Abstract
Electronic payment or e-payment refers to any payment transactions conducted electronically. In narrow terms, it usually refers only to online payment. E-payment is a crucial part of e-commerce. It increases transaction speed, improves merchants’ liquidity, and enhances buyers’ online shopping satisfaction. E-payment also reduces transport costs, robbery, and counterfeiting of fiat cash (Panurach, 1996). However, e-payment development in emerging economies—most of which rely heavily on cash for e-commerce transactions—has not kept up with advances in e-commerce. As a result, inefficient payment methods have become a bottleneck of further e-commerce growth.
TopMajor Payment Methods For Online Purchases
Payment mechanisms for e-commerce transactions are more diversified in China than in countries with high credit card penetration. A variety of E-commerce payment methods are concurrently used in China. The most common ones include e-payment, cash upon receipt of goods, postal payment, and bank transfer (Table 1).
Table 1: E-Commerce payment methods (Source: Ciweekly, 2006)
| E-Commerce Payment Methods | Percentage of Merchants |
| E-Payment | 60.2% |
| Cash upon Receipt of Goods | 39.4% |
| Postal Payment | 12.3% |
| Bank Transfer | 6% |
| Others | 2.1% |
Key Terms in this Chapter
ChinaPay: sponsored by China Banking Association, is a pioneer of China’s bankcard-driven e-payment services.
Cash upon receipt of goods: a payment paradigm in which the buyer orders online, the seller physically delivers the goods to the buyer, and the buyer pays cash upon receipt of the goods.
Direct online payment: An online payment transaction that involves only a buyer, a merchant, and a bank.
Electronic payment: refers to any payment transaction conducted electronically.
Third-party online payment: An online payment transaction that involves a third party as well as a buyer, a merchant, and a bank.
Bank transfer: a payment mechanism in which payment transactions are made by transferring fund between bank accounts of the seller and buyer.
Postal payment: a payment method where payment transactions are made via the postal services.