Using electronic payment systems has become a daily activity for almost everyone all around the world since with the introduction of the Internet, online transactions are made fast and easy. As we can see most product and service providers are interacting with customers online through their websites and use the advantages of electronic payment systems to improve their business. While most of people prefer the convenience and speed of electronic transactions we cannot ignore disadvantages of electronic payment system. Security risks involved in electronic transactions and the privacy concerns raised by them is considerable.
Disadvantages of electronic payment system
Here is a list of disadvantages of electronic payment system with detailed description.
Restrictions and limitations of e-payment system
No matter which payment system you choose all of the have some limits such as the maximum amount in the account, the number of transactions per day and the amount of output. By the mean for withdrawal or fund transfer, there would be restriction of the amount or the number of daily transactions. In case your transfer amount exceed the limit you would not be able to withdraw the money at once. Although it can be considered as a safety solution you cannot ignore that it is inconvenient in some cases. Access to money may be delayed in e-payment systems rather than physical access to money. And also when different electronic payment services do not cooperate with one another, it can make you troubles.
Risk of being hacked using e-payment system
As you are using electronic payment systems to make transactions online your personal or account information and credit card number is exposed over the Internet so it can put you in the risk of being hacked. Being hacked could mean financial losses for you in the way that hackers may use your identity for fraudulent activities or make huge fund transfers from your account.
On the other hand the worse situation happens when the electronic payment company get hacked, it would leads to the leak of personal data on cards and its owners, no matter how much they pay attention to security tips it is always possible.
Transferring money between different e-payment systems
Most of the electronic payment systems do not cooperate with each other unfortunately. This means that you have to use the services of e-currency exchange to transfer money between different payment systems, it can take a lot of time to find a trusted and proper service for exchanging and it can cause a lot of troubles.
Security Concerns in e-payment system
Encryption is a must for e-payment systems to make transactions safe and secure but the system is still vulnerable to security issues. Phishing attacks might be used to convince the account owner to provide login information of their account or e-wallet which can be used to access the victims’ personal and financial information and lead to rubbery of fake identity while there is no superior identity verification measurement such as biometrics or facial recognition. By the mean anyone can use another person’s cards and e-wallets and use it with no trouble.
If you decide to use electronic payment system to make your transactions you should create an account in the e-payment company website. Although transactions are made by using one-time passwords in order to increase safety but some parts of a transaction, or your personal details and bank account information is accessible through your password account of your e-payment website. So you will surely need password protection and this need would increase in case you have multiple account on different electronic payment companies website for any reason.
Anonymity and privacy in e-payment system
One of the disadvantages of electronic payment system is that the information about all the transactions, including the amount, time and user details are stored in the database of the payment system. By this the intelligence agency has an access to transaction information. If information and details of credit cards would not be sent over a secure server and internet connection then it would lead to privacy risks.
Even if virus protection software or firewalls are working properly and data encryption techniques are used, users private information may be exposed to hackers and used for identity and money stealing purposes.
Necessity of Internet access in e-payment system
Basically electronic payment systems use internet connection to make transaction. While this has made them fast it can be considered as one of the disadvantages of electronic payment system since if Internet connection fails, you cannot get to your online account. As well online payment methods are not working in case of offline sales.
Disputed Transactions and false identity in e-payment system
When someone use your e-payment account to make transactions without your authorization, or you notice unfamiliar charge it would be difficult to receive a refund without sufficient information about the person identity and knowing that who has made the transaction. You cannot claim anything while you know nothing.
On electronic payment system there is no way to make sure that the person who is entering the accounts information it the owner exactly despite physical transactions. Users identity is not verified using a photograph or a physical signature. Since electronic cash transactions are working based on cryptographic systems the identity information would be transferred encoded by encryption keys which are vulnerable to attack and they might get to people that may fake users identity.
Increased Business Costs using e-payment system
One of the disadvantages of electronic payment system is that you need to protect financial information stored in your business’s computer systems from unauthorized access of other people working in your organization. They you will have to afford additional costs in procuring, installing and maintaining payment security technologies and tools.
Although you might have already know that electronic payment gateways and third-party payment processors charge service fees too. Almost most of the electronic transaction services require users to pay transaction fees which can considered increased costs. Some of the companies also require setup fees when you want to create account and some others charge you in cases of certain number of transactions every month. As you certainly know electronic payment systems need Internet access, so paying for internet might invite additional costs as well which can be ignored however.
In general, considering all of the advantages of electronic payment system and the disadvantages you may realize that using e-payment would provide more convenient opportunities comparing with traditional transaction systems. Comment your experience and write your opinion.