Global e-commerce continues to expand at a staggering pace, with sales estimated to hit $6.3 trillion in 2024. Behind most of those transactions lies an online payment system — the technology that makes buying with a click possible. For businesses, understanding how these systems work isn’t just about keeping up; it’s about securing revenue, managing costs, and delivering the smooth checkout experience customers now expect.
What is an online payment system?
An online payment system is the framework that allows money to move securely from a customer to a business over the internet. It links together the customer, the merchant, and the financial institutions behind the scenes to make sure every purchase is authorised and settled correctly.
A typical setup includes these players:
- Merchant account: A specialised bank account that allows businesses to accept card payments and settle funds.
- Payment gateway: The technology that securely transmits payment information between the merchant’s checkout page and the payment processor.
- Payment processor: The service that routes the transaction to the relevant card issuer or bank, manages authorisation, and completes settlement.
- Card networks: Organisations such as Visa and Mastercard that establish rules for card payments and enable communication between card issuers and acquiring banks.
Together, these components create the infrastructure that lets businesses accept payments online in a way that’s both reliable and safe — while giving customers flexibility in how they choose to pay.
How online payment systems work
- Customer initiates checkout: The cardholder or digital wallet user chooses a payment method and enters their card details or authorises via their device.
- Payment gateway transmits data: The payment information, including card details or bank account credentials, is encrypted and sent to the payment processor over a secure connection (SSL).
- Authorisation request: The payment processor forwards the request to the card network and the card issuer to check if funds are available and whether the transaction can be approved.
- Authorisation response: The card issuer sends back an approval or decline message. If approved, the transaction is confirmed at checkout.
- Transaction processing: The acquiring bank collects the funds, and settlement begins.
- Settlement: Funds are transferred from the cardholder’s bank account to the merchant account, usually within a few business days, though real-time payment systems are gaining ground in the US and Europe with forecasted growth rates of 43% and 51% annually through 2028.
Examples of online payment systems
Digital wallets
Digital wallets such as GCash, Boost, Grabpay, ShopeePay, Zalopay, Apple Pay, Google Pay, and Alipay store card details or bank account information securely, allowing customers to make fast payments without re-entering their card details for every transaction.
Adoption has risen significantly, with 28% of US in-store shoppers now using a digital wallet. For businesses, offering this option improves checkout convenience and can increase authorisation success rates due to advanced tokenisation and built-in fraud protection features.
Card payments
Credit and debit card payments are one of the most widely used payment methods worldwide. Customers enter their card information at checkout, and the payment gateway encrypts and transmits the data to the processor.
The card network (Visa, Mastercard, or others) communicates with the card issuer to confirm whether the transaction can be authorised. Card payments remain dominant in global e-commerce because of their familiarity, speed, and broad acceptance across markets.
Bank transfers
Direct bank transfers allow customers to pay straight from their bank account, often at lower costs compared to card transactions. In Europe, the SEPA scheme enables fast and standardised transfers across the region, while the US ACH scheme supports recurring billing and payroll-type payments. These systems are commonly chosen for high-value payments and B2B transactions, as they offer lower fees and reliable settlement.
Subscription payments
Subscription payments automate recurring billing, allowing businesses to collect payments on a regular basis after a single authorisation. This model is widely used by SaaS companies, streaming services, and membership platforms. Subscription payments reduce manual effort, improve retention rates, and provide predictable cash flow. Buyers can usually adjust their subscription terms, cancel renewals, or change plans, offering flexibility while still maintaining consistent payment collection.
QR and code-based payments
Code-based systems let customers scan a QR or order code at checkout to complete payment. The QR code links directly to a digital wallet or banking app, streamlining the payment process. This approach is especially popular in Asia, where QR-based payments are widely used for retail and dining. For businesses, it eliminates the need for physical terminals while enabling instant, secure payment acceptance across different payment methods.
Benefits of an online payment system
For businesses, adopting an online payment system provides multiple advantages:
- Revenue capture: Supporting different payment methods and reducing failed transactions help merchants increase acceptance rates. Missed local payment methods directly translate into lost sales.
- Lower costs: Using local acquiring through a payment processor can reduce cross-border fees, which often account for a significant percentage of transaction costs.
- Security and compliance: Built-in fraud detection and encryption technologies protect cardholder data. Solutions compliant with PCI DSS and upcoming PSD3 requirements safeguard against breaches and fines.
- Customer experience: Offering a range of payment options at checkout reduces cart abandonment and increases conversion rates.
- Cash flow efficiency: Faster settlement, especially with real-time transaction processing, improves liquidity management.
How to set up an online payment system
Implementing an online payment system requires a structured approach:
- Open a merchant account: Essential for receiving funds from card payments. This connects your business to the financial system.
- Choose a payment gateway: The gateway encrypts and transmits payment data securely. It should support multiple payment methods, including debit, digital wallets, and bank transfers.
- Select a payment processor: The processor routes and manages transactions. Look for coverage of multiple regions and card networks.
- Integrate with checkout: Configure your website or app to accept payments. Many providers offer SDKs and APIs to support a customised checkout flow.
- Implement security measures: Use SSL certificates, tokenisation, and fraud detection tools. This protects cardholder data and prevents unauthorised access.
- Test and go live: Run sandbox and live tests to confirm successful payment collection before fully launching.
Choosing an online payment processing solution
When evaluating online payment services, consider the following factors:
- Coverage of payment methods: Does the provider support cards, digital wallets, and bank transfers? Can it adapt to emerging payment options?
- Authorisation rates: Higher approval rates mean fewer lost sales. Local acquiring often improves success rates.
- Transaction costs: Compare fees across providers, including cross-border surcharges and FX markups.
- Fraud detection and risk management: Built-in security measures protect your business and customers.
- Settlement flexibility: Can you receive funds in multiple bank accounts or currencies?
- Compliance readiness: Providers should be prepared for regulatory changes, including PSD3 in Europe.
- Reporting and reconciliation: Detailed transaction and settlement reports help finance teams manage accounts more effectively.
Conclusion
For businesses today, online payments are about more than processing transactions. They shape how customers experience your brand, how confidently you expand across markets, and how resilient your operations remain under pressure.
Antom equips businesses with streamlined setup, advanced checkout options, and reliable fraud detection to keep payments flowing securely worldwide. It’s a solution designed not just for today’s needs, but for long-term growth.
