What Are the Types of Electronic Payment Systems?

By Loise Kinyanjui

A credit card is a common payment system.
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Electronic payment systems have become more popular thanks to increased use of Internet shopping. These systems do not just involve Internet transactions, as there are more and more ways being developed to facilitate electronic money transfers. With increasing technology, the range of devices and processes used to transact electronically continues to increase while the use of cash and check transactions is decreasing. This is mainly because it is much easier to carry cards or use cell phones to pay for purchases compared to cash.


These are the most common form of electronic payments. There are three types of cards: credit, debit and prepaid cards. They typically are made of plastic and have a magnetic stripe on the back of the card. The customer gives the merchant the card while shopping, and the merchant swipes the card through a terminal or puts the relevant information into a database, which is then delivered to the credit card company, who relays a confirmation message back to the merchant that the purchase was completed. This process typically takes only a few seconds to complete. Credit cards are an extremely popular form of electronic payment because you can use them almost anywhere for almost any kind of purchase, and you do not have to have cash on hand to pay for things.


Internet payments involve a person transferring money or making a purchase online. Consumers have a choice of either transferring the money directly from their bank account, which can easily be accessed online, or they can use a credit, debit or prepaid card. Most people prefer to use the second option, especially when making online purchases. This form of payment continues to increase in popularity with the ever-growing e-commerce industry.

Mobile Payments

Although the number of transactions that can be carried out via a cell phone are limited, they still can be used to facilitate some electronic transactions. Mobile phone manufacturers have enabled their phones’ software to allow users to access electronic commerce. In some countries, mobile service providers allow their customers to have a bank account on their cell phone numbers and can use the funds in their accounts to carry out transactions.

Person-to-Person Payments

These payments enable a person to pay another using an online account, a prepaid card or another mechanism that stores value. Various companies facilitating such payments are PayPal, Alertpay and Moneybookers. These services can easily be accessed over the Internet via computers, phones and other devices. They provide an easy and secure means of making transactions online.