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To millions of users, the internet is an ever-changing display window on a discount warehouse of unbelievable size - a sort of super shopping channel for the computer literate. Even if you prefer to use the web for its original intention, as a means of sharing and disseminating information, you'll probably have bought a book from Amazon or some groceries from Tesco Direct.

But have you ever wondered what happens when you hit that Checkout button? The process can seem to differ greatly from retailer to retailer. Perhaps you enter your credit card details, and in the process you may be transferred to what seems like another site entirely. Maybe you are asked to use PayPal, or perhaps you've seen advertisements or heard about other types of payment schemes. We'll look at all the most common types of payment systems you're likely to come across, how they're used, and their advantages and disadvantages.

Paying direct

Direct payments are those made from credit and debit cards or by online transfer from a bank account. Most current accounts can now be managed online, making it possible to transfer money to anyone, provided you know their account number. While this is a viable means of paying for goods and services already tendered, it's not generally suitable for online purchases because the transfer of funds is not usually instantaneous. However, on the plus side, no charges are incurred by either party, so this type of transfer might well be considered appropriate if you're buying a high-value item from an individual through an online auction site.

When ordering goods from a merchant trader using a debit or credit card, the

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transaction can be completed within seconds and the order processed swiftly, often in time for next-day delivery. From the seller's point of view a debit card is preferable because it costs less to process, but for buyers a credit card is by far the better choice. Not only does it offer an interest-free period before having to pay anything, it also provides more protection against something going wrong with the sale, such as goods not arriving or the seller going bust.

In case of disputes, and provided the value of a credit card transaction is between £100 and £30,000, you have equal rights to claim against the credit card issuer and the supplier. These statutory rights are laid out in Section 75 of the Consumer Credit Act of 1974 and derive from the fact that in paying by credit card you have entered into a contract with both the supplier and the card issuer. Although it is customary in the first instance to make claims against the supplier, you may choose to claim directly from the card issuer.

When debit card purchases have gone awry, you are not left completely adrift. You can ask your bank to make a chargeback on the transaction, which involves your bank claiming a refund from the bank of the merchant who sold you the defective or non-delivered goods. A chargeback is not an automatic right, but most issuers of Visa and MasterCard debit cards will instigate one for you. Claims must be made within 120 days and generally take far longer to process than simple credit card refunds.

Online transactions are 15 times more likely to be charged back than face-to-face transactions, and the cost of chargebacks has traditionally fallen on the online merchant, which is why two schemes are being introduced to protect merchants against these charges: Verified by Visa and MasterCard SecureCode. You've probably already seen logos for one or both of these when buying from an online retailer. Online vendors who have signed up to these schemes divert their customers to a special screen during the checkout process, on which the customer is invited to join the appropriate scheme. Customers who choose to sign up are asked to create their own password, which in future is requested whenever they buy online from traders participating in the scheme.