In this entry, we will discuss the significance of OPS in everyday life and the technologies necessary to make it all possible. Consumers and businesses rely heavily on online payment systems daily for a multitude of transactions. These transactions include travel, shopping, filing and paying taxes, paying bills and other banking transactions, as well as investing online. Two main technologies in particular have emerged as a result of the increased demand of online payment systems:
Electronic bill payment and presentment (EBPP)
There are a significant number of bills that consumers pay on a regular basis, which include power bills, water, oil, internet, phone service, mortgages, car payments etc. EBPP systems send bills from service providers to individual consumers via the internet. The biggest difference between EBPP systems and the traditional method of bill payment, is that of technology. Rather than receiving a bill through the mail, writing out and sending a check, consumers receive their bills in an email, or are prompted to visit a website to view and pay their bills. Three variations of EBPP currently exist:
· Consolidation, where numerous bills for any one recipient are made available at one Web site, most commonly the recipient's bank. The actual task of consolidation is sometimes performed by a third party and fed to the Web sites where consumers receive the bills. The principal attraction of consolidation is that consumers can receive and pay numerous bills at the one location, thus minimizing the number of login IDs and passwords they must remember and maintain.
· Biller Direct, where the bills produced by an organization are made available through that organization's Web site. This works well if the recipient has reasons to visit the biller's Web site other than to receive their bills. In the freight industry, for example, customers will visit a carrier's Web site to track items in transit, so it is reasonably convenient to receive and pay freight bills at the same site.
· Direct email delivery, where the bills are emailed to the customer's inbox. It is convenient, because almost everyone has email and the customer has to do nothing except use email in order to receive a bill. Email delivery is proving especially popular in the B2B market in many countries.
Mediaries
There are also online payment systems that serve as mediaries and facilitate person-to-person payments, such as PayPal that have revolutionized the way funds can be exchanged on internet auction sites. According to PayPal, one in three online buyers has an account with them. PayPal is an acquirer, performing payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee. It may also charge a fee for receiving money, proportional to the amount received. The fees depend on the currency used, the payment option used, the country of the sender, the country of the recipient, the amount sent and the recipient's account type.
How do OPS affect your day to day online transactions? Feel free to share your experiences.
Source:
Tamayo, Xavier, Jimenez, Luis and Flynn, Shawn P. (July 13, 2005) Trends in Consumer Payment Systems. Electronic Substitution for Mail: Models and Result, 8. Retrieved from: http://www.phoenixhecht.com/treasuryresources/PDF/PitneyBowes_trends%20in%20consumer%20payments.pdf
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