Source: Asia Development Bank
The payment process of e-commerce transactions between buyers and sellers typically involves payment originators such as card companies, payment gateways (PGs), e-commerce platforms, and issuers of e-payment instruments, including mobile vouchers and e-coupons.[1] Payment gateways not only relay buyers’ payment information received from platforms to credit card companies but also act as a representative merchants for many subordinate vendors by serving as their payment agents. The payment gateway directly linked to the payment originator is referred to as the primary PG, and the platform company subordinated to the primary PG is called the secondary PG. Sales proceeds are settled to vendors through the payment originator, primary PG, and the secondary PG.
When multiple payment gateways are involved in the payment process, those closer to the payment originator are assigned higher numbers (e.g., PG1, PG2, etc.). Mobile vouchers and e-coupons are considered prepaid e-payment instruments (prepaid e-money) since consumers purchase them in advance of ordering goods.[2] The sales of these prepaid instruments have steadily increased due to promotional discounts offered by issuers. Some companies, like Ticket Monster, may simultaneously operate as a payment gateway, issue their own prepaid e-money (e.g., TIMON Cash), and act as sales agents for third-party prepaid e-money (e.g., Happy Money). Consequently, the payment gateway representing the seller of a voucher may differ from the payment gateway representing the affiliate network of the same voucher.
Figure 1: A Simple Diagram of E-Commerce Settlement Structure