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Electronic Commerce Transactions

Electronic Commerce Transactions. Week 11. Objectives. What is e-commerce Implementing transactions over the internet Managing security risk Tools for implementing e-commerce Consumer and business markets for e-commerce. What is e-commerce.

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Electronic Commerce Transactions

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  1. Electronic Commerce Transactions Week 11

  2. Objectives • What is e-commerce • Implementing transactions over the internet • Managing security risk • Tools for implementing e-commerce • Consumer and business markets for e-commerce

  3. What is e-commerce • The sharing of business information, maintaining business relationships, and conducting business transactions by means of telecommunication networks • E-business denotes a broad holistic concept encompassing internet related technologies on business functions, from human resource management to marketing to corporate strategy

  4. Aspects of Traditional & Electronic Commerce

  5. Relative Significance of E-commerce in Different Countries

  6. A History of E-commerce • Electronic Data Interchange – the exchange, using digital media, of standardized business documents such as purchase orders and invoices between buyers and sellers • Financial EDI – an aspect of the electronic payment mechanism involving transfer of funds from the bank of a buyer to a seller

  7. Level of E-commerce Sophistications

  8. Reasons for the Growth in E-commerce • Increase in demand for choice (product depth, global reach, price choices) • Demand for information (detailed product information, inventory, inventory, order status) • Demand for interactive, online support • Avoidance of travel and parking difficulties for consumer e-commerce • Elimination of time constraints (that is, opening hours or delays between placing an order and delivery)

  9. Benefits of E-commerce • Lower purchasing overhead – especially for small value and repeat orders • Greater choice (greater product depth and global reach) • Faster fulfilling cycle time (ordering, shipping, billing) • Greater ability to supply information (inventory, order status, etc.) • Lower cost than EDI • Ease of swapping between suppliers greater than with EDI

  10. Benefits for suppliers • A global reach, leading to more orders • Reduced administration overhead (paperwork automation leading to a lower cost for each order made) • Reduced asset requirement (physical properties for companies with a retail network) • Integration between back office and online ‘shopping’ activities • Integration of online ‘shopping’ activities with database marketing • Less need for distribution via channel (disinter mediation) • Reduced working capital (inventory)

  11. E-commerce Enablers • Internet standards • Bandwidth development • World Wide Web • Diversification and proliferation of internet access • Development of ‘off the shelf’ e-commerce products

  12. Inhibitors to E-commerce • Technophobia • Security fears • Technology not user friendly • Poor performance leading to slow download • Inertia of habitual conventional shopping and purchasing • Internet access still limited • Entrenched interests (for example, distributors who may be bypassed)

  13. Payment system requirements • Be secure • Be easy for buyer and seller to use and understand • Be straight forward for banks to administer • Be scalable across different currencies and to different denominations • Have a low costs for implementing transactions

  14. Consumer Payment Systems • Purchasers • Merchants • Certified Authority (CA)- body that issues digital certificates that confirm the identity of purchasers and merchants • Banks • Electronic token issuer – dependent on digital certificates for security

  15. Non-credit of Pre-paid Systems • Digital, virtual or electronic cash • Microtransactions or micropayments such as Millicent • Debit cards • Smartcards

  16. Post-paid or Credit-based Systems • Digital/electronic cheques • Credit cards such as Visa or MasterCard

  17. Requirements for Security Systems • Authentication • Privacy and confidentiality • Integrity • Non-repudiability • Availability

  18. Methods of Increasing Security • Encryption • Secret-key (symmetric) encryption • Public-key (asymmetric) encryption • Digital signatures • Identifies individuals using public key encryption • Certificate and certificate authorities (CA) • Secure Electronic Transaction

  19. Constraints on Selecting an E-commerce Solution • Cost • Quality of service • Performance of service • Downtime • Security • Cards supported • Currencies supported • Time taken to set up an account

  20. Constraints on Selecting an E-commerce Solution • Transaction method • Traditional (phone/fax/mail) • E-mail • Online transaction • Number of products required • Volume of sales • Shopcreator Stall supports up to 10 products • IBM \Home page creator supports 15-500 items • BT StoreFront supports a small to medium number of products

  21. Constraints on Selecting an E-commerce Solution • Cost of product • Configurability • Personalization facilities • Integration with back-end systems • Integration with stock control system to determine availability is vital • Integration with stock control system will allow price and product information changes to be updated rapidly • Integration with adequate fulfillment services • Integration with e-mail to conform order to customer

  22. Consumer & Business Markets for E-commerce • Business-to-business • Familiarity with the technology • Account selling • Consumer markets • Acceptable Internet access mechanisms • Payment mechanisms perceived as convenient and secure • An attractive and usable media interface

  23. The Commercial Environment for E-commerce • Legal status of banks • Non banks are subject to less scrutiny and regulation • Non-banks are at a competitive advantage as they do not carry the costs of the high level of registration • Non-banks do not report to central bank which leads to uncertainty and instability in the money supply • Tariffs and taxation • Value added Tax charged depending on location of supplier and consumer • Export and import tax implications • Services attract VAT according to where the supplier is located

  24. Contracts – consumer protection • Location and identity of supplier and in case of contracts requiring payment in advance his address • The main characteristics of the goods or services • The price of goods or services • Delivery costs • The arrangement of payments, delivery or performance • The existence of right of withdrawal • The cost of using the means of distance communication, where it is calculated other than the basic rates • The period for which the offer or price remains valid • The minimum duration of the contract and whether the contracts for the supply of goods are to be permanent or recurrent

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