9. Methods of payment

The key feature of ecommerce is to pay for something online before you receive the goods. There are a number of ways to do this, each with their advantages and disadvantages.

Credit card

All the major credit cards offer their services to online shops.

Customer go to the checkout and they choose which card to use for payment (Visa, MasterCard, American Express and so on).

The customer then provides details from the card itself. This is done either by filling out an online web form or perhaps credit card details are taken over the phone directly by the business.

To reduce the chance of fraud even further, some credit card companies offer to check a secret password which only the card owner and the card company know about.

The advantage of using a credit card is that it does offer a fair amount of customer protection. For instance, if a holiday firm went bust after you have paid for a holiday, then you can claim the cost from the credit card company.

The disadvantage of credit cards is that they charge quite high interest if you have not paid the bill in full by the end of the month (the credit card do not particularly want you to pay in full, as that is one way they make their money).

Debit card

Very similar to the credit card system expect the money is coming directly out of your bank account. Unless you have an overdraft facility, you must have money in the account to make the payment.

A disadvantage is that it offers less customer protection should the company fail to deliver the goods or they close down.