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We are a bit geeky when it comes to payment technology, but the thing that excites us the most is helping to grow your business – so are some useful tips from us to you.

If there’s a topic we’ve missed, let us know, and we will be happy to dive into it.

What is a payment system?

If you’re looking for information about payment systems for online eCommerce and merchant stores, you’ve come to the right place. Continue reading to discover more about payment systems, including:

  • What are payment systems?
  • What are the different types of online payment systems?
  • What are electronic payment systems for eCommerce stores?
  • The benefits of electronic payment systems
  • The most popular electronic payment system in the world
  • The most popular electronic payment system in Europe
  • What are the most popular electronic payment systems in the US and Canada?

What are payment systems?

A payment system is any system used to settle financial transactions through the transfer of monetary value. Just like trains need a track to travel from one location to another, money or any type of currency needs a payment system to travel from one place to another. For example, when money is spent in an eCommerce or merchant store, it needs a payment system to go from a buyer to a seller, or a salary needs a payment system to go from an employer to an employee.

If we continue the train analogy, then money, or better yet, currency, can take the form of cars, airplanes, bikes, bicycles, etc. That all means that there’s a need for different types of payment systems, all varying in features such as cost, speed, and security.

Payments are a regular part of daily life, mainly as most payments occur online. Some of the most popular payment systems in the UK include BACS for Direct Debits and Direct Credits, the Faster Payments Service, the Image Clearing System, and LINK for cash withdrawals via ATM machines.

There’s a growing need for payment systems as cash becomes less popular. In fact, some businesses are already becoming cashless. Even more widespread, some countries in Scandinavia, such as Denmark and Sweden, are shifting towards becoming cashless societies. Unlike cash, payment systems offer faster and more secure ways of paying online and in-store. But as eCommerce grows and digital online payment systems provide a faster and easier way to make purchases, adhering to responsible spending habits is more important.

As a one-stop payment platform, Fondy understands the need for businesses and eCommerce stores to be flexible and to accept various payment methods in a variety of currencies. Want to know more about us? Great! Check out our About Fondy page and discover what inspires us and how that can benefit your business, no matter the size.

What are the different types of online payment systems?

As mentioned previously, there are many types of payment systems. These payment systems include a mixture of older traditional systems and newer, more digital systems and card networks.

Each payment system supports different payment instruments – the local payment systems support, first of all, local currency payments. Each currency has a payment system that supports the clearing between all participants. For example – GBP services by the Faster Payments Service (instant payments), CHAPS (for international GBP payments), BACS (the traditional and older payment system), EURO – SEPA, USD – ACH, etc. for account-to-account payments.

There are other payment systems that support different payment instruments. For example, the card payments that are supported by Visa, Mastercard, American Express, local payment schemes, and local card networks.

Some of the most popular payment systems include:


BACS means Bankers Automated Clearing System and is a payment system that involves a money transfer from one bank to another. There are two types of BACS payments, namely, Direct Credits and the widely known Direct Debits payments. BACS payments typically take three working days to clear once the initial payment is initiated.

Direct Debits work by adding the payee’s banking information to a Direct Debit Mandate. This mandate authorises the payment from one account to another account and allows the funds to be processed by the provider, for example, an eCommerce store like a mobile phone provider, who will set up a Direct Debit instruction (at what time, the amount and frequency) on the payee’s account and debit the funds on the agreed date such as at the end of the month or quarter.

In the UK and in many other countries, all Direct Debits BACS payments are protected against numerical errors and instruction mistakes via the Direct Debit guarantee.

Direct Credit BACS payments are commonly known as bank transfers. This is when funds are deposited or transferred into your account either electronically online or in-store with cash. For example, when you’re paid by your employer, this normally happens via Direct Credit BACS payments. Just like Direct Debits, Direct Credits involve the payee giving the payer their banking information.

Faster Payments

The Faster Payments Service (FPS) or commonly known as “Faster Payments” or the Faster Payments network or scheme, is a banking system in the UK created to make payment times between two or more accounts quicker. The Faster Payment Service was introduced to replace the CHAPS payment system, which concentrated on large-sum transactions. On the contrary, the FPS’s focus is to complete frequent low-sum payments instantaneously or, at worst, within a matter of hours, such as in an eCommerce store.

The Faster Payments Service can be for a variety of different electronic payments. These payments include single payments that occur in real-time, future payments, which are single online payments to be processed at a predetermined date in the future, and standing orders in which instruction and authorisation are given to a bank to make regular payments like monthly rent.


SEPA means Single European Payment Area and is a payment system allowing customers to make secure cashless credit transfers and direct debit euro payments to European Union (EU) countries and some non-EU members.

SEPA’s aim is to simplify payment methods within and across EU member countries. It works by unifying banking standards to allow for the direct debiting of every euro bank account within the SEPA area. The SEPA transfer process works just like any other domestic bank transfer so that bank account holders in two separate euro-using countries can send and receive funds just like a regular domestic transfer.


CHAPS means Clearing House Automated Payment System and is an electronic banking scheme designed to deliver same-day bank transfers for high-value transactions in pounds sterling in the UK.

The CHAPS network includes over 30 banks in addition to thousands of financial institutions such as remittance services and payment processors and gateways.

CHAPS was created in 1984 to improve on BACS payments which traditionally took up to three working days to clear. With CHAPS, electronic payments can be completed within the same business day as long as they are initiated by 3 pm.

CHAPS is usually used for speedy and secure, time-sensitive, and sometimes emergency payments. That’s why they are one of the most expensive transfers to make, often costing up to £50 per transaction. Examples of when a CHAPS payment may be necessary include large legal payments such as solicitor fees and property deposits.


The Image Clearing System (ICS) was introduced just a few years ago to speed up the cheque-clearing process. ICS allows images of cheques to be submitted by banks and individuals, making them easier and quicker to clear, group together, and release the funds.

As well as cheques, ICS can be used for other payment documents such as bankers’ drafts, postal orders, and travellers’ cheques. The ICS image-based system allows the cheque-clearing process to be quicker and offers a better all-around customer experience.


LINK is the national ATM network that connects most of the UK’s ATMs or cash machines to banks. LINK’s aim is to provide a safe way for UK banking consumers to access cash from anywhere in the world via their bank cards.

The LINK network is also responsible for setting the rules for cash machine operators who want their cash machines to be part of the UK ATM network, such as if and how much they can charge for cash withdrawals and daily card withdrawal limits. Additionally, LINK supervises all card issuers who want their cardholders to have access to the UK ATM card network.


SWIFT stands for The “Society for Worldwide Interbank Financial Telecommunication” and used to be a swift way of transferring money, especially overseas. That’s because when SWIFT was created in the 1970s, it was an innovative and speedy way of sending money to someone or a business (b2b) across borders, taking anywhere from a week to 10 days.

SWIFT is essentially a financial network that allows one bank to communicate with another quickly and safely. This communication involves sending financial information, money, and more. As technology advanced, SWIFT became less popular as newer, cheaper, and faster methods of transferring money were created.

What are electronic payment systems for eCommerce stores?

Electronic payment systems (or e-payment systems) are systems in place that let buyers pay for goods and services electronically or online rather than having to use cheques or cash. Common electronic payment systems include bank debit cards, credit cards, deposits, electronic wallets, and cryptocurrencies. There are two general types of electronic payments, namely, one-time vendor payments and recurring vendor payments.

One-time vendor payments are best known for use on eCommerce websites where card or banking information is entered on a merchant checkout page. Recurring vendor payments are when card payment details are entered once, but for recurring payments such as TV streaming subscriptions and household utility bills.

Both one-time and recurring payments are usually completed on platforms like eCommerce stores by these common methods:

  • Credit card payments.
  • Debit card payments.
  • Direct Debit or Direct Credit payments.
  • Internet banking and online payments.
  • Electronic or digital wallet payments.
  • Store credit card payments.

Successful payments in the UK were made using Open Banking payments went from around half a million in July 2020 to nearly two million just a year later. On its current growth trajectory, 60 percent of eCommerce merchants will be Open Banking users by September 2023 due to the reduced use of cash. Secondly, eCommerce sales as a share of UK retail purchases have increased, thus increasing the need for smooth customer journeys.

Grow sales with a better payment solution

Fondy helps expand your business locally and internationally by giving you access to payment systems like the Faster Payments Service (FPS), CHAPS, and SEPA. Get started on your frictionless payments journey with Fondy today.

The benefits of electronic payment systems

If you’re wondering why you should choose an electronic payment system for your eCommerce store, you might not be alone.

Some of the advantages of ePayments include:

Electronic payment systems are fast

Sometimes ePayments are even instantaneous, meaning that neither you nor your customers are left waiting for payments to clear. Fast and efficient payments are great for cashflow, smooth online commerce, and customer relations.

Electronic payment systems are safe and secure

Digital money benefits from digital, hi-tech security. Additionally, digital payments are nearly impossible to forge and are essential in times like the pandemic when social distancing and travel bans are in effect and eCommerce stores replace brick-and-mortar shops.

Electronic payments are transparent

When you’re making electronic or digital payments, it’s easy to track your money’s journey. That makes it a great way of knowing your payments can be located from a bank to eCommerce/merchant store or vice versa and traced by following its digital footprints online.

Fondy is the perfect payment solution for businesses of all sizes

Benefit from payments in 150 currencies across more than 200 countries and territories. What’s more, choose from multiple payment methods, including Open Banking across 300+ banks in the UK and EU, and give your customers complete flexibility. Create a Fondy account and start enjoying friction-free, cross-border payment solutions today.


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