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As is evident in history, barter trade was the very first payment system adopted by man. As people became more progressive, they used items such as gold, minted coins and paper currency to ease the payment processes. Despite these steps, people still quest for better payment systems. As such, the checks, money orders, and hard cash used for payments in the better part of the twentieth century seem to be outdated.
Today, more people are convinced that the dream of a cashless society is worth pursuing (Garcia-Swartz, Harn &Layne-Farrar 175). Although the world is still to make the transition from paying in money orders, checks and cash, to using credit cards, debit cards and other forms of online payment, scholars and researchers have established that a cashless society would indeed benefit both buyers and sellers of products and services.
Sending checks or money orders
Before the advent of online payment methods, the next best solution that people had was sending checks or money orders through postal mail. As (Crede) observes, these modes of payment were (and still are) time consuming and expensive for both parties involved in the transaction. A case in point is the time-consuming nature of drafting, and mailing a check or money order by the payer.
The payee on the other hand has to collect the check or money order from the mail, cash it, enter the payment details into the information system, process data, and file the transaction details (Crede). Unlike payments by postal mail, online payments are fast and less costly.
Better still; the benefits ensuing from such a payment system are shared between the payer and the payee since the immediate transfer of online funds to the payees account means that the money can be accessed almost immediately. This not only rids the payer of the debt burden, but also enhances the convenience of reorganization his or her payment processes.
An online method
In a study conducted by (Carow and Staten 409-421), it emerges that paying for products or services using an online method afforded the payers a chance to use one card for all payments, and also presented them with a chance to earn rebates on their payments. The ‘one-card-for-all-payments’ provides many benefits to payers across the world to date.
Notably, the payer does not have to withdraw cash from the bank in order to pay his or her bills. With the card in hand, he or she is able to settle all his or her bills in a fast, cheap, and convenient manner. The processing fees that both the payer and the payee would have to incur for processing online payments pales in comparison to costs for processing money orders or checks (Stavins 22).
In addition to time and cost-related savings, one can set up reminders on their electronic devices to ensure that their online bill payments are never late (Edwards). This saves the payer the embarrassment that comes with being reminded that their bills are overdue or even the charges or penalties that accumulate every time they are late to send checks, money orders, or cash to clear pending bills. The payee on the other hand does not have to spend telephone credits calling the payer to remind them of their payment obligations.
Keeping records on how one spends money is also easier when one uses online payments (Investor Guide). The payer can create a central database where he or she can store all the payment records. By doing this, the payer has an easy to search record, where he or she can track payments made to different companies, and download the details of each transaction on a needs basis.
As many consumers know, keeping records for payments is always a wise thing especially when legal issues may come up in the future. More so, keeping records enables a person to keep track of his or her spending, and therefore manage his or her finances better. Keeping all expenses in a single folder also helps during tax deductions since tracking online payments and expenses is easier than finding paper receipts (Investor Guide).
For payers who have fixed monthly or periodic demands for payment, an online payment method presents them with a flexible mode of settling their bills. According to (Edwards), one can setup payment rules that would see bills with specific dollar amounts paid automatically. For payers with bills that vary, the online system can be setup to send an alert every time the payee sends a bill.
Automatic bill payment
For the environment conscious payers, online payments give them another opportunity at conserving nature. According to (McKean), online payers eliminate most of the paper trail that traditional modes of payment produce by eliminating the paper and envelopes used when mailing checks or money orders.
Besides the benefits outlined in this report, (Chou, Lee and Chung 1427) propose that people should adopt online commerce more readily because it has the potential benefits that only the early adopters will be able to utilize fully. Focusing on electronic payment systems, (Chou, Lee and Chung 1427) suggest that online payments will become embedded in businesses as more players in the public and private sectors adopt online commerce.
Being a relatively new method, there is no doubt that online payment will have its early adopters, laggards and people who will simply resist it. As (Szmigin and Foxall 465) suggest the early adopters have a bigger chance of enjoying the benefits of an innovation. Laggards on the other hand have a reduced chance of catching up on such benefits, while resisters will completely miss any benefits provided by the improved payment systems.
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Although it is agreeable that online payments have their fair share of risks, (Crede) has been reasonable enough to state authoritatively that initiatives to reduce such risks are continually being developed. Besides, (Sorkin 5-6) has established that conventional payments methods such as checks, money orders and cash have risks associated to them too.
Considering the promising nature that online payments have, it leaves little doubt that traditional modes of payments will be invalidated in the future (Mantel 36-37). (Garcia-Swartz et al. 178) suggests that only people who like living in denial can ignore the fact that electronic transactions are slowly replacing paper-based payment instruments.
With online technologies slowly catching up with other electronic tools, it is only a matter of time before consumers and sellers switch to the more efficient payment method. As such, consumers of goods and services would be in a better position if they adopted online payments now, since such an action will enable them to become accustomed to the different aspects of the online payments. After all, postponing or rejecting the uptake of such mode of payment is like adjourning or snubbing the inevitable.
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Chou, Untsai, Lee Chiwei and Chung Jianru. “Understanding M-Commerce Payment Systems through the Analytic Hierarchy Process.” Journal of Business Research 57.12 (2004): 1423-1430.
Crede Andreas. “Electronic Commerce and the Banking Industry: The Requirement and Opportunities for New Payment Systems Using the Internet.” Journal of Computer Mediated Communication 1.3 (1995): n. pag. Web.
Edwards, Ben. Online Bill Payments. Money Smart Life, 2010. Web.
Garcia-Swartz, Daniel, Hann Robert and Layne-Farrar Anne. “The Move toward a Cashless Society: A closer Look at Payment Instrument Economics.” Review of Network Economics 5.2 (2006): 175-198.
Investor Guide. Overview of online Banking and Related issues. InvestorGuide.com Network. 2011. Web.
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Sorkin, David. “Payment Methods for Consumer-to-consumer online transactions.” Akron Law Review 35.1 (2001): 1-30.
Stavins, Joanna. “A Comparison of Social Costs and Benefits of Paper Check Presentment and ECP Truncation.” New England Economic Review July/August (1997): 27-44
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