What are eCommerce Payment Systems in India: Types, Examples & Advantages

What are eCommerce Payment Systems in India: Types, Examples & Advantages-feature image
April 4, 2023 12 Min read

Today, when you consider buying anything, the first thing you’ll do is check its availability online on an eCommerce platform.

The way things are being bought and sold is changing, and so are the payment methods.

Gone are the days when people used to be paranoid of online payments and only believed in carrying hard cash. With so many payment options available, you also don’t really feel the need to carry cash anymore.

The change in spending preferences has led to businesses adding multiple payment options to their eCommerce website. So, if you are also an eCommerce website owner, you need to integrate the most popular and widely used payment methods into your website.

So here, we have got all the information that you’ll need. You can know how an eCommerce payment system works, its importance, the latest trends to keep up with, and so on.

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What are eCommerce Payment Systems?

eCommerce Payment System enables customers to pay for products and services using electronic methods of payment. These online transactions involve a purchaser, purchaser’s bank, merchant, merchant’s bank, a payment gateway, and a payment processor.

ePayment system in eCommerce is gaining popularity with the growing trend of online shopping. Even a global crisis like COVID-19 forced people to switch to the online market, which brought traditional sellers online.

Even businesses have felt a sense of security while trading online. Now they can indulge in advance and secure payments and eliminate any risk of fraud or data hack with the help of eCommerce Payment System.

How Does eCommerce Payment Systems Work?

online payment system in e commerce

Before diving more into ePayment systems in eCommerce, let’s understand how they work.

We are all familiar with the basic online payment process, where the buyers click the ‘Buy’ button in their shopping cart, enter the required payment details, and proceed to pay. But what happens next, what are the technicalities involved, how will the amount reach the seller? These and many more questions will be answered next.

Suggested Read: Best Payment Gateways in India For Secure Online Payments

The steps involved in eCommerce payment system processing take only a few seconds, even if the transactions are happening from two different ends of the globe.

Step 1: Open the Payment Gateway

Whenever buyers click on the ‘Buy’ button, they enter their credit or debit card details. These details are encrypted and shared with your payment processor.

Step 2: Confirm with the Issuer

After receiving the card details, the payment processor checks with the buyer’s card-issuing bank to confirm the transaction before deducting the amount.

Step 3: Payment gets Authorized or Rejected

After the alert from the payment processor, the customer’s bank cross-checks the payment before proceeding further. The payment is authorized and processed further when the bank confirms enough in the customer’s account. But, if the balance is insufficient, the transaction gets rejected, and the informed parties are informed about the same.

Step 4: Notify the Transaction Success

Next, the payment processor informs the eCommerce payment gateway about authorization or rejection of transaction. When the transaction is successful, the merchant’s website will receive a notification from the payment gateway. But still, the money will not be credited into the merchant’s account.

Step 5: Credit the Merchant’s Account

Only after a few days, the balance will be credited and reflected in the merchant’s bank account. This step marks the successful completion of the payment process.

Why Is Electronic Payment System Important?

With the increase in telecommunication and ease of access to the internet, electronic payments are increasing rapidly. People have started replacing their traditional form of payment methods with online transactions.

According to Statista, in 2021, India had recorded a whopping number of more than 40 billion digital transactions which were worth about a quadrillion INR (Indian Rupees).

Apart from this, let’s understand other factors that make it important for businesses to adopt ePayment system in eCommerce.

  • Increased Reach: You can cross all the possible physical boundaries and reach maximum customers with eCommerce. When your customers can pay by their preferred method, they are likely to shop more from you. In India, online shoppers are expected to reach 220 million by 2025, and with the integration of ePayment systems, all of them have the potential of becoming your prospects.

  • Minimize Costs: ePayment system in eCommerce saves costs for both parties, the buyer and the seller. Processing payments in the traditional way adds to operational and processing costs like paper expenses, postage cost, additional staff, etc. These costs further become burdensome for customers. But with the increasing popularity and use of ePayment methods, these costs can be minimized.

  • Faster Transactions: You no longer need to be involved in the time-consuming process of drafting cheques, transferring cash, and generating invoices. Both the parties can make and receive instant payments with eCommerce payment gateway.

  • Enrich Security: Traditional payment systems require the buyer to share confidential information via mail, call or SMS. This raised some serious security-related concerns like the mail could get lost or land in the wrong hands. But with eCommerce payment systems, no buyer needs to risk his/her confidential information during transactions.

  • Boost Productivity: Setting up an eCommerce payment gateway automates the transaction process and saves time, cost, and manpower. Quick online payments eliminate the need for mundane tasks such as manual data entry, and keeping a paper-based record of cash payments. This allows your staff to utilize their minds in growing the business further.

Types of Payment Methods for eCommerce Websites

ecommerce payment solution

Integrating multiple popular payment gateways with your eCommerce website will create a convenient purchasing experience for your customers. Further, your customers no longer need to add their payment details every time they buy a product. They can just log in to their respective accounts and pay using their preferred payment methods.

Let’s learn about different eCommerce payment systems that you can integrate into your website.

  • Debit Card: Debit card is a great option for customers to make purchases within their paying capacity. A debit card allows a customer to make payments with the balance that already exists in his/her bank account. Being a popular payment method, debit card is the second largest eCommerce payment gateway used in India.

  • Credit Card: Unlike a debit card, credit allows customers to expand their purchasing power. As a result, it is the most popular method of payment used in the eCommerce industry. To complete the payment, the customer needs to add credit card number, CVN number, and expiry date in the required fields.

  • Digital Wallets: Wallets are gaining great popularity because of their convenience. After creating an e-wallet account, a user can link his/her bank account, debit or credit card in a secured environment. Digital wallets need one-time registration, which eliminates the need for adding bank details every time you make a purchase or a transaction.

  • Net Banking: This payment gateway for the eCommerce website is similar to that of debit and credit cards that allow a customer to make a direct payment from the bank. Net banking is an eCommerce payment gateway that can be accessed with a personalized id and pin.

  • UPI Transfers: Unified Payments Interface aka UPI is another popular option among eCommerce customers. Your delivery guy can carry a QR code that can be scanned upon delivery to make cashless payments. An option to pay from a UPI id can also be integrated as a payment gateway in websites.

  • Digital Currency: Now when the Indian government has announced to release its own digital currency, you should also think about integrating the same in your website. Although big giants have started accepting digital currencies like Bitcoin and Ethereum, but it is yet to gain popularity.

  • Cash: All said and done, the Indian market still consists of a large population that believes in doing cash transactions. So, you need to add an option of Cash On Delivery (COD) to your eCommerce payment gateway.

Suggested Read: List of Best International Payment Gateways in India

Latest Trends around eCommerce Payment Systems

To be at the top of your game, it is important for you to know what’s happening around in the eCommerce world. So, let’s discuss some of the latest trends that you need to catch up on.

  • Increasing Mobile Commerce: An average consumer spends more than 6 hours daily on a mobile. The way consumers search online, consume different content, and even buy products has evolved. Being a handy medium, the total eCommerce sales via mobile have increased by 14% since 2017, which now amounts to 72.9% of the total eCommerce sales.

    The stats indicate that most of the eCommerce payments happen over mobile. So, you need to create a mobile responsive platform that enhances the customer buying experience. You can derive engagement on your app by providing exclusive discounts on in-app purchases.

  • Driving Sales Through Social Media: Statista states that 28% of social media users discover a brand while surfing on it. But the buying journey on social media is such that your prospects have to exit the platform and navigate to an external landing page. You can bridge this gap by integrating social transactions such as ‘Shop Now’ on Instagram where users can make a purchase without leaving the platform.

  • Subscription-Based Models: Subscription models are created to give customers a convenient and personalized experience. This eCommerce trend works great for businesses that require constant replenishment. You can choose from three types of subscription models – Replenishment, Access, and Curation-based model.

    In the replenishment model, a consumer can get access to the purchase of the same products on a recurring basis like necessities. Whereas in the subscription model, customers are offered all the products and services at a special membership discount. And in the curation-based subscription model, customers are given a personalized experience where you can recommend product specifications based on their preferences.

  • Rising Concerns Around Data Privacy: Data privacy is one of the prominent reasons why consumers are hesitant to use the ePayment system in eCommerce. The need to collect consumer data in an eCommerce business cannot be ignored, but protecting it is also equally necessary.

    Unfortunately, certain business owners leak consumer data for personal gain, raising eyes on all eCommerce platforms. So, to protect consumer privacy and integrity, certain laws are created for eCommerce websites that decide the amount and nature of shareable consumer data.

  • Buy Now Pay Later: Consumers often do not want to buy high-priced items like furniture, or an electronic appliance in one go. For those consumers, eCommerce platforms can offer Buy Now Pay Later (BNPL) option. This shopping model is gaining immense popularity and is expected to grow up to 15 times within the next two years. This will allow eCommerce sellers to tap into a larger audience.

Advantages & Disadvantages of eCommerce Payment Systems

eCommerce payment systems come with their fair share of advantages and disadvantages for the seller and buyer. Let’s understand how the integration of different payment gateways for websites can affect both ends.

Advantages of eCommerce Payment Systems

  • Reach Global Market: Popular payment gateways allow you to go global and reach audiences outside of your geographical boundaries. In fact, 56% of online buyers shop from across borders. So, digital payments take your products and services global while increasing your customer base.

  • Increased Distribution Channels: ePayment system in eCommerce allows you to sell your products on different eCommerce platforms as well. eCommerce Payment System also let you sell your products through an affiliate domain and influencers, which can show a considerable increase in your sales.

  • Numerous Payment Alternatives: Integration of numerous payment gateways for websites provides unlimited options for consumers to pay through. Consumers are no longer limited to just cash and cards; they can even make payments without them.

  • Reduced Transactional Cost: Traditional payments add additional transactional costs for the seller. Previously, processing payments required a cashier, unlimited payment slips, paperwork, and a team to manage all this manually. But with eCommerce Payment System, these costs can be reduced.

  • Convenient Payments: ePayment system in eCommerce has enhanced the buying journey for the consumer, making it more convenient. The consumer no longer needs to travel to make a purchase, wait in a queue, or be time-bound to buy anything.

Disadvantages of eCommerce Payment Systems

eCommerce payment systems have their own disadvantages which can be minimized by taking required actions. Buyers and sellers need to be aware and informed in order to keep themselves safe online.

  • Fraud Risk: The risk of data privacy is a global concern today. Online transactions expose the buyer to credit card fraud and other cyberattacks. To combat this, merchants are now working towards creating a secure environment by adding services like biometrics, two-step authentication, etc.

  • Technical Issues: Just like anything technical, the payment gateway for eCommerce website also experiences downtime and network issues. Developers try their best to run regular tests and maintenance operations on the website, but some unforeseen issues cannot be avoided.

  • Additional Business Costs: Switching from traditional payment methods can involve additional costs like training employees and setting up new systems. It will also require additional time for your staff to get used to the new system and understand the nuances.

Suggested Read: Razorpay Vs PayU Vs Instamojo Vs CCAvenue: The Best Indian Payment Gateways

Examples of eCommerce Payment Systems

electronic payment systems in e commerce

An eCommerce website can choose from multiple popular payment gateways such as:

  • Credit and Debit Cards
  • Digital Wallets
  • UPI
  • Net Banking
  • Digital Currency

To make an ePayment system in eCommerce simpler, you need to have a strong payment gateway. A payment gateway helps connect your eCommerce website or application with the bank.

Whenever a payment is initiated, the payment gateway confirms the buyer’s credit/debit card details from the bank and the amount gets transferred. In India, you can choose from the most popular payment gateways, such as:

In Short,

To stay at the top of the eCommerce game, you need to switch from traditional methods of payment to ePayments. This will open new opportunities for your business by providing exposure to greater audiences across the globe. Follow all the security protocols to keep online transactions safe and secure for your business and customers.


  1. What are the popular eCommerce payment gateways?

    Citrus Pay, Instamojo, PayUMoney are the most popular eCommerce payment gateways. They are known for secure transactions, large bank networks, and they support all credit and debit cards.

  2. What are the different types of electronic payment systems in eCommerce?

    Credit cards, debit cards, digital wallets, net banking, and crypto are different types of electronic payment systems in eCommerce.

  3. Which payment method is best for eCommerce?

    The most accepted payment methods like Razorpay, Instamojo, PayPal are best for eCommerce platforms.

Related Categories: eCommerce Software Platforms | Shopping Cart Software | Dropshipping Software | Order Management Software

Written by Isha Lamba

Isha’s writing journey started way back in 2018 when she graduated in the field of Journalism & Mass Communication. Since then, she has been writing for all digital and print marketing assets including blogs, editorial reviews, landing pages, emailers, and more. She has contributed her writings to genres... Read more

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