If there’s a topic we’ve missed, let us know, and we will be happy to dive into it.
- What is the SEPA payment method?
- What are quick payments in one click?
- What are cross-border payments?
- What is a payment gateway provider?
- What is a payment system?
- How to integrate payment gateway APIs?
- How to accept mobile payments?
- What is a payment link?
- What are open banking payments?
- What are payment methods?
- What are local payment methods?
- How to accept international payments and transactions?
- How to accept payments on PayPal?
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, aeroplanes, 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 making a deliberate shift 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, it’s more important to adhere to responsible spending habits.
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.
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.
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 travelers’ 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 ePayment 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
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 cash flow, 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.
The most popular electronic payment system in the world
According to a 2021 FIS Global Payments Report, by the year 2024, cash will account for only about 13 percent of POS (point of sale) card transactions. On the other hand, the same report states that digital wallets will make up nearly 34 percent of all transactions. Additionally, digital or eWallets account for almost half of every online eCommerce store sale.
As well as cash becoming less popular and less safe to carry around, the 2020 global pandemic was a main accelerator of digital wallet’s growth. Along with digital or eWallets, the other rapidly growing electronic payment systems in the world are “Buy Now, Pay Later” (BNPL) and contactless card payments, especially in online eCommerce stores.
The most popular electronic payment system in Europe
Europe has many types of electronic payments in use, depending on which country you reside. With a versatile payment gateway, you should be able to accept and process debit and credit card networks such as Visa, American Express, Mastercard, Discover, Diners Club, and JCB cards. You should also look for payment gateways and online eCommerce merchants that accept electronic payments in:
- Austria, Belgium, France, Germany, Italy, and Spain with Sofort
- The Netherlands for iDEAL payments
- Italy for CartaSi card payments
- Denmark with Dankort payments
- France for Carte Bleue or Visa Debit
- Germany for Giropay card payments
- The United Kingdom (UK) for Direct Debit payments
- Europe-wide for SEPA Direct Debit, Prepaid Cards for PaySafe Card and Apple Pay, PayPal, Masterpass, Visa Checkout, WebMoney, and Skrill electronic wallets
What are the most popular electronic payment systems in the US and Canada?
North America also has many types of electronic payments in use, depending on which country you reside. With a versatile payment gateway, you should be able to accept and process debit and credit card networks such as Visa, American Express, Mastercard, Discover, Diners Club, and JCB. You should also look for payment gateways and eCommerce that accept electronic payments with:
- eWallets like Apple Pay, Masterpass, Visa Checkout, PayPal, Android Pay, Apple Pay, and Pay with Google
- ACH Payments or eChecks