E-commerce and E-payment systems

E-commerce

Electronic commerce, commonly known as e-commerce, is the buying and selling of product or service over electronic systems such as the Internet and other computer networks. Electronic commerce draws on such technologies as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.

Types of E-commerce

i. Inter-Organizational( business to business) ii. Intra-Organizational(within business) iii.Customer to Business iv. Intermediary and E-commerce

r-Organizational( business to business) Facilitates the following Applications:

Supplier management: help Company to reduce the suppliers and increase no. of Pos processed with fewer people. Inventory Management: Reducing the inventory levels, improve inventory turns, eliminate out of stock occurences.

Distribution Management: Purchase orders, advanced ship notices, ensuring the accurate data.
Channel Management: Technical, product, pricing information, distributor etc..mainly information sharing. Payment management: reduces the Clerical errors, increase the speed, lowers the transaction fees and cost.

Intra-Organizational(within business)

Work Group Communications: Enabling the Managers to Communicate with the employees using E-mail, videoconferencing, bulletin boards. Electronic Publishing: help Companies to publish Hr manuals product specifications, online publishing Sales Force productivity: Flow of Information between the production and sales forces, between the sales and customers.

Customer to Business E-commerce

Social interaction: Consumers communicate through E-mail, videoconferences, news groups. Personal finance Management: Quicken the consumers to manage investment and personal finances using online banking.

Purchasing product and information: To find the online information about new products and services.

Intermediary and E-commerce

Information Access providers-netcom, PSI Payment/transaction processors-VISA, mastercard Information directory providers-yahoo, alta vista, lycos

Information rating servies-consumer reports, edmunds car Guide

PROs and CONs

1. Pro: No Standing in Queues or Being Placed on Hold Forever 2. Con: Lack of Personal Touch

For customers, this is one of the most popular conveniences of ecommerce. I miss the personal touch and relationship that develops with a retail store. In comparison, ecommerce is far more sterile.

3. Pro and Con: Easier to Compare Prices

There are several shopping search engines and comparison shopping websites that help consumers locate the best prices. While buyers love this, sellers find it too restrictive as many of them get filtered out of the consumer's consideration set.

4. Pro: Access to Stores Located Remotely

Especially for people who are not situated in major urban centers, this can be a big advantage. Likewise ecommerce opens new markets for ecommerce businesses.

5. Con: Inability to Experience the Product Before Purchase

There are many products that consumers want to touch, feel, hear, taste and smell before they buy. Ecommerce takes away that luxury.

6. Pro: No Need for a Physical Store

Since there is no need for a physical store, ecommerce businesses save on one of the biggest cost overheads that retailers have to bear. 7. Con: Need for an Internet Access Device Ecommerce can only be transacted with the help of an Internet access device such as a computer or a smartphone. 8. Con: Need for an Internet Connection Not just does one need an access device, one also needs Internet connectivity to participate in ecommerce

9. Pro and Con: Common Availability of Coupons and Deals

Though there is nothing about ecommerce that makes it intrinsically oriented to discounts, the way online business has evolved has led to lowered prices online. This is an advantage for the buyer, but a disadvantage for the seller.

10. Pro: Lots of Choices

Since there are no shelf size or store size limitations, ecommerce businesses are able to list many different items

11. Pro: Stores Are Open All the Time

12. Con: Credit Card Fraud

Eliminating the limitation of store-timings is a big convenience for consumers.

Consumers and businesses alike suffer from credit card fraud. Some doomsayers go so far as to predict that fraud will lead to the demise of online business.

13. Con: Security Issues

Consumers run the risk of identity fraud and other hazards as their personal details are captured by ecommerce businesses.Businesses run the risk of phishing attacks and other forms of security fraud.

14. Pro: Ability to Buy and Sell to Other Consumers

Auction sites and listing sites allow individuals to buy and sell from each other. This opens a whole new paradigm of ecommerce. The most famous enabler of consumer to consumer (C2C) ecommerce is eBay.com.

15. Pro: Instantaneous Purchase of Digital Goods

No longer does one need to go and buy a CD of one's favorite music. Within a few minutes, one can download digital products, such as music, and start using them immediately.

16. Con: Delay in Receiving Goods

If shopping is about instant gratification, then consumers are left empty-handed for some time after making a purchase on an ecommerce website.

17. Pro: Not About "Location Location Location"

Conventional wisdom lays a lot of emphasis on the location of the physical store. But ecommerce has liberated businesses from the shackles of location.

18. Pro: Reduced Employee Costs

Since ecommerce processes are automated to a large extent, fewer employees are required for lower-end jobs. Human resources can be used more effectively for higher-level functions.

Electronic Payment

E-Payment

Electronic Payment System is a way of transferring money over Electronic Media.

Some Examples

Methods of traditional payment

Check, credit card, or cash

Methods of electronic payment

Electronic cash, Scrips, software wallets, smart cards, and credit/debit cards

Scrip is digital cash minted by third-party organizations

Why there is need for E-Payment?

 It's safe you don't need to give out your card details when you shop. It's quick just type in your password. It's free no charges for paying or setting up your account.

CLASSIFICATION OF E-PAYMENTS

Micropayment systems
I. VISA cash of VISA International VISA CASH (1995) It provides anonymity- operational cost is high as transactions pass through the network for settlement at banks. II. MONDEX OF Mondex International:

National Westminster bank-1990 - Swidon

Sold- MASTER CARD INTERNATIONAL

Electronic cash
Electronic cash, e-cash, digital cash -provides the means to transfer money between parties over a internet. Involves a use of computer network. Internet. Digital stored value system. In technical terms, electronic money is an online representation, used to exchange value within another system, or within itself as a stand alone system. In principle this process could also be done offline.

Properties of e-cash
Independence

Non-reusability
Anonymity

Transferability
Diversibility

Secure storage

Working of E-payments
transfer money
credit merchants
Electronic mint

S E Customers N d bank eRequest to c A Obtain e-cash S h

customer

R e d e e m e c a s h

Merchants bank

Send e-cash

merchant

deliver goods

Advantages of E-Cash

I. Advantages
Time saving Useful for individual users International exchange Lots of choice Easy to compare prices

Disadvantages of e-CASH
II. Disadvantages:
Fraud Failure of technology Loss of human interaction Power failure, loss of records

Electronic cheques
Electronic chequeing pertains to the use of networking services to issue and process payments that emulate real world chequeing.

The payer issues a digital cheque to the payee and the payee deposits it in the bank to redeem money, each transaction is carried over the internet.

Working of electronic cheques

Customer s bank
u p d a t e works Clearing house forward

Merchants bank
v a l i d a t e f o r w a r d

Custome rs browser

Access and browse Select goods and pay echeques Close transaction

Merchant s system

Advantages

Advantages and disadvantages of electronic cheque

Time saved Reduced paper handling cost Reduction in bounced cheques Disadvantage

Customers who opt to pay with e-cheques are often at disadvantage as money is immediately debited from account ,in contrast to paper cheques which has float time during which they can transfer the funds to their account

Electronic credit card

A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.

Working of electronic credit

Card issuer u p d a t e

Forward receipts

Merchants bank
r e q u e s t p r o v i d e

Consumers system

Access homepage Select goods& through credit card .Close transaction

Merchants system

Advantages and disadvantages of electronic credit

Advantages The credit card number and expiry date can be prevented from disclosure to the merchant. The electronic credit system can be designed to obtain almost instant payments to merchants from credit card sales. Disadvantages Blowing Your Budget -- The biggest disadvantage of credit cards is that they encourage people to spend money that they don't have. High Interest Rates and Increased Debt -- Credit card companies charge you an enormous amount of interest on each balance that you don't pay off at the end of each month

Some of other concepts of electronic payments

Smart cards

Memory cards
Shared key cards Signature carrying cards

Signature creating cards

Security Requirements of EPS

Integrity Authenticatio n

Privacy

Nonrepudiation

Secure Sockets Layer Protocol (SSL)

Provides privacy through encryption of the message for both the sender and receiver.

Customer Order with Payment Information

Encrypted order sent

Customer order decrypted at merchant server

SSL encrypts the customer order, which includes the payment information. This data is sent from the customer to the merchant via a secure pipe.

Secure Electronic Transfer(SET)

Protocol by Visa and MasterCard released in 1996. 3 party system - cardholder, merchant and bank using SET-enabled systems. Uses digital certificate to ensure cardholder is who he/she says he/she is or claims to be. Credit card details are invisible to merchants, protected by encryption for clearing bank.

SET Based Transaction Process

Public Key Encryption

Each user has a pair of cryptographic keys - a public encryption key and a private decryption key.

The publicly available encrypting-key is widely distributed, while the private decrypting-key is known only to the recipient. Messages are encrypted with the recipient's public key, and can be decrypted only with the corresponding private key.

 Presented by:
Harshini
Ruby Kenen Sravani Sharuna Megha