Internet Payment Systems

Internet Literacy – Part 12

Introduction
This is part 12 of my series, Internet Literacy. In this part of the series, I explain how payment is made on the Internet. A customer might have to send money to the owner (company) of a website. The owner of the website company might have to send money to an individual or ordinary company. The owner of a website might have to send money to another owner of a website. This part of the series is a continuation of the previous part, to make you Internet literate.

Bank Wire Transfer
Money can be transferred from one bank account to another within the same country and between any two countries. For money to be transferred from one bank account to another the following information is needed at both ends.

Name of Account Holder,
Account Number,
Bank Name,
SWIF Code,
Full Bank Address including the Country

The sender and the receiver at both ends must each have this information for both ends (sender and receiver). This information is exchanged between the sender and receiver before the money is sent. Communication can be done through emails (or phone). Remember that many websites today incorporate emails. So you can actually send an email today using a web page and the receiver can read and reply the email using a web page.

The sender goes to his bank to send the money, presenting the above information of the receiver. The receiver goes to his own bank to receive the money, presenting the above information of the sender. The money takes 3 to 5 days to arrive at the destination, once sent. A bit more than the above information may be needed depending on the individuals or companies or transactions.

The disadvantages with bank wire transfer are as follows: The transmission process is rather slow. Exposing your bank information to the other party (or third party in transit) is not good as the other party may use it unlawfully. A hacker, through Internet communication, might steal your bank information.

Western Union-Like Money Transfer
There is an international organization called, Western Union. Transfer of money with the Western Union is fundamentally between two individuals. The sender and the receiver need the correct name (at least first name and last name) of each other. Western Union has agencies in regions and even cities in many countries of the world.

The sender goes to the nearest agency in his country. There he fills a form and hands over the money. There he will be given a receipt. The receipt contains the transaction number. The sender will then tell the receiver, by phone or email the transaction number. The receiver will then go to his nearest agency or any agency in his country. There he will present his name and address and the name and country (address details optional) of the sender, and the amount (in either currency). He will also present the transaction number. Then he will be given the money.

Western Union money is transferred within 10 minutes. If the receiver does not have an identification document, then the sender at his agency has to give a test question and answer of his choice. He has to communicate the test question and answer to the receiver by phone or email. At the receiving end, the receiver will present the answer to the test question. Some receiving countries insist that the transaction number as well as the answer to a test question must be presented. Note: Western union money can also be sent within the same country.

The disadvantage of the Western Union transfer system is as follows: The sender has to carry physical money to his agency. The receiver has to carry physical money from his own agency to his home or bank. In the process of carrying physical money, one may be attacked by thieves.

If you live in the USA, you would not have this disadvantage when it comes to sending money, because you can have a western union account, and you can use the Internet to login to your account and send money.

There are other Western Union-like Companies. An example is MoneyGram. However, western Union, today, is the most popular.

Credit Card
Before the Internet, the credit card was used to make payments like to buy something from a shop. Today, in the developed countries, many business websites accept payment by credit card. Each credit card company has her own name (e.g. Master Card) for the credit card. The credit card is actually a piece of card, given to you by the credit card company. You have to deposit some physical money at the credit card company. To pay with your credit card at a web page you need the following information of the credit card.

Card Holder Name,
Credit Card Number,
A Special Code of the Card(may be optional),
Expiry Date of Credit Card,
Full Address of the Credit Card Holder

The disadvantage of the credit card is as follows: You must have heard that hackers have successfully stolen credit card information of some holders, and have used the information to withdraw money unlawfully from the holders account. That is the disadvantage.

PayPal-Like Money Transfer
This is the ultimate Internet Money transfer system today. PayPal is a money transfer system found in many developed countries and a few developing countries. PayPal works with banks and the Internet. The sender and receiver each need to have a PayPal account and a bank account. Both the sender and the receiver each needs to have an independent email address (e.g. johnsmith@yahoo.com), which PayPal also considers as the PayPal email address.

Today, opening a PayPal account is free, at the website, paypal.com . After that the sender has to transfer money from his bank to his PayPal account. This money should be reasonably large as from time to time he will be sending money to receivers without contacting his bank.

You send money from one PayPal account to another PayPal account. Each PayPal account is principally identified by the PayPal email address. To send money, the sender uses the Internet to go to the PayPal site. (paypal.com). He logs into his PayPal account. He fills a web form, typing in the amount, the PayPal email address of the receiver, the reason for sending the money and click the Submit Button of the form. That is all. Then after, at anytime the receiver logs into his own Paypal account using the Internet, he will see the money sent. To collect the money, the receiver has to transfer it to his bank account only using the PayPal website after logging in. Of course, after logging into any website you should log out after the session. He then goes physically to his bank and collects the money.

If you are transacting business, there are other things you have to do with the PayPal site, but I will not go into that. You can send money from one PayPal account to another PayPal account within the same country or to another country.

The transfer of money with Paypal does not take up to 5 minutes from one PayPal account to another. As soon as the receiver receives the money in his PayPal account he can use the money even without going to his bank. He can even send part of the money to another PayPal account.

A few other companies operate like PayPal. A good example is Money Bookers (moneybookers.com). PayPal operates in the developed countries and in a few developing countries. In some developing countries, you can only send money but you cannot receive money by PayPal. Money Bookers exists in both developed and developing countries but is still not as popular as PayPal, today.

With PayPal-like systems the sender or the receiver does not need to know where the physical PayPal agencies in his country are located. The agencies may not even exist in his country, because of the availability of the Internet worldwide.

Risk
All financial transactions involve risk of money being stolen. The money may be stolen by workers of the company or outsiders. Form time to time the systems mentioned above take measures to reduce the risk. However, as technology and the society changes, new risk come up and it is up to the company to take measures quickly to minimize the new risk.

Well, I have given you important different systems of making payments with the Internet. If you want to know where the agencies of any of these systems are in you country, just search the web.

End of Series
If you have completed this series and understood, then know that you are now Internet literate.

Becoming a Website Designer
If you have completed this series and found it interesting, may be you would like to become a website designer. To become a website designer, just click the first link below. Then after, you can look for a job at the second link below.

Chrys

Other Links of the Series
Internet Vocabulary
Particular Internet

Vocabulary
The Browser

Window for the Ordinary Internet User
The Web Page for the

Ordinary Internet User
Web Page Form for

the Ordinary Internet User
The File Menu of a Browser
Non File Menus of the

Browser
Smartphones and Tablets
Search Engines
Meaning of Social Networks
Factors to consider

when ordering a Website
Internet Payment Systems

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