The only guide to online payment methods you’ll ever need (2024)

There’s simply no getting around it – people love options. From streaming services to takeout food delivery and online retail stores, there’s never been a bigger buffet of choices in the battle to keep customers happy. 

The same goes for the world of online payments, and to match the ongoing digital payments revolution, each day brings new innovations. That said, tried and tested online payment staples are still meeting the needs of millions. 

But, with the continued push for more innovation, convenience, and options, how does one keep up, let alone contend with industry giants? 

Well, we’ve crafted an in-depth guide detailing everything you need to know about online payment options. So, keep reading to pin down how to make the most of online payments. 

Read next: How to set up online payments. 

The need for online payment options 

Even though the concept of online payments isn’t new, more and more businesses across various industries have started to adopt these technologies. The tech behind each might differ, from traditional bank transfers to card transactions and contactless payments, but their purposes are the same. 

At the very core of any business lies the goal of making profits, but this is only possible if companies offer their customers the ability to make payments. While this might seem obvious, this objective created the need for online payment systems. 

With the boom of eCommerce, amongst other digital-focused industries, the need for online payment methods came quickly. It has become more frowned upon to bottleneck customers with limited payment options than ever before. This has given way to many online payment possibilities, making it simpler than ever to accept payments online.  

Catching up with South Africa’s online payment revolution 

Considering South Africa’s attitude towards the global digital shift, what was once a traditionally cash-based economy is opening up to various alternatives. Having never shied away from the digital shift in banking, shopping, and lifestyle, South Africa has led the continent in innovative ways of paying and being paid. 

A key player in South Africa’s diversifying payments landscape is the implementation of mobile money services such as MTN MoMo and 1Voucher. The latter provides 29 million cash customers with a secure yet cashless way to pay. On the other hand, digital wallets like Apple Pay and Google Pay allow consumers to tap and pay quickly. 

Like other African countries, South Africa has also opened its payment landscape by including buy-now-pay-later (BNPL) options. And while it is still in its fledgling state, many South Africans have used BNPL services for eCommerce purchases and continue to do so. 

Electronic fund transfers (EFTs) 

On to a commonly used online payment method used daily worldwide for numerous transactions – electronic fund transfers. 

The basics of electronic fund transfers (EFTs) 

Okay, so what goes on behind the scenes of EFTs? Simply put, a bank transfer is the direct transfer of funds from one bank account to another. This type of transaction can be between two local banks, but international bank transfers can also be completed between two foreign banks. 

Electronic fund transfers: How do they work? 

While the process by which an EFT takes place is pretty straightforward, you should remember that it may differ from country to country. In general, though, this is what an electronic funds transfer looks like: 

1. Your customer finishes your checkout process and pays via a bank/electronic funds transfer (EFT). 
2. The customer then uses the bank account details you provided, typically accompanied by a unique reference code designated explicitly for that customer. 
3. Your customer then instructs their bank to transfer the relevant amount from their accounts to yours, using this reference code to indicate the purpose of the transfer. 
4. A simple funds transfer between their bank and yours completes the transaction. 

Digital wallets 

Often referred to as mobile wallets, these services function on smartphones, tablets, and smartwatches. These virtual wallets include popular services such as Apple Pay, Google Pay, and Samsung Pay, allowing people to pay for items at vendors or online. 

The basics of digital wallets 

Digital wallets have become famous in recent years, providing people with a convenient and straightforward way to make online and offline payments. Utilising a variety of information storage tech, it transforms a mobile device into a virtual wallet. 

 More than that, these digital wallet applications give a mobile device the same capabilities as a contactless bank card. Its popularity, in part, is thanks to the added security measures it allows for and often safeguards including biometric scanning. 

Digital wallets: How do they work? 

Using a digital wallet is equally as simple as most online payment options and, in general, requires input from the user via biometrics, following a selection of which stored payment method to use. 

 Think of a digital wallet as a digital brain that stores the relevant information for various online payment methods. All that’s needed is the selection of which to use, and the rest happens in the same fashion as a contactless card payment. 

1. For online payment, an individual simply proceeds through your business’s offered payment gateway and then selects to pay via a digital wallet.  
2. Following this, a provided list of digital wallets is given, and one is selected, followed by the engagement of the mobile wallet and the selection of payment method. 
3. Behind the scenes, an instant bank transfer occurs according to the chosen process. 

Scan-to-pay 

Bridging the gap between mobile payments and accepting online payments even further, scan-to-pay transactions involve a quick-response (QR) code and enable quick, convenient online purchases. 

The basics of scan-to-pay online payments 

Although QR codes are used for a nearly endless variety of things, they prove very beneficial to the world of online payments. Valued at $9.98 billion in 2022, this tech has demonstrated that businesses need to focus on payment methods that offer simplicity, speed, and security. 

Scan-to-pay: How does it work? 

Although the mechanics that go into QR codes for payments can be confusing, this is an easy-to-follow rundown that does not get too technical. 

1. The first step is to choose a payment service provider (PSP) that supports QR code payment systems. 
2. After setting up a merchant account with the chosen provider, the account gets linked to a QR code, enabling it to receive payments. It is worth noting that some providers don’t require you to set up a merchant account. 
3. Next is a simple configuration of the provided QR code-generation feature, where the platform will ask you for payment details. 
4. Once you’ve entered these details, you can go ahead and generate a unique QR code linked to your account. 
5. Finally (after testing the code, of course), you can deploy it, giving customers another way to pay and adding another way to receive payments online to your arsenal. 

Buy now, pay later (BNPL) 

BNPL services allow customers to make purchases while deferring payments over some time through an instalment plan, with roughly 38% of users claiming it will enable them to break up payments, increasing manageability. Offering this type of transaction improves affordability for your customers while increasing earning potential for businesses. 

The basics of buy-now-pay-later (BNPL) 

Also considered invoice payments, a BNPL transaction is a loan that a company offers to customers, allowing them to make purchases on credit without needing a credit card.  

 Typically, these BNPL services partner with retailers to offer customers the flexibility to complete online payments. This is often done without interest or minimal interest charges. 

BNPL: How does it work? 

This alternative payment method allows customers to not commit to a full payment upfront and enables them to split payments. These services operate based on a short-term loan offered by BNPL services as a third-party payment provider to businesses. 

 After selecting to pay via BNPL, a customer creates an account with the respective provider and is then given terms and conditions to accept specific to this transaction. If accepted, the BNPL service will pay the full amount on behalf of the customer. The customer then repays that amount to the BNPL service according to the arranged terms and conditions.