What are the Different Methods for Handling Ecommerce Transactions?

Cassie L. Damewood

Ecommerce transactions can be handled in several different ways. Some options are identical to those used by regular retail stores, and some are unique to online purchases. How the online retailer chooses to handle transactions is totally at her discretion, although customer needs and preferences normally play a major role in what transaction options are offered. Popular ecommerce transaction options include credit cards, debit cards, electronic checks, gift cards, online payment services, and deferred payment plans. Some online companies still accept personal checks and cashier's checks, but these options are dwindling as they cost the retailer time and money to process, and they have more chance of failure than other payment options.

Debit cards are often used for ecommerce transactions.
Debit cards are often used for ecommerce transactions.

The lack of an actual person being involved in ecommerce transactions makes many people apprehensive about this form of commerce. In the early days of ecommerce, horror stories abounded about stolen credit card numbers, identity theft, and outright thievery by unscrupulous, and often totally fraudulent, online retailers. Since online sales were so new, security options were limited and blind trust was often the only option offered to consumers willing to purchase from a website.

Most online retailers accept payment via credit card.
Most online retailers accept payment via credit card.

Today's online business community offers ecommerce transactions with a myriad of built-in security features. Bank card numbers are encrypted to prevent theft, and personal information is securely stored through similar techniques. A significant number of companies provide third-party security to retail websites and guarantee reimbursement to retailers and consumers should their systems fail.

In addition to accepting major credit and debit cards, many Internet commerce sites provide other transaction options for their customers. Electronic checks are popular on some ecommerce business sites, although they cost the merchant additional processing costs on top of the charges she must pay to process credit and debit card sales. To pay by electronic check, a physical check is generated by the seller using bank information provided by the buyer, and the check is deposited into the seller's bank account like a regular counter check.

Delayed payments are another option preferred by some consumers. This option allows the buyer to receive a service or product before paying for it by providing the seller with bank account information or a credit or debit card account number to be billed at a later date or dates, if the terms provide for multiple payments. This method usually involves a service fee payable to the seller at the onset of the transaction.

Some ecommerce sites sell gift cards or gift certificates or offer discount coupon codes to consumers. These online retailers accept these methods of payments for ecommerce transactions. These payment methods are processed much like payments made by credit or debit cards.

Identity theft was a serious problem during the early days of ecommerce.
Identity theft was a serious problem during the early days of ecommerce.

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