Scientific innovations and inventions have led to technological development. In modern civilized world, technology is used in almost all spheres of life. It has been adopted in settling of bill and money transfers.
The emergence of e-commerce and increased international trade has facilitated making of business transactions over electronic Medias like phones and the Internet. One form of payment in e-commerce and international trade is e-payment system (Sharma, and Diwan 12). This paper takes a SWOT (strength, Weakness, Opportunity and Threats) analysis of e-payment operation; it will focus on how the system works in United Arabs Emirates (UAE).
E-payment
E-payment system facilitates payment for goods and services procured through e-commerce system. The emergence of e-commerce called for a system of payment where people who are distance apart can facilitate trade without necessarily seeing each other. It is an instant process where funds are transferred from the payer to the receiver, after an authorisation process.
It is a replacement of the old cash and check system. The system extends from more than just offering payments over the Internet to conduction of financial transactions like approval of credit system over the Internet. The system is divided into four general categories:
- Online Credit Card Payment System
Payment cards have magnetic stripe or computer chips and have some information known to the cardholder. After making a transaction, the cardholder gives some information to the seller like his code, his pin number, and bank details. The seller sends this information to the customer’s bank that authorises payment.
- Online Electronic Cash System
The system uses the Internet to authorise a bank to pay a certain amount to a certain person, the transaction is effected immediately through wire transfer system. The account holder using his computer does the authorisation.
- Phone payment (M-banking)
Under this system, an account holder uses his phone to authorise transaction. For the process to take place, the bank will have engaged the phone service provider for such services and the account holder need to enroll for the system.
- Person to person payment
This mode of payment is where a person using a certain amount/value holder device like phone account transacts money into another person’s account. For the transaction to be effected, the payer uses codes and passwords.
E-payment is not limited to above methods; however, there are innovations done as technology increases. The Internet, globalisation and international trade have facilitated business transactions being conducted when someone is sitting at the comfort of their home or a distance away from the other party. They can procure for goods and services from a distance. To pay for these transactions, electronic payments are used (Laudon, and Traver 12-23).
S.W.O.T analysis of E-payments
Strength
E-payment is a safe and convenient method of transacting across different boundaries. It is safe to transfer money when making a certain payment of goods purchased over e-commerce. When used, there is an improved customer service since the customer will,
- Have a choice of the best method to use when transacting among the options available.
- There is convenience since the customer does not need to keep invoices and sales receipts
- It allows an immediate payment of goods thus any delay that might have occurred when transacting via cash and check is removed.
- There are some small discount concessions to facilitate the trading.
- It offers a competitive edge since the customer can always choose the trader with his most preferred form of e-commerce.
To the seller, the system also offers some advantages that include:
- The seller gets paid for transactions immediately reducing debtors and collection fees
- It is a strong supporter of international trade thus an increased market for trader’s goods.
- It leads to an improved cash flow in a business since the seller is paid immediately through the system.
To the economy, the system facilitates international trade among countries a move that has facilitated the growth of trade among different countries.
Weaknesses
The system calls for users to maintain an account with the service provider, where some personal information is required to open an account then a secret password is also generated; this calls for password and personal information privacy systems. This may pose some danger to the trader.
On the part of service provider, there is need to create strong electronic systems which cannot be hacked. In case of hacking, the customer is bound to loss some large amounts of money.
Opportunities
Globalisation has increased trade among countries; international trade is facilitated by the use of e-payments. The increase in international trade is an opportunity for electronic payment. Different methods are being adopted that are shaped to benefit the system of payment.
Technological development is another factor that has facilitated the development of the new payment systems. As new methods of transacting are invented, then the payment system is given a platform to operate.
E-commerce is another factor that has favoured the use of e-payment system. As people transact among each other using electronic media, then there has been the need to have a system where payments will be facilitated. This creates business e-payment systems.
Money insecurity is another factor that has created the need for e-payment. As threats for security of cash increases, the way forward to solving this need is adopting electronic payment methods.
Threats
The major threat that is facing e-payment is hacking of computer systems. Hackers are improving their expertise to be able to hack money through the system. There are also some individual level threats where individual information falls in the hands of hackers (Lammer 12-45).
E-payment in United Arab Emirates (UAE)
United Arabs Emirates is a fast growing economy; the country has adopted electronic commerce both at local and international level. For payment in the UAE electronic commerce system, e-payment systems are being adopted, the following are the major systems used in UAE,
- Mobile phone money transfer (M-banking)
- Internet banking , this is through systems like PayPal, e-money and electronic money transfer
- Qatar Payment System (QPS), this is a government payment system where the government collects taxes through the system.
- The use of credit and debit cards; the cards are used when making financial transaction like shopping within and without the economy. The use of Visa cards has enabled the cards to be issued in other countries than in UAE.
- Hawala system of money transfer
There are new systems that are increasingly been put in place to facilitate electronic commerce trade (Al-Abed, Paula, and Hellyer, 3-23).
Conclusion
Technological development has facilitated e-commerce and electronic money transfer. E-payment is a money transfer system using electronic gadgets like computers via the Internet. It is a convenient and safe method of money transfer. UAE has adopted a number of e-payment systems; they include mobile payment system, internet banking, Qatar payment system (QPS), hawala system, and use of credit and debit cards.
Works Cited
Al-Abed, Ibrahim, Paula Vine, and Hellyer, Peter. United Arab Emirates yearbook 2005. London: Trident Press Ltd, 2004.Print.
Lammer, Handbuch. E-Money, E-Payment & M-Payment. Massachusetts: Birkhäuser, 2007.Print.
Laudon, Kenneth, and Traver Carol. E-Commerce. New Delhi: Pearson Education,2002.Print.
Sharma, Sunil, and Diwan Parag. E-Commerce: A Manager’s Guide to E-Business, New Delhi: Excel Books, 2000. Print.