The internet and globalisation have redefined how we purchase and sell goods and services. It has impacted every aspect of our lives, and a lot of the things that require a lengthy list of resources can today be taken care of using just a laptop and internet connection. These include anything from publishing news to selling merchandise and making payments to someone sitting on the other end of the country or world.
Never before in human history have we experienced convenience at such a level. As technology progress, we will only witness more advancements happening all over the world.
One of the spectacles of the 21st century is the ability to send and receive money from anywhere in the world within minutes via online transaction processing, something that was unimaginable just a few centuries ago.
What are Online Transactions and Their Purpose?
The best online payment method allows a person to transfer funds digitally using online transaction processing (OLTP). OLTP is a system that handles transaction-oriented applications for data entry and retrieval transaction processing.
The entire process is secure, convenient, and almost instantaneous, where transactions take place at a rapid pace allowing businesses and individuals to make and receive payments without delay.
Different Stages of Online Transaction
An online transaction happens over three stages. Let’s have a brief look at them.
- Pre-purchase/Sale: This is the pre-transaction stage where a product or service is advertised with the intent of selling it to a consumer.
- Purchase/Sale: This is when the sale happens, and the customer initiates an online payment to purchase the advertised goods or services.
- Delivery Stage: This is the last stage where the ordered goods or services are delivered to the customer, and the online transaction is deemed as completed.
Setting up an Online Payment Processing System
If you aim to set up an online payment gateway for your business, firstly, you will need to set up an account with your bank and get the necessary software to integrate the system with your website.
You may also choose to partner with a third-party payment gateway provider to help you take care of the online payment process.
No matter which one you go for, it’s crucial to have an online payment option if you are in the business of selling goods or services online.
Now that you are aware of what an online transaction is, the purpose it solves and the various stages within it, let’s have a look at a few of the advantages and disadvantages of an online transaction processing system.
Modes of Payments Available to Customers and Businesses
- Net Banking Transfer – This method involves the buyer making a payment using their bank account to transfer funds electronically from his bank account to that of the seller.
- Credit or debit card – The buyer shares their credit or debit card information on the payment processing system to initiate a transaction. The amount is debited once the buyer authenticates his identity through a uniquely generated OTP.
- Digital Wallets – A customer can also use a digital wallet such as Paytm, GPay, or Phonepay to make the payment if they so choose to.
- Prepaid Cards – This is a prevalent option among customers who don’t want to share financial data such as credit or debit card information.
Advantages of an Online transaction Processing System
- It’s the perfect solution for online shopping and day-to-day transactions between businesses and customers.
- It’s a robust and efficient system with excellent response.
- Simple to use as the customer only needs to enter the required information, and everything else gets taken care of by the online payment gateways.
- Choice of multiple payment modes, including credit, debit, net banking, digital wallets, and even prepaid cards.
Although it is the most efficient way of making transactions in a global world, everything comes with its set of disadvantages, even something as groundbreaking as online transactions processing.
Disadvantages of an Online Transaction Processing System
- The risk of financial data getting leaked is of concern. However, partnering with top payment gateway providers like plural payment gateway minimises the risks and instances of fraud.
- A large number of online transactions can get affected even if the server hangs for a few seconds. Top payment gateway providers also offer solutions that direct the customer to the available gateway as per the requirements.
Online transactions are quickly becoming the most preferred mode of payment across goods and services that we buy. It’s safe, convenient, and allows us to conduct business with customers and vendors on a global scale.