Payment Methods

Around the world there are many ways - we call these Payment Methods - to pay for online purchases. Consumers have a preference for a Payment Method because they want to determine the momentum of the financial transaction (pre or post delivery) or this is defined by their payment culture. In general these Methods can be categorized by Card, Alternative and Wallet Methods that are each further explained below.

card-payments

CARD PAYMENTS


Everyone probably knows card payments. The consumer purchases goods or services using their credit or debit card information.

Payment convenience, consumer protection and international acceptance are the main drivers for card payments online.

Our Knowledge Base recognizes 4 card payment types: Credit Cards, Debit Cards, Prepaid Cards and Gift & Loyalty Cards.

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alternatives

ALTERNATIVE PAYMENTS


Alternative Payments is the term we use for all online payments that do not rely on cards.

Our Knowledge Base recognises the following alternative online payment methods: (Online) Bank Transfers, Checks, Direct Debits, Invoices, Mobile Carrier Billings and Cash-on-Delivery.

Some Alternative Payment Methods gain more and more attention and traction around the globe.

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digital-wallets

DIGITAL WALLET PAYMENTS


Digital Wallets or eWallets are assumed to be 'the next best thing' for online and mobile payments.

These digital wallets act as a virtual replacement of the physical wallet. These wallets provide access to pre-registered, 'cloud-stored' cards or to other payment methods.

Some wallets are relying on card payments, some on alternative payment methods, others on both. Some eWallets can be pre-loaded with 'virtual' money.

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Norwegian online shoppers prefer card payments. Dutch shoppers prefer the alternative payment method iDeal, an online bank transfer.

CARD PAYMENTS


Cards could be seen as the 'key' to the consumers bank account, whether it is a deposit (debit), a loan (credit) or a stored value (prepaid). Cards can be used to 'unlock' and transfer the shoppers money to the online merchant.

The most common worldwide used and accepted credit and debit card brands are VISA, VISA Electron, VISA Debit, MasterCard, MasterCard Debit, Maestro, American Express, Diners Club International, Discover, JCB and Union Pay.

Next to these globally recognised card brands, there are also country or region-based card brands like Hipercard in Brazil, BC Card in South Korea, Dankort in Denmark and Carte Bleue in France.

VIEW ALL CARD PAYMENT METHODS card payments

ALTERNATIVE PAYMENTS


Alternative Payments have seen an uplift in the last years. Why? Some of them provide great ease of mind for both consumer and merchant.

Alternative Payments like online bank transfers and direct debits are often associated with low and fixed transaction costs, safe and secure transaction types, guaranteed payments and swift settlement.

Popular alternative payment method brands are iDeal (Online Bank Transfer, the Netherlands), Klarna (invoice, Sweden), ACH (Checks, United States) and Interac (Online Bank Transfer, Canada).

VIEW ALL ALTERNATIVE METHODSalternatives

DIGITAL WALLET PAYMENTS


Digital Wallets or eWallets are the ones to watch. Digital Wallets are expected to gain global footprint rapidly if they have not already. They provide improved payment experience and simplify online and mobile checkout. Especially on mobile devices consumers appreciate an enhanced and swift payment experience.

These digital wallets should be seen as the virtual look-a-like of our physical wallet. These eWallets can contain (pre-registered) credit cards, debit cards, gift and loyalty cards and provide access to alternative payment methods like online bank transfers. Some eWallets allow the consumer to preload money into their wallets.

PayPal's Wallet is probably best known to many. MasterPass by MasterCard, V.me by Visa, QIWI wallet and Allied Wallet are digital wallet brands on the rise.

There are 2 types of Digital Wallets we need to distinguish (some of the Digital Wallet suppliers offer both types):


VIEW ALL DIGITAL WALLETS wallets

CARD PAYMENT TYPES


We subdivide card payments into credit card, debit card, prepaid card and gift & loyalty card payments. These 4 card payment types have different characteristics which justify separate classification.

They differ in terms of usage, scale, accceptance, regionality, security, costs, liabilities and more.

There are around 600 million Maestro cards issued worldwide.
Maestro is the debit card brand of MasterCard.

ALTERNATIVE PAYMENT TYPES


We subdivide alternative payments into Online Banking, Direct Debits, Bank Transfers, Mobile Carrier Billings, Cash on Delivery and Pay-by-Invoice.

They differ in terms of usage, scale, accceptance, regionality, security, costs, liabilities and more.

Direct Carrier Billing is potentially the largest payment method in emerging markets!

DIGITAL WALLET PAYMENTS


Digital Wallets or eWallets are the ones to watch. Digital Wallets are expected to gain global footprint rapidly if they have not already. They provide improved payment experience and simplify online and mobile checkout. Especially on mobile devices consumers appreciate an enhanced and swift payment experience.

These digital wallets should be seen as the virtual look-a-like of our physical wallet. These eWallets can contain (pre-registered) credit cards, debit cards, gift and loyalty cards and provide access to alternative payment methods like online bank transfers. Some eWallets allow the consumer to preload money into their wallets.

PayPal's Wallet is probably best known to many. MasterPass by MasterCard, V.me by Visa, QIWI wallet and Allied Wallet are digital wallet brands on the rise.

There are 2 types of Digital Wallets we need to distinguish (some of the Digital Wallet suppliers offer both types):


Preloaded Digital Wallet

A Preloaded Digital Wallet is a wallet which is prepaid and has e-money preloaded to use as an alternative to cash. Users of the wallet have to fund the wallet before they can pay for an online transaction. They can add funds to the wallet via various ways of payment such as cards or alternative payment methods. The balance on the wallet is used to pay for online and mobile transactions.

This type of Digital Wallet is the traditional eWallet model.



Find Preloaded Digital Wallets


Pass-Through Digital Wallet

A Pass-Through Digital Wallet is where the eWallet authenticates the user, but the transaction is being settled on a linked payment system, such as a bank account, a credit, debit or prepaid card. The user of the Wallet is not using the funds stored in the Wallet but selects during the moment of payment one of the 'stored' payment methods to finalize the payment to the merchant.

Traditional Preloaded Digital Wallet brands have added this type to their offering allowing the user to choose between either two at the point of checkout. This is why you will find most of the Preloaded Wallet suppliers offering both types.

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Mobile commerce will account for a third of holiday shopping in 2014.

BITCOIN - The Crypto Payment Method

You might have watched the noise and heard the word “Bitcoin” or “cryptocurrency” or “digital currency,”. Some will argue that it is the future of finance, others say it is a fad, but we regardless of the outcome, you should be aware of the movement. Bitcoin was first mentioned in a 2008 paper published under the pseudonym Satoshi Nakamoto and became operational beginning of 2009. In 2011 the value of one Bitcoin went from USD 0,30 to USD 32,- and back to USD 2,- again. Bitcoin began attracting media attention late 2012 and numerous news articles have been written about it since. We will try to summarize the highlights here.

So what is Bitcoin?

Bitcoin is a digital currency based on peer to peer technology that functions without an intermediate central authority. Bitcoins use cryptography to control and record transactions, and once validated, a transaction is recorded into a public ledger which is known as the Block Chain. These transactions are then sent to every peer on the network, which prevents double spending, and keeps all of the other peers "honest". The reason Bitcoin has garnered so much attention in recent months is two-fold: not only did it reach a record value of $256, then plummeted, surprising advocates of what was designed to be a self-stabilizing economy, and also becoming the focus of numerous federal investigations, uncovering black markets associated with the use of Bitcoin.


Why is Bitcoin so attractive?

Many people use bitcoins for many different reasons. During the 2012-2013 financial crises in Cyprus, where governments’ confiscated people’s bank accounts, Bitcoin activity surged, sending the price skyrocketing over 200% in the first few weeks of the crisis. The reason for this was that people wanted to protect what assets they had left, and by converting their money to bitcoins, they were able to keep and protect their assets from confiscation. Another reason Bitcoin is so attractive is because of the utility of it: Moving a large amount of money from point A to point B. Everyone knows that by doing this the traditional way via Western Union, Bank Transfer, or even PayPal, that this is expensive and can take days to clear. With bitcoins, the transfer fees are usually optional, and it doesn’t matter if you’re sending 1 Bitcoin or 10000 bitcoins, the transaction is the same. No paperwork, just open your wallet, paste the destination bitcoin address, fill out the amount you want, and hit send. Within a few hours or so (depending on the network at the time) your money has arrived at its destination.


How Bitcoins work

Once you have either installed a bitcoin client on your computer or mobile device, or signed up with an online wallet provider, you will be assigned a bitcoin address. This is the address you will use to send and receive bitcoins. The address will look something like this: 1CTQvkBaz1niAAtAM81KHQEKyQx8BnTKua. The good thing is you will not need to remember this, as long as you can copy and paste, you can process Bitcoin transactions. If you want to receive Bitcoins, the person paying you will need to know this address. Also, you can create and use a new Bitcoin address for every transaction if you wish.

When a bitcoin is sent through the network, from one person to another, the person enters the destination address, the amount, and decides if they want to pay the fee for faster processing. After clicking send, the transaction is sent to what is called the Block Chain, which is a shared public ledger of all bitcoin transactions. All confirmed bitcoin transactions are recorded in the blockchain. This allows for all bitcoin clients to properly calculate their existing balance and new transactions can be verified to be spending bitcoins that are actually owned by the spender. The integrity and the chronological order of the block chain are enforced with cryptography.


Mining

Bitcoins are created through a process called mining. Mining is intentionally designed to be resource- intensive and difficult so that the number of blocks found each day by miners remains steady. The primary purpose of mining is to allow Bitcoin nodes to reach a secure, tamper-resistant consensus. Mining is also the mechanism used to introduce Bitcoins into the system: Miners are paid transaction fees as well as a "subsidy" of newly created coins. This both serves the purpose of disseminating new coins in a decentralized manner as well as motivating people to provide security for the system. Bitcoin mining is called this way because it resembles the mining of other commodities: it requires exertion and it slowly makes new currency available at a rate that resembles the rate at which commodities like gold are mined from the ground.


Wallets

A Bitcoin wallet is exactly what it sounds like: a place for you to keep your Bitcoins. Wallets come in three flavors; a local wallet, which is installed locally on your computer or mobile device, an online wallet, which is maintained by a third-party, or a paper wallet, which is an offline form of a Bitcoin wallet, and the most secure.

There are several types of local Bitcoin wallets you can download and install locally on your PC. Online wallets are a convenient way to store your bitcoins without having to install any software. This makes it easy to access from anywhere and to spend or receive coins. One of the major draw-backs with an online wallet, is that your coins are hosted by a third-party. This means that if something happens to that site, either a technical problem, or the site is hacked, you do stand the possibility of losing the coins you have stored there. A paper wallet is a mechanism for storing Bitcoins offline as a physical document that can be secured like cash or anything else of real-world value. Paper wallets are generally created by printing a brand new public address and private key onto paper, and then sending bitcoins from a "live" wallet to the printed wallet's public address for safekeeping.


Exchanges & Providers

Bitcoins can be traded, bought and sold on Bitcoin exchanges. There are several exchanges out there, some of which allow you to trade against other crypto-currencies, but most of them just trade dollars and Bitcoins. Because Bitcoin is decentralized, exchanges will usually have varying prices between them, so having accounts at multiple exchanges can be profitable.

Also, more and more Providers are supporting Bitcoins and some are even specialized in Bitcoins only. Use the below button to find a Provider who can help you get Bitcoin supported as a Payment Method for your E-commerce activity.

Find Providers who support Bitcoin

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