Minggu, 18 Desember 2011


The transfer of funds from one party to another over electronic media is known as electronic payment system. The different approaches to electronic payments include, card payment, mail order and online payment. Online transactions are a daily activity for almost everyone today. With the introduction of the Internet, online transactions became easy. Most of the big product and service companies made their network presence prominent and started interacting with their customers over the web. Online shopping soon became popular. With financial institutions, walking on similar lines, people around the world began performing their financial transactions through the Internet. Credit and debit cards became a commonplace feature and gave impetus to the electronic payment systems.

While most of us prefer the convenience in payments that the electronic payment systems have brought about, some dislike the idea of electronic money. They feel uncomfortable in performing online transactions. Though only the positive change brought about by the e-payment systems is highlighted, we cannot ignore the disadvantages of electronic payment systems. One must be aware of the privacy and security concerns raised by electronic payment systems.

Electronic Payment Systems and their Disadvantages

Most of the online banking sites as also the online financial transaction sites require you to open an online account with them. You need to register to the institution in order to be authorized to perform money transactions with them. This involves a username and a password, which implies the need of password protection. You also need to maintain an account per organization, which can make it bothersome for some of you.

For secure online transactions, the site that hosts your account should follow strict security policies. If the passwords are susceptible to being hacked, it can mean a serious financial loss for you. Banks or financial institutes, which maintain your personal information, cannot afford to expose it to hackers. There is a potential risk of your personal and account details being stolen.

One of the most severe disadvantages of electronic payment systems is that of identity theft. The available security measures can prevent the sensitive information from being exposed. But it is important to use virus protection or firewalls for your computer. It is important to carry out money transactions over a secure server.

There is a great risk involves in the theft or the losing of the smart cards. In case the cards fall in unsafe hands, there is a danger of the expenditure of your entire bank balance. There are measures to inform the concerned authorities about the loss of the card. But, the time between losing the card and informing the authorities is critical. Unauthorized users may carry out transactions in your name during this period of time.

Mostly, electronic cash is based on cryptographic systems. The transactions are encoded by means of numeric keys while the transaction details travel across the net. Though electronic payments are resistant to forgery, the keys are vulnerable to attack.

This was not to discourage you from taking to electronic payments. It was rather to make you aware of the disadvantages of electronic payment systems. While we are moving towards a paperless environment, we are inviting issues related to electronic security.

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