Trends and Technology in E-Payment.

• Author: Chen, Alexander N.

INTRODUCTION

The Internet has been recognized as a user-friendly medium of communication and a good tool to get information and process financial transactions (Hashim, Hameed, Ayyub, Ali, & Raza, 2016). For people who are used to living in this wired world, the use of the Internet has become a necessity not only for work but also for academics, communication, entertainment, and business transactions (Kelleci & Inal, 2010). The Internet is now impacting almost every aspect of our lives from influencing how we interact, the way we do business, and the way we learn.

The digital world is becoming immensely crowded. Internet use has grown exponentially with the majority of users being young people and adolescents (Younes, Halawi, Jabbo, El Osta, Karam, Hajj, & Rabbaa Khabbaz, 2016). Since the Internet is now a part of our daily lives, it is not a surprise that the number of active users and Internet penetration as a percentage of population continue to grow globally. Based on data collected from the Global Digital Statshot of 2018 on www.slideshare.net, Table 1 provides a summary of the distribution of Internet users by world region.

From Table 1, it is observed that the Internet is used worldwide, and significant disparities exist between developed and developing regions. Specifically, developed regions have higher internet penetration. For instance, in North America, 88% of the population has Internet access, as does 90% of the population of Western Europe. East Europe and South America have relatively high penetration rates of 74% and 68%, respectively. Africa and South Asia have the lowest rates, both coming below 35%. These two regions, with their combined populations of over 3 billion, have the most potential to develop and expand Internet usage.

The emerging role of the mobile phone in commerce appears unavoidable when one considers the ubiquity of the mobile phone across the globe. As a communication device, the mobile phone is associated with increased satisfaction with people's lives and relationships when compared to less personal communication methods (Goodman-Deane, Mieczakowski, Johnson, Goldhaber, & Clarkson, 2016). It provides its user with the capability to have a voice or video conversation, exchange email or text messages, or participate in social media or other online activities (Goodman-Deane et al., 2016). This wide variety of tasks for which it can be used has led to the high level of global mobile phone penetration. In Table 2, we summarize mobile phone connections and penetration by region.

East Europe, West Europe, Middle East, South America, Southeast Asia, Central Asia, Oceania, and North America all have penetration rates higher than 100%. Africa and South Asia are behind the other regions, but still have relatively high mobile penetrations rates of 82% and 91% respectively. This high rate of mobile penetration globally implies that people are better connected than ever. The increasing computational power of mobile devices has led to the smartphone. A typical smartphone is capable of running several applications concurrently (e.g., navigation, email, browser, communication), in addition to other built-in functionalities such as music player, cameras, and sensors (Rahman, Prima, Razzaque, Hassan, Alelaiwi, Alrubaian, & Choo, 2016). Among all the types of mobile phones, smartphones are the new trend.

Globally, smart devices represented 36% of the total mobile devices and connections, and 89 percent of the mobile data traffic in 2015; by 2020, more than three-fifths of all devices connected to the mobile network will be "smart" devices. Sixty-seven percent of mobile devices will be smart devices by 2020, up from 36% in 2015 (Cisco, 2015). Table 3 shows each type of mobile connection by device worldwide.

With the large number of smartphones in use, and technological improvements with each new release, a new type of channel called mobile commerce is emerging (Ondrus & Pigneur, 2006). Therefore, it is not a big surprise that phones are used as a transactional device (van de Heijden, 2002). Smartphones are now playing a key role in the electronic business and are used as devices for electronic payment.

CURRENT TRENDS FOR E-PAYMENTS

E-payment is a type of an e-commerce transaction system for buying and selling products that are offered through the Internet. Shon and Swatman (1998) define e-payment as any exchange of funds initiated via an electronic communication channel. According to Wester's New World Dictionary, electronic payment refers to making any payment that is made electronically rather than in person.

An electronic payment is a financial exchange between buyers and sellers that takes place online. The content of this exchange is usually some form of digital financial instrument (such as encrypted credit card numbers, electronic checks or digital cash) that is backed by a bank or an intermediary, or by legal tender (E-Payment Systems, n.d.).

The growth of e-services has created the need for using an electronic payment system. Electronic payment systems are conducted in different e-commerce categories such as Business-to-Business (B2B), Business-to-Consumer (B2C), and Consumer-to-Business (C2B). The electronic payment systems are summoned to facilitate the most important action after the customer's decision to pay for a product or service, which is to deliver payments from customers to vendors in a more effective and efficient way (Abrazhevich, 2004). Previous studies have shown that younger and more educated consumers, with higher incomes, were more likely to use an electronic payment system (Stavins, 2001).

Traditional payment systems typically rely on the physical proximity of the parties to a transaction or the physical exchange of transaction media. The new model of e-commerce eliminates this proximity requirement by addressing some of the following problems with traditional payment systems.

Traditional payment systems require the consumer to either send paper checks by mail or a physical presence to sign papers before performing a transaction. This may lead to inconvenient circumstances (E-Payment Systems, n.d.). It is also time-consuming in the way that it can take many days or weeks to process the payment. Since we are living in a world where time is a valuable asset, people are now trying to save as much time as they can. Therefore, they are looking for flexible payment methods that are available to them anytime.

This happens as the consumer is required to send all confidential data on paper by mail, which is not encrypted, and it may be read by anyone (E-Payment Systems, n.d.). Security is one of the main concerns of customers. They all want to protect their personal information to prevent fraud. Also, when using the traditional payment system, customers have to carry cash on them in order to process transactions. This creates an enormous security issue because they are more exposed to thefts.

When we talk in terms of current businesses, it is global. Financial institutions need faster transactions everywhere. This cannot be possible without the bank having a branch near all of the company's offices (E-Payment Systems, n.d.). In this globalized world, you should be able to complete an instant payment from any single point on the globe to the opposite side without difficulties. We are now living in a globalized business world where it is possible to buy or sell items to people all around the world. The traditional payment method cannot meet these requirements.

Not all potential buyers may have a bank account (E-Payment Systems, n.d.). In some countries, it can be difficult to open a bank account. There are now different customers and buyers profiles that older payment systems do not take into account. We have the example of people who use credits cards and prepaid cards.

The parties to an e-commerce transaction are not the only ones interested in electronic payments. Financial institutions are incentivized to adopt...