Skip to content

A guide to e-commerce payment systems

Written by

Last editedMar 20222 min read

Any online business needs a fast, secure and reliable system in place to receive payment from their customers. This is the foundation of all e-commerce (electronic commerce). Thankfully, e-commerce online payment systems are designed to facilitate transactions with minimal fuss and maximum efficiency.

But before we dive into how these systems work and which one might meet your financial needs, we need to discuss exactly what it is that an online payment system does.

What is an online payment system?

An online payment works by using a payment gateway to connect your digital storefront to the payment processing network of your choice. That processor then works with your bank to clear and distribute funds.

This is the basic system that underpins all paperless monetary transactions and it has revolutionised the business of processing payments. It not only allows payments to be made discreetly from anywhere on the planet at any time but has led to significant reductions in transaction and labour costs.

Different types of payment systems for e-commerce

There are several types of electronic payment methods that are classed as either cash payment or credit payment systems.

Credit cards

One of the most common forms of electronic payment, a credit card is used online by asking the customer to input the card’s unique number alongside a security number often located on the back of the card and the expiry date. The bank that issues the card then pays the merchant on behalf of the customer and builds up a line of credit the customer has to pay back, sometimes with interest.

Debit cards

Debit cards work in a similar manner to credit cards, only the money being transferred does actually belong to the customer. With a debit card, the customer needs to have the amount available in their account to make the purchase (unless they have an arranged overdraft). Where a credit card works through a credit card payment system, a debit card works through a cash payment system.

Electronic fund transfers

EFT is a means of transferring funds directly from one bank account to another. This is an immediate payment method but it is also cumbersome and not as secure and anonymous as other e-commerce payment methods.


Any online payment transaction that occurs without the intervention of a middleman could be described as an e-money transaction. So, all online payments done via credit cards, debit cards, or smart cards are examples of e-money transactions.

What’s an APM?

An alternative payment refers to any form of digital payment that doesn’t use a physical card. The digital wallets used by Apple and Google, for example, are popular APMs.

They are also quickly becoming industry standard as they are not only more convenient but more secure, too, thanks to more elaborate and advanced encryption algorithms. It’s also a lot easier to steal and use a credit card than it is to steal and use a digital wallet locked behind a password, thumbprint or face ID.

If you operate on a global scale then you really can’t afford to not at least consider APMs. GoCardless is an industry-leading APM that provides an instant payment collection solution via both Direct Debit and open banking, offering instant confirmation of payment via our Instant Bank Pay system.

It can be used both for recurring and one-off invoice payments and is available in a variety of formats to fit your payment flow including hosted pages, drop-in modules, and custom options.

We can help

If you’re interested in finding out more about e-commerce payment systems, or any other aspect of your finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

Get StartedLearn More
Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

Contact sales

Try a better way to collect payments, with GoCardless. It's free to get started.

Try a better way to collect payments

Learn moreSign up