electronic wallets. With the continuous technological development, as well as the increased level of networking and communication between banks and financial institutions, more solutions for electronic payment, various, new, and innovative solutions that suit everyone, have been created.

Important points about electronic payment

Electronic payment is not a stand-alone system.

Rather, it is a smart system that connects communication technology and the Internet with traditional banks or money companies, allowing bank customers or money company subscribers to use their balances in purchases, bill payments, and electronic money transfers without the need for direct traditional cash payment.

Payment solutions are available to everyone through specialized banks and companies.

There are many banks and companies specialized in providing electronic payment solutions to business owners, and anyone can contract with one of these banks or companies to create an electronic payment system for their customers, most often in the case of setting up an online store on the Internet.

Online shopping is not the only form of electronic payment.

It is possible to apply electronic payment to traditional purchases; for example, debit cards (the card linked to the bank account and used to withdraw from ATMs) can be used to pay the price of purchases made from a store on the ground.

Electronic payment service providers charge commissions.

In fact, electronic payment services are not free, but there are always commissions that are added to the amount paid or the amount of the purchase in return for providing the electronic payment service.

Communication technology and the Internet are essential elements to complete the electronic payment process.

This does not apply to shopping operations through the Internet only, but it applies to all payment operations and electronic financial trading, even in the case of withdrawals from an ATM, as the machine must be connected to the network with the bank’s database.

Steps in the electronic payment process?

In this part, we will explain how to complete the electronic payment process in clear steps. Let’s assume here that the electronic payment process will be for the purchase of a product from an online store, and it will be done by using a credit card (Mastercard) affiliated with the Bank of Finland.
Note: Mastercard is a company specialized in issuing bank cards in cooperation with local banks, and it is considered the most popular credit card network, followed by Visa.

1. A buyer who is online visits the online store.
2. The buyer chooses the product he wants to buy and then clicks the “Pay” button.
3. The buyer fills in the credit card details.
4. The buyer’s payment data is sent to the payment gateway. The payment gateway is a company specializing in payment services, and it represents an intermediary to carry out the payment process for the benefit of the online store. One of these payment gateway services must be used by the online store.
5. The payment gateway collects the credit card data of the buyer and sends it to the card network (in our case, MasterCard).
6. MasterCard checks with the customer’s bank to ensure that the card is valid and that there is sufficient balance for the transaction.
7. If approved by the bank, the bank will deduct the purchase price from the available balance on the buyer’s credit card.
8. After deducting the purchase amount, the bank sends a confirmation of the payment process to the MasterCard network.
9. The card network sends confirmation of the payment process to the beneficiary bank (the bank of the online store owner through which he receives the price of the product), and then the confirmation is sent to the payment gateway as well.
10. The payment gateway sends the payment confirmation to the online store, which in turn tells the buyer to confirm receipt of the product price.
11. The buyer also gets a notification from his bank regarding the payment.
12. The procedures for sending the product begin at the buyer’s address.

Electronic payment methods

There are many electronic payment methods, including global methods and local methods as well. It is important to mention here that not all payment methods are necessarily acceptable or suitable for all electronic payment purposes.

Cards issued by local banks

As mentioned above, banks issue cards in cooperation with specialized companies, led by MasterCard and Visa. Here is a list of the most important types of cards that are issued by local banks:

• Credit card: This card is issued with a limited credit limit in accordance with the policies of the local bank and the policies of the central bank to which the local bank is affiliated. A credit guarantee must be available to issue this card (bank balance or savings certificates) in order to guarantee the bank’s rights in the event of default. The card is usually used for online purchases and can be withdrawn from ATMs. The card debt is paid in the month following the month in which the purchases are usually made, and instructions can be left for the bank to pay the debt from the account balance when payment is due.
• Prepaid card: This type of card is a container for saving money and using it for online purchases. This card is issued through some local banks, where the customer makes a deposit and uses this deposit to make online purchases. The deposit is made at the bank itself or through ATMs. Usually, this card has a monthly limit for deposits and exchanges.
• The debit card: is the card that is issued when opening a bank account, and it is used to withdraw money directly from the bank account through ATMs. It is also used to buy from stores on the ground. This card is linked directly to the bank account and may have daily withdrawal limits.

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