With internet making the world a smaller place, one of the most important and significant developments is online banking and e-payment. Nowadays people can buy, sell, make payments etc. from the comforts of their homes. Online payment methods have become a part of an active urban lifestyle and avoiding them is next to impossible. However, with every pro comes a con and nothing with online reach is free of risks. While we cannot avoid these methods, we can understand what e-payments are and proceed with caution so as to avoid as many risks as possible.
We may consider that e-payment is a subset of an e-commerce transaction that involves electronic payment for the purchase and selling of products or services provided over the internet and that e-payments may simply be defined as paying goods or services over the internet. There are several other meanings for e-payments, in which the e-payment method is a type of financial agreement that includes the purchaser and the seller, facilitated by the use of electronic communications. The area of e-payment is growing very quickly, and this involves increasing e-payment forms and also increasing e-payment opportunities, risks and challenges.
Here are some guidelines to mitigate these risks and save yourself from certain unprotected payment methods
Online payments should only be done on a site having a valid SSL certificate. To a common man that can be ascertained by the presence of 'https://' in the web address. Also, a 'padlock' symbol should appear in the address bar if a site has a valid SSL certificate. This certificate ensures that any personal information like credit card number of bank details are submitted in the encrypted form thus reducing information leak and fraud.
Online transactions should be avoided on unknown or suspicious apps and sites. Its always a good practice not to click on payment links provided by such sites as they may take the user to fraudulent sites and steal data. Instead of copy/paste the web addresses, they should preferably be entered manually in the address bar. Computers should be preferred for e-payments instead of telephone apps as mobile apps may not have the requisite level of security layers.
Credit risk is the risk that a counterparty will not settle an obligation for full value, either when due or at any time thereafter. Banks engaging in electronic banking activities may extend credit via non-traditional channels, and expand their market beyond traditional geographic boundaries. Inadequate procedures to determine the creditworthiness of borrowers applying for credit via remote banking procedures could heighten credit risk for banks. Banks engaged in electronic bill payment programs may face credit risk if a third party intermediary fails to carry out its obligations with respect to payment. Banks that purchase electronic money from an issuer in order to resell it to customers are also exposed to credit risk in the event the issuer defaults on its obligations to redeem the electronic money.
While the field of e-payments is very useful presently and has a bright future, it is filled with obstacles. It requires the joint effort of the business and the customer to create safe payment methods and expand the online payment industry.