What Is Online Payment, How It Works & Its Benefits

Published on
December 7, 2023
Written by
Ekky Pramana

The rapid development of the digital era has made online transaction methods the increasingly preferred choice for people worldwide. One key aspect of online transactions is its electronic or online payment systems. Online payment is a method that allows users to make payments over the Internet, providing significant convenience and efficiency in daily life. Online payment has become a popular modern solution, where consumers make purchases or pay for services without needing physical contact with cash or credit cards.

Providing security during transactions is one of the main reasons why online payment is increasingly used worldwide. Online payment platforms are equipped with sophisticated security systems, including data encryption and two-factor authentication (2FA), thereby reducing the risk of fraud and leakage of personal information. Furthermore, online transactions enable customers to access their transaction history directly through digital platforms, providing transparency and ease of expense tracking. Therefore, manual record-keeping is optional to determine expenditure amounts when the end of the week or month arrives.

Not only that, online payment also expedites the transaction process. Payments can be made anytime and from anywhere, without the need to visit physical stores or payment offices. This provides incredible flexibility for consumers with busy schedules or those living far from business centers. The speed in transaction processes also positively impacts business efficiency, as sellers can promptly confirm payments and deliver products or services without waiting for time-consuming manual processes. Thus, online payment is not just something that offers convenience but also supports global economic and business growth.


What is online payment?

Online payment definition

​​Online payment is the process of making payments over the Internet using various electronic methods. It encompasses a range of technologies and platforms that facilitate electronic fund transfers from the sender to the recipient. Online payment methods include credit cards, electronic bank transfers, digital wallets, and various other innovations in digital payments. The primary goal of online payment is to provide a more efficient, fast, and secure way for individuals and businesses to conduct financial transactions without involving physical cash.

One key characteristic of online payment is its ability to support transactions on various scales, from small purchases to large business transactions. With the integration of financial technology in the modern era, online payment processing enables users to pay for goods and services, transfer money between accounts, and even invest in digital assets—all without leaving the comfort of their homes or offices. Online payment processing also enhances convenience for both customers and sellers by reducing administrative costs and improving efficiency in tracking and reconciling transactions.

Security is a crucial aspect of online payment, and various security protocols have been implemented to protect users' personal and financial data. The use of data encryption, two-factor authentication, and adherence to security standards such as PCI DSS (Payment Card Industry Data Security Standard) are examples of security measures commonly applied by online payment processing service providers. This means that online payment not only offers convenience and efficiency but also prioritizes providing a secure and reliable transaction experience for users worldwide.

The role of online payment in the digital era

Providing convenience and efficiency in online transactions, the role of online payment in the digital world is crucial and has significantly transformed the landscape of financial transactions. Firstly, online payment provides ease of access and flexibility for users to make payments and financial transactions from anywhere, anytime. With online payment services, individuals and businesses are no longer restricted by geographical or time limitations, allowing for the creation of a connected global economic ecosystem.

Furthermore, online payment plays a key role in supporting digital business models and e-commerce. E-commerce platforms and online business applications heavily rely on digital payment systems to facilitate the efficient purchase of products and services. Easy and quick online transactions through various payment methods, such as credit cards, digital wallets, or electronic bank transfers, provide a smoother shopping experience for consumers. This also drives the growth of online businesses by expanding market reach and increasing sales conversions.

The role of online payment in the digital world also encompasses financial inclusivity. By enabling individuals without access to traditional financial systems to engage in electronic transactions, online payment opens doors to broader financial inclusion. Through digital wallets and app-based payment services, individuals previously underserved by conventional financial institutions can now easily access and use various financial services available in Indonesia.

Online payment also has a positive impact on transparency and security. Digital payment systems are often equipped with advanced security technologies, such as data encryption and two-factor authentication, which help protect users' financial information. Through easily accessible transaction histories, online payment helps clarify users' financial footprints, providing greater control over expenditures and facilitating smarter financial management. Therefore, the role of online payment in the digital world is not limited to financial transactions but also contributes to how we interact with money and conduct daily financial activities.

Methods of online payment 

Debit card and credit card 

Credit and debit cards have become highly popular and widely accepted methods of payment worldwide. Credit cards allow holders to make purchases or financial transactions without having to pay in cash on the spot. By using a credit card, someone can make payments and access credit immediately, paying the bill at the end of the billing period. The main advantages of credit cards involve convenience, flexibility, and the ability to make significant purchases without carrying cash.

On the other hand, debit cards are directly linked to the cardholder's bank account. When a debit card is used for a purchase or transaction, funds are directly withdrawn from the associated bank account without incurring interest or monthly bills. Both credit and debit cards are generally accepted in various places such as retail stores, restaurants, and online.

Credit and debit cards offer additional security through features like PIN (Personal Identification Number) or electronic signatures. Moreover, many card providers have enhanced security by implementing integrated chip technology (chip and pin) to reduce the risk of fraud. Although they differ in payment mechanisms and credit concepts, credit and debit cards play a central role in facilitating everyday financial transactions, providing users with convenient and secure options for online payment processing to make purchases and transact efficiently.


As a digital or online payment tool, an e-wallet functions similarly to a physical wallet and is typically in a mobile app. Within an e-wallet, users can store digital funds or balances without being tied to interest rates, as is the case with traditional bank accounts. Although e-wallet balances do not accrue interest, some transactions conducted through e-wallets may incur low administrative fees.

In Indonesia, the popularity of e-wallets is on the rise, with the presence of various mobile apps such as DANA, GoPay, ShopeePay, and many others. E-wallet users are identified through virtual numbers or accounts, making it convenient for them to conduct transactions efficiently. The advantages of e-wallets include user-friendly interfaces, convenience, and their ability to simplify financial transaction processes, making them a widely accepted digital payment method in society.


Regardless of the debate surrounding its pronunciation, QRIS (Quick Response Code Indonesian Standard) has become an increasingly popular payment method in Indonesia. This payment system uses QR codes as a medium to facilitate financial transactions easily. Users only need to scan the QR code provided by the seller or merchant using a payment app or digital banking on their mobile phones. QRIS enables quick and convenient payments without needing physical cash or cards. One of the advantages of QRIS lies in its ability to support various types of payments, including interbank transfers, product purchases, bill payments, and more. Moreover, QRIS is considered a secure solution as transaction data is well-encrypted. For business owners, the presence of QRIS can also be advantageous as it eliminates the need for an EDC machine to process payments, streamlining the payment process for your customers.

Retail payments

In addition to the traditional and digital payment methods commonly found in various retail outlets, payments through convenience store networks such as Indomaret and Alfamart have also become a popular choice among consumers in Indonesia. Both companies provide payment services through collaborations with various financial institutions and payment service providers. Consumers can pay bills, purchase phone credit, and conduct other financial transactions at the nearest Indomaret or Alfamart store.

The availability of payments through Indomaret and Alfamart provides a convenient and easy alternative for consumers who may not have easy access to banks or ATMs. By using these convenience store branches as payment points, consumers can quickly carry out their daily financial transactions without the need to visit other payment locations. This not only enhances financial accessibility but also expands the coverage of payment services, especially in areas far from major financial centers. Thus, payments through Indomaret and Alfamart contribute positively to creating an inclusive and easily accessible payment ecosystem for various segments of society.

Non-credit instalments

Non-credit instalment, more commonly known as online credit has become a preferred option as it provides easy access without needing physical collateral, a relatively fast process, and transforms how consumers interact with the financial system, offering a more flexible and convenient shopping experience. Online credit providers such as Kredivo, Indodana, and Akulaku have become popular payment methods in the digital era. As fintech products, online credit allows consumers to make purchases of products or services through installment payment systems, utilizing requirements that are more flexible compared to traditional loans. Kredivo, Indodana, and Akulaku are among the highly favored online credit platforms in Indonesia. They offer practical payment solutions, especially for e-commerce businesses, where consumers can use these services to plan more affordable payments in line with their financial capabilities.

The benefits of online payment for MSMEs and businesses

The benefits of online payment have a significant positive impact, especially for Micro, Small, and Medium Enterprises (MSMEs) and businesses as a whole. Firstly, online payment processing simplifies the payment process for MSMEs with the existence of digital payment systems. Customers can easily make transactions to purchase products or services without  carrying physical cash. This not only provides convenience to customers but also speeds up the checkout process, enhances service efficiency, and reduces queues at the cashier.

In addition to simplifying payments, online payment also brings efficiency to MSMEs' business operations. By utilizing digital payment platforms, MSMEs can automate payment processes, transaction recording, and financial management. This reduces administrative burdens, speeds up accounting processes, and allows MSMEs to focus on developing their products or services. This efficiency accelerates workflow and provides opportunities for MSMEs to grow faster.

Security is another key factor that makes online payment highly advantageous for MSMEs. By using secure payment platforms, small and medium-sized businesses can instill confidence in customers, as the security of data and transaction information are guaranteed. This creates a reliable business environment and enhances consumer trust, which, in turn, can increase customer loyalty.

Furthermore, online payment also helps MSMEs save on operational costs. Digital transactions tend to be more efficient and cheaper when compared to conventional payment methods. Administrative costs, printing costs, and other expenses related to managing physical transactions can be minimized, allowing MSMEs to allocate their resources more effectively.

Ultimately, online payment is a crucial factor that can expand the reach of MSMEs into the global market. With digital payment platforms, small businesses can more easily sell their products or services internationally. This opens doors for MSMEs to connect with customers in various countries, increasing brand visibility and awareness, as well as exploring new business opportunities. In this way, online payment helps MSMEs elevate themselves to participate in global trade, enhancing their growth and competitiveness in the international market.

Aspire’s Payment Gateway provides complete online payment options for customers

As a business owner, undoubtedly providing the best for your loyal customers is at the top of your mind. Well, Aspire can assist you in ensuring that your business has a comprehensive payment solution that meets your needs. Aspire, one of the leading fintech service providers in Southeast Asia, now offers the most reliable payment gateway service in Indonesia, providing more than 26 payment options, ranging from bank transfers, credit and debit cards, e-wallets, QRIS, to retail payments through Indomaret and Alfamart. Aspire's advantages are not only in easy integration and efficient use but also in automatic payment verification features, ensuring that online payment processes occur smoothly, faster, and easily.

By using Aspire, you can also make local and international transfers, including a user-friendly mass transfer feature. Aspire also provides responsive support services available at all times, ready to assist you in overcoming obstacles or answering questions you may have. With simple transaction fees and no subscription fees, Aspire offers high flexibility and security in every business transaction. Choosing Aspire as your payment partner in your business allows you to enjoy various conveniences and security in running your business online. Want to find out more about running a business and everything about financial management in business? Check out the Aspire blog!

Ekky Pramana is a seasoned writer specialising in business finance and management. With a writing history at Tech in Asia, Teknoverso, and various other publishers, he leverages his market expertise to empower and educate first-time founders in managing their businesses better.
Ekky Pramana
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