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What is Online Payment? Types, Modes, Methods, Meaning
Online payment allows you to pay money via the internet. Buyers will use this type of payment when they purchase goods online or offline. They can use different types of online payment methods, including debit/credit cards, wire transfers, net banking, and digital wallets. Online payments can be done at the discretion of consumers.

They can pay online to e-commerce stores to buy clothing or other items, subscriptions, mobile, DTH recharges, medicines etc.

Four entities will be involved in the online payment process, such as the consumer, merchant or business, the consumer's bank, and the bank of the merchant or business.

Although, more than one entity is involved during the online payment process, the entire process is electronic and completed within seconds.

With the advent of the internet, online payments have become extremely popular among buyers and sellers, owing to their benefits. They help consumers considerably save much of their time, allowing the process to be completed quickly and efficiently. Buyers do not need to handle physical cash, as online payments allow them to make cashless purchases. Consumers can buy their preferred goods and pay for them with the greatest security by propelling a payment confirmation message to consumers.

What is Online Payment?
When it comes to knowing online payment meaning, in essence it is an exchange of currency, electronically through the internet. The process in these payments is the transfer of money from the bank account, debit card, or credit card of a customer to the bank account of a seller. This online e-payment is handy for purchasing the merchandise or services of sellers.

Buyers and sellers make online transactions with the help of online payment apps. On the buyers' side, the transaction is to purchase goods and services and products or services deliverance from the sellers' end. These easy online payment options involve several steps while transferring a buyer's funds and seller's offerings. Both parties will use some online payment apps to complete their transactions successfully.

Types of online payments
The World Wide Web lets people know which is the best online payment app. Different online payment methods have become extremely popular among people, offering many benefits to them. Paying money online through trusted platforms is the safest and best online payment mode amongst buyers and sellers. Some of the common types of online payments are as follows:

1. Credit Cards
2. Debit Cards
3. Automated Clearing House (ACH)
4. Cash
5. E-Checks
6. Digital Payments
7. Digital Wallets
8. Money Orders
9. Electronic Funds Transfers (EFTs) and Other Options

1. Credit Cards
Credit cards are one of the payment sources in the list of payment methods online. These online payment modes allow cardholders to buy their preferred merchandise and services. Credit cards are one of the alternative online payment methods, offering a higher rate of cash back. They allow users to have little to no liability for fraudulent fees. They help users get reward points that they can redeem for several purposes.

Paying with a credit card makes it easier to avoid losses from fraud. When a thief uses your debit card, the money is debited from your account instantly. Legitimate expenses for which you've scheduled online payments or mailed checks may default, triggering insufficient funds fees and affecting your credit.

Credit cards come in different types, such as Mastercard, Visa, Diners and American Express. All the handiest online payment methods in India. However,

Mastercard and Visa credit cards have global recognition, but American Express cards also have extensive coverage. Similarly, each of these credit cards provides users with unique benefits. They will provide users with a bounty of benefits, including travel insurance, rental car insurance, and purchase protection.

However, the benefits may count on the discretion of credit unions and banks offering these credit cards.

Credit cards offer a quick and convenient way to make financial transactions both large and small. With a credit card, clients use a set credit limit from the company issuing the card to make offline and online purchases. Some companies like American Express and Mastercard offer contactless credit cards that use radio-frequency identification to authenticate card information, saving customers the trouble of swiping their cards against a card reader and making the process more secure.

If customers pay back their credit card balances regularly, they can build up a good credit line. However, if they have trouble meeting their payment due dates, they can be charged interest and their credit card rating can go down.

2. Debit Cards
Banks will issue debit cards to their account holders as part of their online payment services. They allow them to use their cards to make purchases online.

The banks will deduct the amount automatically from the cardholders' bank accounts. Similar to a credit card payment system, the debit card online payment system is one of the most preferred online payment options among people. The major ones are Visa, RuPay, and MasterCard. Visa cards are the most acceptable cards by worldwide merchants for all online and digital transactions. Debit cards provide an easy way for people who are seeking to make online payments.

They offer the best online payment solutions, which makes them the most sought-after payment tool amongst global buyers. They provide immediate money access to users to perform many online transactions comfortably. Similar to credit cards, debit cards are extensively accepted online.

Debit cards withdraw money directly from an attached bank account. A debit card payment usually doesn’t come with annual fees and does not charge payees interest, which can encourage use. However, they also come with limited fraud protection and don’t build a client’s credit score, causing some customers to prefer using credit cards.

To accept debit card payments, you’ll need to comply with all the regulatory requirements in your industry. You’ll also need to choose a payment process to facilitate payment card transactions. In-store, the equipment you need to process debit cards are the same as the ones for credit cards. Online retailers, be sure to set up your payments web page to accept financial transactions from debit cards and optimize this page for mobile devices so clients can enter their debit card information through their smartphones.

3. Automated Clearing House (ACH)
Automated Clearing House (ACH) transfers are electronic, bank-to-bank money transfers that provide a fast and convenient way for businesses to pay vendors and receive payments from their clients. These ACH payments are also sometimes called direct debit payments or bank payments, and they allow customers to pay directly from their bank account to another bank account. Bank transfers and wire transfers are usually used for larger and more frequent payments where cash is not a good fit.

This mode of payment is helpful for businesses like utility companies since their customers can set up automatic recurring transfers to pay their bills.

However, some banks do impose limits on how much money can be sent through an ACH transfer and multiple ACH transfers can trigger an excess withdrawal penalty for savings accounts. Since there can be delays in ACH transfers, some clients may be hit with late fees if their transfer completes after the due date.

To accept ACH transfers, you’ll need to sign up with payments provider that supports ACH. This gives business access to the ACH network and allows direct withdrawals from customer bank accounts. You’ll also need to request authorization from customers and collect their payment details, making sure to verify this information.

Transactions involved in a bank transfer are the same as debit card transactions. This transfer method transfers money from one bank account to another, so a debit card is not required physically. Bank transfers provide a faster and safer form of payment than other modes of transactions, such as paying or withdrawing money from a bank account.

People can also set up online payment system on their telephones. If you are wondering how to online payment, you need to access your online account and choose the option for making your payments. Some banks also provide their account holders with online payment apps, allowing them to transfer funds.

4. Cash
Exchanging cash remains a simple (albeit cumbersome) payment option used by both local markets and major companies. It’s particularly popular among older customers and clients who are less tech-savvy and prefer to use physical currency.

That said, paying in cash is difficult if a client needs to make multiple expensive purchases. Cash users also need to carry the currency of the country where the transaction is being made. Finally, unless you keep careful records, cash transactions carry a higher risk of accounting errors.

5. E-Checks
eCheck payments are conducted online. In the U.S., businesses use the ACH merchant network to withdraw money from the payer’s checking account and deposit the funds directly into the payee’s checking account. Customers validate their eCheck payments by authorizing the transaction on a website or signing a contract.

This mode of payment can be processed faster than a paper check and may offer lower processing fees than certain credit cards. However, there is the potential that online hackers can gain access to customer banking information and computer glitches can lead to faulty withdrawals.

To accept eChecks, businesses use an ACH-supported merchant account to withdraw customer funds online. They also need their customer’s banking information, including routing and checking account numbers.

Electronic cheques are one of the most popular online payment processing systems. They will deduct money from a checking account. This online payment mechanism eradicates the need for users to prepare their cheques in written form, helping sellers deposit them into their bank accounts. Electronic cheques have many security features compared to traditional paper checks, including verification, digital signatures, public key cryptography, and encryption.

Owners of these checks can perform a function similar to what they can carry out through a traditional paper check. The benefit of using these e-checks is that they need fewer steps to process them. The processing costs of e-cheques are comparatively lower than the standard paper checks. The direct deposit system offered by several employers is one of the more regularly used versions of the e-cheques.

6. Digital Payments
Beyond credit and debit cards, digital payments include paying by PayPal, Venmo, and Zelle as well as through digital mobile wallets like cell phones and smartwatches.

According to McKinsey, 82% of Americans already use digital payments.

All of these payments enable money to be transferred from one account to another electronically. Customers appreciate these payment options for their fast transaction speed and the reduced dependency on cash.

Businesses that choose to accept digital payment need to invest in a Point of Sale (POS) system that can handle multiple types of digital payment methods. You’ll also need to consider your return on investment (ROI) when factoring in the setup fees, per purchase fees, and flat monthly usage fees that come with processing digital payments.

7. Digital Wallets
Digital wallets are available in various payment modes such as credit and debit. A wallet typically needs to verify customers’ identities (such as address, email address and phone number), to pay. These often use biometric verification like a fingerprint or face recognition software (ex: Apple Pay and Google Pay).

8. Money Orders
Usually issued by a government or banking institution, money orders are certificates that allow your business to receive cash on demand. Since money orders do not include personal information like bank routing numbers, they are considered safer than paper checks. Money orders can also be cashed in other countries, making them useful in international business dealings. However, you may need to pay a fee to cash a money order and the lack of personal information makes them hard to track.

If your business accepts money orders, you should endorse each certificate with your business name, your name, and your job title. Be prepared to present personal identification as well as proof of your position in your company. Having a business checking account also makes it easier to deposit the funds.

9. Electronic Funds Transfers (EFTs) and Other Options
Electronic Funds Transfer is a term you may also hear, but this is an umbrella term for all types of digital payments, including credit card payments, debit card payments, mobile payments, PIN transactions, and online purchases.

Wire transfers are usually used for larger and more frequent payments where cash does not fit. In most cases, payments by manufacturers to suppliers are made via wire transfers, especially for domestic transactions. The ACH is commonly employed for direct deposits in payrolls by a business. Although both electronic transfers exist, the differences are between ACH and wire transfers. ACHs only operate in the United States. Sometimes they require a couple of days to fully process them.

Providing your customers with multiple modes of payment improves your customer service experience and facilitates stronger relationships with your clients. Given the number of payment options today, it’s important to invest in a secure payment platform like Stax that provides you and your clients with the best-in-class service.

10.Third-Party Payment Services
The most prevalent online payment method is third-party transfer. It entails making out and depositing a sum into the account of a third party that receives the payment. However, users need to know how to make payments online through this transaction mode.

Third-party transfer in banking allows banks to manage it manually or use digital technology to complete it.
Buyers and sellers can send and receive money through these services. They facilitate users to avail of these services online or through their mobile phones by attaching their bank accounts to a third-party payment service. These services help vendors that wonder how to accept online payments on a website, allowing them to acknowledge payments without opening a merchant account. However, they may need to open a bank account to hold cash received through card payments.