E-payment: definition, services and benefits

An e-payment is an electronic payment. This refers to any payment made via a EPT (electronic payment terminal) using contactless technology, by entering a PIN code or by making a payment over the Internet on an e-commerce site. Banking information is read, transmitted and exchanged in real time. It comes under the heading of electronic money, i.e. any intangible, digitised money flow other than checks or cash.

The differences are sometimes blurred. We’re talking about the digitisation of payments or the digitisation of transactions. We speak of digital or electronic money as opposed to fiduciary money (coins or banknotes). The exchange is digital and deals with secure banking data between a payment network, a sending bank and a receiving bank. These are data stored on electronic media. Electronic money is regulated by traditional banking institutions (European Central Bank) and is denominated in traditional units of account such as the EURO.

A virtual currency, on the other hand, is a form of electronic money, since it is itself stored on an electronic medium. But it is only intended to record exchanges, has no legal status and is not indexed to a real currency. It has no physical materialisation and is not subject to any control. There are three types of virtual currencies:

● Closed virtual currency: this is used in closed virtual universes and cannot be converted into regulated legal tender. The best example of this is video games, where virtual currency has no connection with real life.
● Virtual currency with a “one-way” flow: here, virtual currency can be bought with real currency. Example: with 10 euros, I buy X units. This currency, once converted into virtual money, can be used to purchase real or virtual goods. The most frequently used examples are the famous airline “Miles”. These are generally small amounts.
● Virtual currency with a “bidirectional” flow: in this case, of course, we find the famous cryptocurrencies, which allow conversions into real currency in either direction. They are exchanged peer-to-peer, without banking intermediaries, and have their own management and security systems based on blockchain.

Services dealing with e-payment include all digital payment services:

● E-wallets enabling the cantonment and transfer of funds: these include kitty banks, neobanks, etc.
● Bankcards, payment cards, prepaid cards: France’s favourite payment method!
● Mobile payment and everything to do with card tokenization: the growing payment medium.
● Virtual cards for all Internet payments
● IoT and all connected objects enabling contactless payment, thanks in particular to NFC technologies
● QR Codes

Because of its purely digital nature, e-payment offers a number of advantages that have made it a success:

● Fast: e-payments have the advantage of being instantaneous for the end-user. Even if, in reality, the transaction takes place over a longer or shorter period of time, the data transfer is almost immediate.
● Secure: e-payment security standards have become stricter in recent years. Whether it’s DSP2, RGPD, PCI-DSS or AML5…security standards are all built with the aim of protecting transactions against cybercrime, guaranteeing respect for and protection of personal data.
● International: worldwide payment is simplified, and exchange fees are controlled or even non-existent.