Chapter
2

Modes of Online Payment


Credit cards – The easiest form of electronic money that is available and most widely used today. There are several million credit cards that are being used to make online payments in India. Many international sites and mobile commerce sites allow you to pre-store your credit card number securely so that you don’t have to key in the number each time. Currently, the largest user base in e-commerce uses credit cards for payments. 

Debit card – The second largest e-commerce payment medium in India are Debit Cards and Netbanking. Very often, for customers who want to stay within their spending capacity, paying for things online using a debit card proves to be a preferred choice.  With the debit card, one can only pay for purchased goods with the money that already exists in the current or savings accounts as opposed to the credit card where the amounts that the buyer spends are accumulated and have to be paid for as a bill at the end of the billing period. 

Netbanking – Another easy way to make payments for online transactions. It uses a similar method to the debit card of paying from the money that exists in the user’s current or savings account but net banking does not require the user to have a card for payment purposes. While completing the purchase the consumer needs to put in their net banking id and pin. 

Mobile Money – Out of India’s 1.2 billion people, only a small percentage have bank accounts. Amongst that massive unbanked population, many hundreds of millions have mobile phones, and for them, mobile money is likely to be hugely beneficial. Even for smaller transactions, where credit cards are not accepted, it might be simpler to just hand over cash. But if you don’t have sufficient cash, then mobile money becomes useful. However, mobile money would be convenient to buy a movie ticket or pay your utility bills on your phone, where otherwise you might have to key in your entire credit card number, CVV number, etc, every time you make a payment. It’s meant for transactions between Rs 50 – Rs 500 to buy things like games, music, ebooks, and virtual goods in games, and where people may not want to use credit or debit cards. 

In India, this is a developing payment option and still evolving in terms of regulations and guidelines. As on date the main method to pay for products using your mobile is still linked to your bank account. Payments using mobile carrier billing ie where your payments are deducted from your mobile prepaid balance or billed to your postpaid account are still restricted to services provided through the mobile operator eg for value-added services. Mobile carrier billing has not yet started for e-commerce transactions though this is expected soon 

Reward Points – Some other more indirect ways of online payments are rewards points. On certain things that are purchased by a person, a number of rewards points will be awarded which will get added to the buyer’s account. In the next transaction, the buyer can choose to pay for their next purchase using the accumulated rewards points, which will replace what they would otherwise be paying as money. 

Prepaid Cards – this is a relatively new and fast-growing payment method. Typically a consumer may buy or be gifted a prepaid card that can be used online. Usually, this would be for a particular brand or for a retailer. Some online retailers have their own gift cards which are sold to their customers, who in turn may use it for themselves or as to give them as gifts. Gift cards have their own authentication system and this may vary from issuer to issuer. 

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