There is a tremendous growth of the use of the component based software engineering (CBSE) approach for the development of software systems. The selection of the best suited COTS components which fulfils the necessary requirement for the development of software(s) has become a major challenge for the software developers. The complexity of the optimal selection problem increases with an increase in alternative potential COTS components and the corresponding selection criteria. In this research paper, the problem of ranking and selection of Data Base Management Systems (DBMS) components is modeled as a multi-criteria decision making problem. A ‘Fuzzy Distance Based Approach (FDBA)’ method is proposed for the optimal ranking and selection of DBMS COTS components of an e-payment system based on 14 selection criteria grouped under three major categories i.e. ‘Vendor Capabilities’, ‘Business Issues’ and ‘Cost’. The results of this method are compared with other Analytical Hierarchy Process (AHP) which is termed as a typical multi-criteria decision making approach. The proposed methodology is explained with an illustrated example.