- 19/11/2016
- Category: Commentaries
Electronic commerce (e-commerce) is one of the most influential innovations of the internet era, yet in many ways it is still in its relative infancy. In United States, online transactions number in retail transaction make up only 7% in 2015. Meanwhile, the growth of e-commerce is even more obvious in emerging markets such as India, where online retail sales jumped from 3% in 2010 to 34% in 2014. This growth has spurred by the continuation of technology development, in order to improve the online shopping experience for both customers and merchants. In recent years, e-commerce has thrived significantly, marked by the establishment of innovative payment infrastructures companies such as PayPal and Amazon. In the future, it is always possible for refining the payment system to develop cashless payment system in order to give more comfortable and effective online shopping journey for both customers and merchants.
India is one of few countries in the world, where its citizens have a habit of spending their money in cash. In 2016, 78% of all consumer payments in India were made in cash. However, if India successfully developed their financial technology-based startups, India is predicted to experience the Cashless Revolution in 2023. Nevertheless, cashless payment, such as e-wallet and virtual account also has a high risk, from the infamous target data breach, to the credit card sniffers on transit ticket terminals. This means that the costumers still have a trust issue in cashless payment system.
In order to solve this trust issue, there are several payment providers who provide payment gateway services that include security options to secure sensitive data, such as credit card numbers. To minimize cashless payment risk, merchants may use some security services such as real time payment report system, fraud control & management system, and may also use protocol to secure personal information involving both parties in the transaction. Payment gateways software also assist merchants with servers that transmit transaction information and responses from bank issue such as, whether a transaction is approved or declined. Essentially, payment gateways facilitate merchant communication within banks to give a better service to customers.
How payment gateways work
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PayPal, who is named as the most popular payment gateways companies, has been operating in more than 202 countries and in 25 currencies since 1998. It has a feature to allow users to integrate PayPal checkout on the merchant websites as well as process payments through a browser and application to extend credit to customers. PayPal also influenced many payment getaways startup in Southeast Asia to develop easier payment system. In Southeast Asia, there are several payment gateway providers who have capabilities to compete with PayPal. Those competitors already thrived, especially in a country with low credit card usage. Most of them are startup companies based in their origin countries, such as Qwikwire, Ayanah, Dragonpay, and Apptivate in the Philippines; 1pay, Mobivi, and Payoo who dominate market in Vietnam; 2C2P in Thailand; and Coda Payments, Veritrans and Doku in Indonesia.
This payment gateways system has given more than easier online payment service. At the same time, the development of payment gateways has created a huge stepping stone to revolutionize social culture to be a cashless society. In one hand, cashless society may increase efficiency in transaction which may even develop further into an increased productivity within the society. On the other hand, in the future, those payment gateways innovations may be written in history as a major proponent of consumptive society or even worst, it could create an extreme “Shopaholic” syndrome. Nonetheless, akin to many other social phenomenon resulting from the inevitable technological expansions, cashless society may bring certain challenges which require careful approach. Realizing how foundational the future benefits of payment gateways and cashless society may bring, the issue of cyber security still remains as one hurdle in deepening the process of integrating society to cashless culture, especially in Southeast Asia, where cyber security is still highly unmaintainable. Other than that, creating convincing cashless system for society is even more perplexing, and is certainly not as easy as flipping one’s hand. With all concerns in mind, payment gateways system may become an opening gate for more delightful and foreseeable future of cashless society. Along the way, bigger problems of cyber security and society’s trust shall not be put aside, in order to amplify all benefits a cashless society may offer.
References:
Shipley, Erin, “4 Technological Advances Taking Ecommerce to the Next Level”, Tech.co (online), 22nd December 2015, http://tech.co/technological-advances-ecommerce-2015-12, accessed on 14th November 2016
Kashyap, Karan, “India’s Fintech Startups Will Cause A Cashless ‘Payment Revolution’ By 2023”, Forbes (online), 18th August 2016, http://www.forbes.com/sites/krnkashyap/2016/08/18/indias-fintech-startups-will-cause-a-cashless-payment-revolution-by-2023/#2ed51e1b4646, accessed on 14th November 2016
PayPal (online), https://www.paypal.com/webaps/mpp/country-worldwide accessed on 12th November 2016
Lee, Terance, “10 Startups That Can Beat PayPal in Southeast Asia”, Tech In Asia (online), 7th October 2013, https://www.techinasia.com/10-startups-beat-paypal-southeast-asia accessed on 12th November 2016
Diagram: https://www.b3net.com/wp-content/uploads/sites/1423/2016/05/Payment-Gateway-Integration-Magento.png accessed on 12th November 2016
DBS Group Research, “E-commerce in Asia, Bracing for Digital Disruption”, Number 13, 2015, https://www.dbsinsights.com/wpcontent/uploads/2016/07/151103_insights_e_commerce_in_asia_bracing_for_digital_disruption.pdf, accessed on 12th November 2016
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