Electronic Payment, Research Paper Example

The payment system for SMEs has witnessed tremendous changes that have enabled efficiency in the transaction of goods and services. Some of the prediction made in the past have been realized and put into use to ensure effectiveness in payment system.  The Payment Council has been at the fore front in ensuring that both businesses and their consumers get the desired payment platform for their transactional activities. The council has put extra effort to carry out research aimed at developing the new modes of payment especially for online transactions. Technological advancement that led to the development of Chip and PIN led to the emergence of various card payment methods that facilitated mobile transactions (Pay-Your-Way-2025-FUTURE-OF-PAYMENTS, pp 7).

The development of in E-commerce has enabled most businesses to adopt a virtual mode of existence that is based on internet applications and traditional mode that is based on physical establishment in a specific region. Mobile and online payment methods have facilitated the interplay between the two modes of existence (Cronin, 2010).

The trends in payment are manifested in the adoption of the various payment methods that are deemed appropriate by various consumers and businesses, for instance the spread in Debit and Credit cards can be attributed to features such as ease of use and good security features.  Businesses prefer Debit cards due to the fact that it enables people to transact without carrying liquid cash. Debit cards are also preferred by most people for purpose of convenience. It is used by most people and thus makes it easy for people to make payments. The cards have facilitated payment of bills and other transactions and hence facilitating the busy lifestyles of people today (Tsekeris, 2007).

Cash and cheques

Cash and cheques have been used for quite a long period of time as modes of payment to mark transactions between two different parties, however they are being replaced at a very high rate by debit cards and other modes of mobile payments. Businesses are shifting from the use of cheques and cash in paying their bills and are adopting such modes debit cards and other online payment platforms such as Pay pal. It is however cognizance to note that cheques and cash payments still dominate transactions that involve high value.  Debit cards and online payment platforms have dominated low value transactions.

Online and mobile payments

The online payment platforms are very cardinal for the transactions in E-commerce. Online and mobile payments are preferred by SMEs mainly for purposes of convenience. Businesses and individuals are increasingly using internet banking services to check their account details with a lot of ease. Mobile banking have been have  a  notch higher  by enabling  businesses and individuals to transfer and receive money through their mobile phones, for instance users of smart phones can transfer and receive money from one person to another.   The internet world has enabled seen the emergence of many payment methods. Pay pal has been rated among the most reliable and secure payment methods in  online transaction s. many alternative forms of currency have emerged to facilitate mobile and online payment methods, consumers can  purchase goods from  retail stores by using loyalty points.

Based on the above trends the future of financial transactions for SMEs have witnessed a lot of changes, takes a case scenario of cash payment that has transformed from coin based payments in the 1800s to notes in 1900s and continues to date. The future trends in the currency payment will the invention of electronic wallets (Cronin, 2010).

The credit and debit card modes of payment have also gone through a lot of changes, for instance recent developments in 2011 have seen mobile phones being used as debit cards. The Quick Tap payment method which applies the technique of near field technology enables mobile phone users to conduct shop.  The banking transactions are experiencing tremendous changes especially after the payment council established mobile payment initiative in 2011 that facilitates transactions between two different parties without information regarding their account details. Future developments in this field are expected to reduce the time taken by individuals to switch their financial accounts (Tan, 2009).

Trends in electronic payment methods are still changing and many methods are expected to emerge in the payment market.   Mobile payment methods used by smartphones will compete with those of other rival products as walled garden which popularly used by apple.

The is need to determine the perception of the consumers on development of online payment methods, statistically speaking 42% Brits think there will be no need for a wallet or a purse by 2025, 51 percent believe that they will be able to pay for goods and services by fingerprints

35% believe they will pay by Iris scan and 32% expect to pay by voice command (Pay-Your-Way-2025-FUTURE-OF-PAYMENTS pp 13).

The element of security will be one of the foremost concerns with regards to electronic payment methods. Security devices such as facial recognition, finger prints, handshakes, security jewelry will be improved to embrace the changes. On the security aspect using voice verification and gesture as well will support photo identification which is not enough to use alone because any one can use or upload other’s photo (Cronin, 2010).


Cronin, M. (2010). Banking and Finance on the Internet, John Wiley and Sons. ISBN 0-471- 29219-2 page 41 from Banking and Finance on the Internet. Retrieved 2008-07-10..   http://article.wn.com/view/2013/04/28/Five_Reasons_to_Use_Internet_Banking/#/video

Tsekeris, C. (2007): “Electronic Banking”, in Ritzer, G. (ed.), Blackwell Encyclopedia of Sociology, Blackwell Reference Online. http://iosrjournals.org/iosr-jbm/papers/Vol7-issue6/C0762126.pdf

Gandy, T. (2008): “Banking in e-space”, The banker, 145 (838), pp. 74–76.

Tan, B.  (2009): “Factors influencing the adoption of Internet banking”, Journal of the Association for Information Systems, 1 (5), pp. 1–42.             http://www.ijbssnet.com/journals/Vol_3_No_17_September_2012/33.pdf