Project Report on E-Commerce

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Project Report on E-Commerce

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INDEX Sr. No.

Title

1.

INTRODUCTION OF E-COMMERCE

2.

WHAT DO YOU MEAN BY COMMERCE

3.

DEFINITIONS OF E-COMMERCE

4.

HISTORICAL DEVELOPMENT

5.

THE ELEMENTS OF A TYPICAL COMMERCE

6.

THE ELEMENTS OF E-COMMERCE

7.

MODELS OF E-COMMERCE Business-to-consumer Business-to-business Consumer-to-consumer transactions

8.

Common Technology Differences of B2B and B2C E-Commerce –Case Studies leading the Tansformation

Intel Amazon eBay 9.

E-COMMERCE PROCESS

10.

E-COMMERCE PROCESS CYCLE

11.

BENEFITS OF E-COMMERCE

12.

SUCCESS FACTORS IN E-COMMERCE

Page No.

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13.

PROBLEMS

14.

PRODUCT SUITABILITY

15.

ACCEPTANCE

16.

E-COMMERCE TECHNOLOGIES

17.

E-COMMERCE STANDARDS

18.

E-COMMERCE SOFTWARE SOLUTION

19.

SALES AND MARKETING CYCLE

20.

ELECTRONIC STOCK TRADING

21.

ELECTRONIC BANKING

22.

SECURE ELECTRONIC TRANSACTION

23.

25.

2007 INFORMATION SECURITY TIPS FOR SMALL BUSINESSES FUTURE EXPECTATION ABOUT THE ECOMMERCE ELECTRONIC COMMERCE COMPANIES

26.

BIBLOGRAPHY

24.

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The idea of doing business electronically over networks is nothing new: We think nothing of ordering the products we’ve seen advertised on television on in printed catalog with a phone call or a fax, & ATMs are always within a reach for quick, easy, and automatic banking. Corporations advertise through broadcasting & networks, & consumers’ flocks to local outlets of national &international franchise networks. As the world become increasingly interconnected, particularly through the internet with its open protocols, forward looking business will be able to make their product available to a global market, without having to create & maintain their own private network s for selling, delivering & supporting customers.

While the techniques for attracting consumer attentions, describing products, & delivering them electronically will be of interest to those who wish to participate in this new markets, this project simply explain how business transaction can be executed across an unreliable & unsecured medium like the internet, & discussed some of the methods currently being planned & implemented – in other words, how you will be buying & selling in the future, & how it will work.

The number of businesses devoted to promoting commerce on the internet has been growing like Topsy since the end of 1994, but they all share the

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goal of making commercial transaction over the internet safe , simple secure - & earn a profit in the process. The method employed to achieve these ends are somewhat more various, but can be categorized as either creating secure & reliable channel to carry transaction across internet connection (which are inherently unsecured & unreliable), or using more traditional channels to carry sensitive information.

Electronic merchants need to feel confident they can safely market & deliver their product, get paid for all products purchased, & not lose any product to theft. Electronic consumers need to feel confident they can safely select and take delivery of products, pay for them, & not be concerned about compromise of payment information ( like credit card or bank account no.).

Everyone wants to feel confident that the individuals they deal with across the internet are who they say they are, to avoid losses to fraud.

“Search for better ways to do things and you will find success”

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OBJECTIVES The study of e-commerce is much broader that the current enthusiasm for home shopping on the web. The objective behind the preparation of the project on

“E-Commerce & Internet” is: To know the importance of E-commerce in today’s environment.  To make readers aware of the role played by E-commerce in big organizations.  To make readers aware that E-commerce is a double edged sword. If it is properly used it can be a boon or a blessing, but if it is abused or misused it can also act as a curse.  Informal business to business transaction using internet ecommerce;  Consumer transaction with business, or other members of the public, using internet e-commerce.  To make readers aware that E-commerce is a double edged sword. If it is properly used it can be a boon or a blessing, but if it is abused or misused it can also act as a curse.

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INTRODUCTION OF E-COMMERCE Electronic Commerce is exactly analogous to a marketplace on the Internet.

Electronic Commerce (also referred to as EC, e-commerce eCommerce or ecommerce) consists primarily of the distributing, buying, selling, marketing and servicing of products or services over electronic systems such as the Internet and other computer networks. E-commerce follows the same basic principles that traditional commerce follows—that is, buyers and sellers exchange and transport goods from one place to another. But rather than conducting business in the traditional way—in stores and other “brick and mortar” buildings or through mail order catalogs and telephone operators— in e-commerce buyers and sellers transact business over networked computers.

E-commerce offers buyers convenience. They can visit the World Wide Web sites of multiple vendors 24 hours a day and seven days a week to compare prices and make purchases, without having to leave their homes or offices.

In some cases, consumers can immediately obtain a product or service, such as an electronic book, a music file, or computer software, by downloading it over the Internet.

For sellers, e-commerce offers a way to cut costs and expand their markets.

They do not need to build, staff, or maintain a store or print and distribute mail order catalogs. Automated order tracking and billing systems cut additional labor costs, and if the product or service can be downloaded, e-

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commerce firms have no distribution costs. Because they sell over the global Internet, sellers have the potential to market their products or services globally and are not limited by the physical location of a store. Internet technologies also permit sellers to track the interests and preferences of their customers with the customer’s permission and then use this information to build an ongoing relationship with the customer by customizing products and services to meet the customer’s needs.

At the close of the 20th century, retail transactions made up the largest part of e-commerce. Consumers purchased computers, airline tickets, hotel rooms, automobiles, clothing, electronics, books, event tickets, food, furniture, and countless other commodities over the Internet. Business-tobusiness commerce represented one of the fastest growing segments of ecommerce. Businesses ordered supplies and coordinated complicated projects electronically E-commerce also has some disadvantages, however. Consumers are reluctant to buy some products online. Online furniture businesses, for example, have failed for the most part because customers want to test the comfort of an expensive item such as a sofa before they purchase it. Many people also consider shopping a social experience. For instance, they may enjoy going to a store or a shopping mall with friends or family, an experience that they cannot duplicate online. Consumers also need to be reassured that credit card transactions are secure and that their privacy is respected. E-Commerce according to Person Halls book E-Commerce started in 1994 with the first banner ad being placed on a website.

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WHAT DO YOU MEAN BY COMMERCE Commerce is the exchange of goods & services, usually for money. When you buy something at a store you are participating in commerce. Going to work each day for a company that produces a product, is a link in the chain of the commerce. When one thinks of different ways, he/she immediately recognize several different players of the commerce such as: •

Buyers: These are the people or organization with money who want to purchase goods & service products.

•

Sellers: These are the people who offer goods & service to buyers. Sellers are recognizing in different forms such as retailers who sell directly to consumers and wholesalers who sell to retailers & others. Wholesalers are also known as distributors.

•

Producers: these are the people organization that create the product & services that seller’s offer to buyers. Producer may is classified in the category of a seller. They can sell their products to any category to customers.

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DEFINITIONS OF E-COMMERCE “What is E-Commerce? E-Commerce supports an entire range of activities such

as

product

design,

manufacturing,

advertising,

commercial

transactions, settlements of accounts using a variety of computer networks”.

Thus, e-commerce refers to the paperless exchange of business information using electronic data interchange, electronic mail, electronic fund transfer & other networked based technologies.

In a holistic sense electronic commerce can be summarized as:  It is a business strategy.  It uses technology to achieve business goals.  It improves external business relationships.  It is an evolution in the way companies’ internet.  It provides information to facilitate delivery of goods & services.

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WHAT DO YOU MEAN BY COMMERCE Commerce is the exchange of goods & services, usually for money. When you buy something at a store you are participating in commerce. Going to work each day for a company that produces a product, is a link in the chain of the commerce. When one thinks of different ways, he/she immediately recognize several different players of the commerce such as: •

Buyers: These are the people or organization with money who want to purchase goods & service products.

•

Sellers: These are the people who offer goods & service to buyers. Sellers are recognizing in different forms such as retailers who sell directly to consumers and wholesalers who sell to retailers & others. Wholesalers are also known as distributors.

•

Producers: these are the people organization that create the product & services that seller’s offer to buyers.

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HISTORICAL DEVELOPMENT The meaning of the term "electronic commerce" has changed over the last 30 years. Originally, "electronic commerce" meant the facilitation of commercial transactions electronically, usually using technology like Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT), where both were introduced in the late 1970s, for example, to send commercial documents like purchase orders or invoices electronically.

The 'electronic' or 'e' in e-commerce refers to the technology/systems; the 'commerce' refers to be traditional business models. E-commerce is the complete set of processes that support commercial/ business activities on a network. In the 1970s and 1980s, this would also (ATM) and telephone banking in the 1980s was also forms of e-commerce. However, from the 1990s onwards, this would include enterprise resource planning systems (ERP), data mining and data warehousing.

In the dot com era, it came to include activities more precisely termed "Web commerce" -- the purchase of goods and services over the World Wide Web, usually with secure connections (HTTPS, a special server protocol that encrypts confidential ordering data for customer protection) with e-shopping carts and with electronic payment services, like credit card payment authorizations.

Today, it encompasses a very wide range of business activities and processes, from e-banking to offshore manufacturing to e-logistics. The ever growing dependence of modern industries on electronically enabled business

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processes gave impetus to the growth and development of supporting systems, including backend systems, applications and middleware.

Examples

are

broadband

and

fiber-optic

networks,

supply-chain

management software, customer relationship management software, inventory control systems and financial accounting software.

When the Web first became well-known among the general public in 1994, many journalists and pundits forecast that e-commerce would soon become a major economic sector. However, it took about four years for security protocols (like HTTPS) to become sufficiently developed and widely deployed. Subsequently, between 1998 and 2000, a substantial number of businesses in the United States and Western Europe developed rudimentary web sites.

Although a large number of "pure e-commerce" companies disappeared during the dot-com collapse in 2000 and 2001, many "brick-and-mortar" retailers recognized that such companies had identified valuable niche markets and began to add e-commerce capabilities to their Web sites. For example, after the collapse of online grocer Webvan, two traditional supermarket chains, Albertsons and Safeway, both started e-commerce subsidiaries through which consumers could order groceries online.

The emergence of e-commerce also significantly lowered barriers to entry in the selling of many types of goods; accordingly many small home-based proprietors are able to use the internet to sell goods. Often, small sellers use online auction sites such as EBay (tm), or sell via large corporate websites like Amazon.com, in order to take advantage of the exposure and setup convenience of such sites.

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The Elements of a typical commerce The basic elements of typical commerce activity are listed as below: (1)

Product or service: One must have a product or service to offer. The product may be from a piece of paper to an airplane:

(2)

Place: one must have a place to store the product for marketing. Place can sometimes be very ephemeral for example a phone number may be a place. For most physical product, we tend to think of the place as a store or shop.

(3)

Marketing: you need to figure out a way to get people to come to your place. This process is known as marketing. It is very important component of commerce. If the people are not aware of the place & way to reach the place, you will not be able to sell anything.

(4)

Method of accepting orders: in a mail order company the orders come in by mail or phone & are processed by the employees in the organization.

(5)

Method of accepting money: If you are at Wal-Mart you can pay in cash or by cheque or by credit card for your purchases. B-to-B transaction often use purchased orders. Many businesses do not require the payment at the time of delivery, & some of the products & service are delivered continuously.

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(6)

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Method of Delivery: You need to have a way to deliver the product or service.

(7)

Method of accepting Returns: If the customer is not happy with your product then you need a way to accept a return.

(8)

Warranty Claims: Sometimes if the product breaks in the way before delivery or some other problems crop up with the product, after its delivery during the warranty period, in such a situation warranty claim are to be honored.

The Elements of E-commerce In case of an E-commerce, all the above listed elements are available but hey are having slight variation in the real life situation.

(1)

A Product or service: In case of E-commerce, it is virtual product shown on a web site. One can demonstrate multimedia presentation of the product & its entire feature on the web page itself, which may not be possible in case of physical product of commerce activity.

(2)

A place to sell the product: In the e-commerce case, a website displays the products in all ways & act as a place for E-Commerce.

(3)

A way to get customers to visit your website: In case of ECommerce search engines and linkages with other web sites play an important role in helping the customers to reach web sites of the eorganizations.

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A way to accept orders: The orders are accepted on the web site itself. On the web pages of the E-commerce companies shopping carts are being provided. One can click on the icon and fill in the shopping card to order items to be purchased and it is accepted by the Ecommerce Company as order from the customer.

(5)

A way to accept money: In case of traditional commerce, buyers and sellers are in direct contact with each other. The payments in Ecommerce are made using Electronic Fund Transfer in various form using credit cards, smart cards, e checks, etc. The information .of payment is routed through Value Added Networks (VANs) and Payment Gateway Systems, etc.

(6)

A way to accept returns: As is the case of commerce, in case of [commerce all the trading companies have the system of accepting the returns if the goods and services are not to the satisfaction of the customer or not up to the standards/ specifications mentioned in the product catalogs or brochures hosted on the web pages.

(7)

A way to handle warranty claims: Sometimes if the product breaks in the way or some other problems crop up with the product. In such situation, warranty claims are to be honored as in the case of commerce.

A way to provide customer service: The main tools of the customer service are [-mail, On-line forms, on-line knowledge bases and frequently asked questions.

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Models of E-commerce Most transactions in E-commerce may broadly be classified into two main categories: (I)

Business-to-consumer

(ii)

Business-to-business

(iii)

Consumer-to-consumer transactions

The vast majority of this activity to date has been taking place in countries with advanced economies and infrastructure. For developing countries, electronic commerce presents important new opportunities to achieve a more level playing field vis-à-vis larger, more developed economies, as it demises in-place advantages of cost. Communication, and information, and creates huge new markets for indigenous products and services. While many developing countries are beginning to take advantage of the potential of Ecommerce, critical challenges remain to be overcome before the vision of a truly integrated and equitable world economy can be realized.

Business-to-consumer transactions (B2C): These are the transactions that most of us are familiar with today. It may be define as any business selling its product or service to consumers over the internet for their own use. Like individual customers buying books and music CDs over the Web, or surfing the Web on find the best deal for some particular item. Here, the merchant

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setting up the shop on the Web deals directly with the end customer. This category is characterized by a large number of transactions, where each transaction is typically small in volume. The end-customer could be totally unknown to the merchant or might be visiting the shop for a few occasional purchases.

Business-to-business transactions(B2C): These are transactions between two businesses or corporations, where the product traded is for business use.

This category is characterized by limited number of transactions, where each transaction is typically or larger volume. The end-customer is typically a previously approved or registered customer or at least known to the merchant.

The two forms of web-based e-commerce, business-to-business and business to-consumer, share many common characteristics and technologies.

However, they also differ in important ways, in characteristics and technologies as well as in the business drivers for adopting e-commerce.

Consumer-to-consumer

transactions

(C2C):

Consumer-to-consumer

(C2C) electronic commerce promotes the opportunity for consumer to transact goods or services with other consumer present on the internet. The C2C, in many a situations models the exchange systems with a modified form of deal making. For deal making purposes a large virtual consumer trading community is developed.

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Common Technology Differences of B2B and B2C There are also important technology differences between the business-to business and business-to-consumer e-commerce models. For example, the need to process payments via credit card securely has been a major driver for the development of the broad range of security technologies and payment systems. However, this need is felt most acutely on business-to-consumer sites because E-commerce merchants expect payment at the time an order is placed and consumers want to be able to pay online to avoid the delay and inconvenience associated with having to mail a check to the merchant. On business-to-business e-commerce sites, this issue is not as pressing because the merchant typically is willing to invoice the buyer and collect payment later and because business customers are used to ordering via a purchase order rather than paying immediately via credit card. For business-tobusiness transactions, additional safeguards are built into the existing processes to protect the companies against possible fraud. In the business to business sector, EDI is getting replaced because of the advantage Internet offers to conduct such transactions. In the business-to-consumer e-commerce market, the anticipated benefits to the vendor vary according to the business model for becoming involved with e-commerce initially.

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In some cases, merchants have taken a familiar business model, such as catalog shopping, and transported it to the web as a new medium, using their web site instead of a paper catalog to provide product information and using online ordering to replace calling .an operator to place an order. Today, these web sites may not generate many incremental orders (orders that would not be placed if the company was not on the web). Merchants are investing in ecommerce to extend their presence to the web so they will not become visible by their absence, to give consumers and additional mechanism through which to do business with them; and to gain experience with webbased e-commerce so that when (or if) it becomes a larger part of their sales, they are ready to take advantage of it.

Gaining experience with web-based e-commerce is particularly important so that a. company can avoid being-outflanked by competitors who take advantage of the web more quickly and use it to gain market share. In the future, as usage of the web becomes more widespread and possibly begins to replace (rather than supplement) existing channels, other business drivers may become important as well. For example, expenses of direct mail merchants (such as printing and postage) could be reduced dramatically if web-based e-commerce replaces traditional catalog sales.

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TYPES OF E-COMMERCE A variety of businesses are conducted online, including retail businesses that sell products to consumers, service providers that sell services to consumers, auctioneers that create a marketplace for products and services, and business-to-business commerce. Retail transactions make up the largest part of e-commerce. Consumers can find computers, automobiles, clothing, books, music, airline and event tickets, food, and just about anything else for sale on the Internet.



Product Transactions

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E-Commerce Web Site A page from the Amazon.com Web site illustrates the ease and immediacy of electronic commerce. Shoppers are able to search a wide variety of products, make their selection, order online, and receive updates about the status of their shipment. After years of operating losses, Amazon.com

was

among

the

first

e-businesses

to

report

a

profit.Amazon.com Retail Web sites typically include electronic catalogs that describe and display products for sale. Consumers can search for individual items or randomly browse electronic catalogs, some much larger than their mail order print counterparts. An Internet book retailer, for example, can offer millions

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of different book titles for sale on its Web site, far more titles than could fit into a store or that could be included cost-effectively in a print catalog.



Service Transactions

Other e-commerce businesses offer services. Financial services represent a large segment of e-commerce. For a small fee, online investment brokerages trade stocks on behalf of their clients. Online stock brokerages typically charge customers lower fees than traditional stock brokerages. Other sites provide consumers with a way to research and obtain mortgages and other loans online.

Travel sites offer a method of scheduling airline flights, renting cars, and booking hotel rooms. Travelers can plan all the details of their vacation or business trip, make reservations, and purchase tickets at the same site. Such sites also offer maps, travel literature, and booking information for travelers.

E-Commerce –Case Studies leading the Transformation B2B Comprises about 80-90 percent of all e-commerce by value. In this section we will present three case studies that are leading this transformation in different areas. Intel is an existing company that started using the internet as a distribution channel in the mid 1990s. It transformed itself into an ebusiness. Amazon is a pure –play Dotcom Company that rediscovered itself, after initial emphasis of sales through website only, in the physical world by incorporating a supply chain, warehousing, & customer relationship to

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become a profitable business. eBay is yet another pure-play dotcom company that pioneered C2C e-commerce & became a profitable company from the very beginning.

Intel:In the mid 1990s, Intel adopted e- commerce technologies to reach out to its customer & trading partners. Within a few years, Intel was handling over 3 million page hits per day with online revenue of $ 2 billion per month.

Intel’s website deliver online information & support to a complex network of customer, employees, channel resellers, suppliers & OEMs. Over 6000 user in more than 50 locations around the world use the customized, personalized & secure B2B functionality.

Intel defined e-business in terms of what they called 100% e-corporation concept: a corporate strategy to re-engineer & automate business processes, using business system & internet technology, aimed at significantly improving customer, employee & supplier business interactions.

Amazon:Amazon is a pure –play B2C dotcom website, opened as an online bookstore in July 1995. It mission was to use the internet to transform book buying into fasted, easiest & most enjoyable shopping experience possible. Jeff Bezos, CEO of Amazon.com, argued that retail store required lot of real estate in prime location to sell product to customers, & that the cost of real estate was always going up. The Amazon.com main website offers millions of books, CDs, DVDs, free electronic greeting cards, online auctions, games,

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videos, toys, tools, electronics, home furnishings, apparel, kitchenware, computers, health & beauty goods, prescription drugs , gourmet foods, & services including film processing.

Amazon also expanded in parallel into international market. Even in July 1995, it had customers from 45 countries. By the year 2000, 13.8 percent of its revenues came from over 150 countries. It opened distinct websites for its customer in Britain, Germany, France & Japan with content in local language for customers. The company also became sensitive to local cultures. It also opened local office in these countries to serve customers.

eBay:The eBay website proclaims that “eBay is the world’s online marketplace, enabling trade on a local, national & international basis. With a diverse & passionate community of individual & small businesses, eBay offer an online platform where millions of item are traded each day.” eBay enable a visitor to the site to find, buy, & pay for an item by bidding as if he were participating in an auctions. For example, in India, eBay acquired a successful online auction site, baazee.com.

Seller & buyers meet through the eBay marketplace, & interact through it as also directly. They follow the auction or fixed price formats facilitated by

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the website. Payments are made by buyer & goods are received by them from sellers. Most items require small payments to be exchanged. Both buyer & seller found it inconvenient to deal with money orders or cheques.

Pay pal, a micro –payment gateway for effecting such payments, became very popular with the trading community. It made C2C payments as easy as sending an e-mail. The service was offered free to the buyer, but sellers were required to pay a small fee to pay pal, that was comparable to credit card charge.

There are other auction sites such as Yahoo! Auctions, Half.com’ and Amazon.com. But eBay is the world’s largest auctions C2C marketplace, just as Amazon.com is the world’s biggest store.

E-COMMERCE PROCESS E-commerce process involves via three logical entities - the storefront, the payment mechanism and the supply. The storefront is nothing but a series of HTML web pages that display the products. The development of the same is quite simple and easy, with thousands of software available in the market. The third is more of a physical world operation which we're all familiar with - like supply chain, logistics etc. However the second part, the payment mechanism, is very crucial, and the entire e-commerce depends on this.

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E-payments are central to the whole e-business cycle, as they would allow the companies to service customers faster, innovative and at lower costs. This is also the crucial part; because if the claims and debits of the various participating companies -customer, servicing company, and the bank are not balanced, because of payment delays, or even worse payment defaults then the whole process is disrupted. Hence, the central to the problem is prompt and secure payment, clearing and settlement of credit and debit claims.

Having understood how crucial they are to the system as such, let us look into the various instruments that would allow us to do the same, and where they stand. The companies, world over utilizing credit cards for payments. This is a time-tested solution for all the problems. There is nothing new in the process, it's very basic the consumer who buys a service from merchant pays by entering his credit card details, and the credit card organization will handle the payment.

The elements that go into the payment mechanisms are- . 

Cardholder - The individual who is making the purchase (either goods or services) using the credit card.



Merchants - the Company that is selling goods and services to cardholders.



Issuing Bank - The bank that has issued the credit card to the cardholder. The issuing bank provides the monthly billing statements to the cardholder.

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

28

Acquiring Bank - The bank that enables the merchants to accept the credit/card payments. This works in conjunction with the payment gateway (usually third party) to accept or decline the cardholders purchase request. After getting the amount from the issuing bank, the acquiring bank deposits it into the merchant account.



Card Association - An association such as VISA International and MasterCard, which issues credit card through its members (the issuing banks to the cardholder). (Al1 American Express and Discover are not Card Associations, as they are not issued by any bank, and are offered directly to the card holder. They are referred to as Card Issuer.)



Payment Application - An application used, by the merchants to request credit card authorization and settlement of funds between the merchant and the acquiring bank.

There are two types of processes that are utilized by the payment mechanism: 

Authorization Process- The credit card details as entered by the cardholder are verified and confirmed with the issuing banks; and



Settlement process- The transfer of funds between the issuing banks and the acquiring banks

Authorization Process When making purchases over the web, the cardholder uses a web browser to procure product information from the merchant. The merchant captures the

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product information as well as credit card information and then communicates the credit card information to the acquiring bank through the payment application. The acquiring bank works with: i, e appropriate card association (or card issuer) to execute the transaction.

The authorization process in a typical e-commerce cycle. There are two cycles - Authorization (credit card authorization) and settlement (settlement of payments to the merchant).

Using a web browser (Microsoft Internet Explorer or Netscape Navigator), the cardholder visits the website of the merchant, where goods or service are displayed.

E- Commerce Payment Mechanism Under E-commerce payment mechanism, the customer selects the product, which he intends to purchase by clicking on the "Purchase" button. A form opens up on the web browser, which would be secure, (A lock symbol in the status bar of the browser indicates that the site from that point on is secure and encrypted), in which the cardholder enters his credit card information.

Some web sites would prompt for the shipping address as well.

E-commerce



30

The payment application encrypts and transmits the credit card information to the acquiring bank through secure communications with Secured Sockets Layer (SSL).



The system in the acquiring bank received the information and forwards this information to the card associations for verification as well as a4thorization. The card association (or issuer) verifies the card information and determines whether the cardholder has sufficient credit line available to pay for the purchases (the purchase amount is also transmitted). The amount that he can buy is referred to as "open to buy". A confirmation number is generated and the "open to buy" amount is blocked.



If the card information is incorrect or if the credit card number is invalid, then a message declining the transaction is generated and transmitted to the customer through the merchant.



Apart from the verification of credit card, the acquiring bank also verifies the address whereby the shipping details provided by the cardholder at the time of sale is 'compared to the billing information stored in the database of the cardholder.



The information encrypted and sent to the merchant through the payment application, and then on to the cardholder.

This whole end-to-end process (from the moment the cardholder

clicks on "purchase" to the receipt of the authorization message) takes only a few seconds based on the payment application, traffic, and Internet connection on the client and others.

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After successful authorization of the credit card, the merchant initiates the fulfillment process of the product or services as requested by the cardholder.

According to general rules, the merchant can initiate a settlement process; only after the cardholders order has been fulfilled. Sometimes, the fulfillment can take days- say physical goods like computers, while some may take a few seconds - like subscription based services or software downloads.

Settlement Process The settlement process of the orders fulfilled by the merchant.  The merchant on a periodic basis compiles a list of fulfilled orders and transmits the details to the acquiring bank. This is a typical batch process.  The merchant's payment application encrypts the purchase information and transmits the encrypted information to the acquiring bank.  The acquiring bank sends settlement instructions to the appropriate card association for verification. The credit amounts from the issuing bank and makes the deposit to the merchant account.  The merchant receives a notification with the fund transfer.

While the authorization process takes only few seconds, the settlement process may take several days, depending on the funds availability with the issuing bank, as well as other procedures and policies.

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Currently, HDFC Bank and ICICI have launched payments gateways for online transactions. Payments can be effected through credit cards or directly by debiting the accounts of the customers of the respective banks.

HDFC bank claims it was the first to launch a payment gateway on May 1st 2000. Interestingly, even ICICI bank claims to be the first one to have a payment gateway, which it flagged off on 15th July 2000. Besides HDFC Bank and ICICI Global Tele-systems, LG Software and a few other nonbanking companies are toying the idea of launching payment gateways for inter bank and Bank to Bank transactions.

E-Commerce Process Cycle Card Holder click on “purchase” button

Merchant captures the information

Payment application encrypts the information & forwards to the acquiring bank Acquiring bank forwards the information to the card association or card issuer

Card Holder is notified with confirmation number

Merchant receives confirmation message

Payment application encrypts the information & forwards to the acquiring bank

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33

Examples of E-Commerce Pay seal- Indian (ICICI)'s Payment Gateway: ICICl's gateway has been developed along with Compaq and QSI. Financial Software and Systems is implementing the project in India. The acquiring is done by ICICI bank. The gateway is implemented in two-mode (I) Offline Purchasing Process (ii) Online Purchasing Process. ] (i) The Offline Purchasing Process: This is an example of business to consumer credit card transactions. The transaction process is being explained in the below diagram of transaction with the pay seal. The customer presents his card at the merchant's shop. The merchant uses a point of sale (POS) service to send the card information over a dial-up connection to his acquiring bank. The acquiring banks then send this information to the issuing bank through the card network. The issuing bank than authorizes or rejects the transaction and sends the message back to the merchant over the path. (ii) The online Purchasing Process: In the online market place, buyers and seller are often unknown to each other in the process of purchasing a product with a credit card by telephone. In the environment, the customer can not validate the card usage with his signature, which is the norm in offline transactions. The authentication of the card is in the absence.

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Transaction process with Payseal

The Shopping Process with Payseal In a typical retail process on the Internet 

The customer fills his shopping card on a merchant website and proceeds & check out.

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

35

The transaction information is transmitted to the merchant server.

The web merchant forwards a digital order to the Payseal server in encrypted format.



Payseal authenticates the merchant and provides a payment details directly on the customer's browser over a secure 128 bit SSL+ connection.



The customer provides his credit card details, which is directly sent to the payment server.



The credit card details are then switched to IGIGI Bank for authentication. IGIGI bank then transmits the message to the card holders (issuing) for payment authorization. The issuing bank authorizes the payment transmits the confirmation back to the payment gateway through acquiring bank.



On receiving authentication and authorization, Payseal forwards validation of the payment instrument to the merchant server.



The merchant transmits the acknowledgement of the payment to the customer's browser.

The entire process Payseal integrates seamlessly with the help buys

application of the web merchant ensuring a pleasant shopping experience the customer.

The credit card details of the customer remain unknown to the net merchant.

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Customer’s Information

Customer with Browser Merchant with web server

Acquiring Bank

The Process of Payseal

Benefits of E-commerce Important benefits of E-commerce include the following:

E-commerce



37

Lower transactions costs - If an E-

Commerce site is implemented well, the web can significantly lower both order taking cost and customer service costs after sale. 

Larger Purchases per transaction.



Integration into business cycle.



People can shop, in different ways.



Ledger Catalogues.



Improved Customer Interactions.



Reduction in inventions.



Access

to

a more

geographically

dispersed customer base. 

Low Procurement processing cost.

Some of the benefits are very specific to the consumer such as : 

Increased

choice

of

vendors

and

products. 

Convenience from shopping at home or

office. 

Greater amounts of information that

can be accessed on demand. 

More competitive and increased price

comparison capabilities.  of services.

Greater Customization in the delivery

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Success factors in e-commerce In many cases, an e-commerce company will survive not only based on its product, but by having a competent management team, good post-sales services, well-organized business structure, network infrastructure and a secured, well-designed website. A company that wants to succeed will have to perform 2 things: Technical and organizational aspects and customeroriented. Following factors will make business of companies succeed in ecommerce:

Technical and organizational aspects 1. Sufficient work done in market research and analysis. E-commerce is not exempt from good business planning and the fundamental laws of supply and demand. Business failure is as much a reality in e-commerce as in any other form of business.

2. A good management team armed with information technology strategy. A company's IT strategy should be a part of the business re-design process.

3. Providing an easy and secured way for customers to effect transactions.

Credit cards are the most popular means of sending payments on the internet, accounting for 90% of online purchases. In the past, card numbers were transferred securely between the customer and merchant through independent payment gateways. Such independent payment gateways are

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39

still used by most small and home businesses. Most merchants today process credit card transactions on site through arrangements made with commercial banks or credit cards companies.

4. Providing reliability and security. Parallel servers, hardware redundancy, fail-safe technology, information encryption, and firewalls can enhance this requirement.

5. Providing an attractive website. The tasteful use of colour, graphics, animation, photographs, fonts, and white-space percentage may aid success in this respect.

6. Streamlining business processes, possibly through re-engineering and information technologies.

7. Providing complete understanding of the products or services offered, which not only includes complete product information, but also sound advisors and selectors.

Naturally, the e-commerce vendor must also perform such mundane tasks as being truthful about its product and its availability, shipping reliably, and handling complaints promptly and effectively. A unique property of the Internet environment is that individual customers have access to far more information about the seller than they would find in a brick-and-mortar situation.

(Of course, customers can, and occasionally do, research a brick-and-mortar store online before visiting it, so this distinction does not hold water in every case.)

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Customer-Oriented A successful e-commerce organization must also provide an enjoyable and rewarding experience to its customers. Many factors go into making this possible. Such factors include: 1. Providing an incentive for customers to buy and to return. Sales promotions to this end can involve coupons, special offers, and discounts. Cross-linked websites and advertising affiliate programs can also help.

2. Providing personal attention. Personalized web sites, purchase suggestions, and personalized special offers may go some of the way to substituting for the face-to-face human interaction found at a traditional point of sale.

3. Providing a sense of community. Chat rooms, discussion boards, soliciting customer input and loyalty programs (sometimes called affinity programs) can help in this respect.

4. Owning the customer's total experience. E-tailers foster this by treating any contacts with a customer as part of a total experience, an experience that becomes synonymous with the brand.

5. Helping customers do their job of consuming. E-tailers and online shopping directories can provide such help through ample comparative information and good search facilities. Provision of component information and safetyand-health comments may assist e-tailers to define the customers' job.

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Problems Even if a provider of E-commerce goods and services rigorously follows these "key factors" to devise an exemplary e-commerce strategy, problems can still arise. Sources of such problems include: 1. Failure to understand customers, why they buy and how they buy. Even a product with a sound value proposition can fail if producers and retailers do not understand customer habits, expectations, and motivations. Ecommerce could potentially mitigate this potential problem with proactive and focused marketing research, just as traditional retailers may do.

2 Inability to predict environmental reaction. What will competitors do? Will they introduce competitive brands or competitive web sites? Will they supplement their service offerings? Will they try to sabotage a competitor's site? Will price wars break out? What will the government do? Research into competitors, industries and markets may mitigate some consequences here, just as in non-electronic commerce.

3. Over-estimation of resource competence. Can staff, hardware, software, and processes handle the proposed strategy?

Have e-tailers failed to

develop employee and management skills? These issues may call for thorough resource planning and employee training.

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4. Failure to coordinate. If existing reporting and control relationships do not suffice, one can move towards a flat, accountable, and flexible organizational structure, which may or may not aid coordination.

5. Failure to obtain senior management commitment. This often results in a failure to gain sufficient corporate resources to accomplish a task. It may help to get top management involved right from the start.

6. Failure to obtain employee commitment. If planners do not explain their strategy well to employees, or fail to give employees the whole picture, then training and setting up incentives for workers to embrace the strategy may assist.

7. Under-estimation of time requirements. Setting up an e-commerce venture can take considerable time and money, and failure to understand the timing and sequencing of tasks can lead to significant cost overruns. Basic project planning, critical path, critical chain, or PERT analysis may mitigate such failings. Profitability may have to wait for the achievement of market share.

8. Becoming the victim of organized crime. Many syndicates have caught on to the potential of the Internet as a new revenue stream. Two main methods are as follows: (1) Using identity theft techniques like phishing to order expensive goods and bill them to some innocent person, then liquidating the goods for quick cash; (2) Extortion by using a network of compromised "zombie" computers to engage in distributed denial of service attacks against the target Web site until it starts paying protection money.

9. Failure to expect the unexpected. Too often new businesses do not take into account the amount of time, money or resources needed to complete a

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43

project and often find themselves without the necessary components to become successful.

Product suitability Certain products or services appear more suitable for online sales; others remain more suitable for offline sales.

Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and modification), music, movies, office supplies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Other successful marketers such as use Drop shipping or Affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory. Examples include numerous sellers on eBay. Virtual marketers can sell some non-digital products and services successfully. Such products generally have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers.

Items which can fit through a standard letterbox — such as music CDs, DVDs and books — are particularly suitable for a virtual marketer, and indeed Amazon.com, one of the few enduring dot-com companies, has historically concentrated on this field.

Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good

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44

candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets - in such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number.

Purchases of pornography and of other sex-related products and services fulfill the requirements of both virtuality (or if non-virtual, generally highvalue) and potential embarrassment; unsurprisingly, provision of such services has become the most profitable segment of e-commerce. [Citation needed] There are also many disadvantages of e-commerce; one of the main ones is fraud. This is where your details (name, bank card number, age, national insurance number) are entered into what look to be a safe site but really it is not. These details can then be used to steal money from you and can be used to buy things on line that you are completely unaware of until it is too late. If this information is leaked into the wrong hands. People are able to steal your identity, and commit more fraud crimes under your name. Finally there are many problems with e commerce some of which are: Failure to understand customers, why they buy and how they buy. Even a product with a sound value proposition can fail if producers and retailers do not understand customer habits, expectations, and motivations. E-commerce could potentially mitigate this potential problem with proactive and focused marketing research, just as traditional retailers may do. Failure to consider

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45

the competitive situation. One may have the will to construct a viable book e-tailing business model, but lack the capability to compete with Amazon.

Inability to predict environmental reaction. What will competitors do? Will they introduce competitive brands or competitive web sites? Will they supplement their service offerings? Will they try to sabotage a competitor's site? Will price wars break out? What will the government do? Research into competitors, industries and markets may mitigate some consequences here, just as in non-electronic commerce. Over-estimation of resource competence. Can staff, hardware, software, and processes handle the proposed strategy? Have e-tailer's failed to develop employee and management skills? These issues may call for thorough resource planning and employee training.

Products less suitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings — most notably clothing — and products where colour integrity appears important. Nonetheless, Tesco.com has had success delivering groceries in the UK, albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the U.S. Also, the recycling program cheap cycle sells goods over the internet, but avoids the low value-to-weight ratio problem by creating different groups for various regions, so that shipping costs remain low.

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46

Acceptance Consumers have accepted the e-commerce business model less readily than its proponents originally expected. Even in product categories suitable for ecommerce, electronic shopping has developed only slowly. Several reasons might account for the slow uptake, including: 

Concerns about security. Many people will not use credit cards over the Internet due to concerns about theft and credit card fraud.



Lack of instant gratification with most e-purchases (nondigital purchases). Much of a consumer's reward for purchasing a product lies in the instant gratification of using and displaying that product. This reward does not exist when one's purchase does not arrive for days or weeks.



The problem of access to web commerce, mainly for poor households and for developing countries. Low penetration rates of Internet access in some sectors greatly reduce the potential for ecommerce.



The social aspect of shopping. Some people enjoy talking to sales staff, to other shoppers, or to their cohorts: this social reward side of retail therapy does not exist to the same extent in online shopping.

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

47

Poorly designed, bug-infested e-Commerce web sites that frustrate online shoppers and drive them away.



Inconsistent return policies among e-tailers or difficulties in exchange/return.

E-commerce Technologies Some of the important E-commerce technologies are discussed as under: (1) Electronic Data Interchange: EDI is the preparation, communication, and processing of business transactions and data electronically in a predefined structure format, using computers and telecommunication links.

Large corporations mostly use it and their satellite suppliers working together over a private network called a Value Added Network (VAN).

These VAN offer reliability and security that is difficult to on the internet so far. An EDI services provide maintains a VAN, with mailboxes for each business partner. The provider stores' then forwards EDI messages between partners. Each participating company' has to run EDI translation software on its computers to convert EDI data in to formats used by the Company's data bases. The basics of EDI software are: shown in Diagram Store and Forward messages VAN Translation EDI standard messages

EDI standard messages

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48

Business application

Business application

The Basics of EDI Software EDI service providers are now incorporating Internet services and open EDI as a new service of specifications for handling EDI on the Internet.

(2) Electronic Fund Transfer (EFT): It involves the electronic transmission of financing transactions (debit and credit) between banks, banks and companies, banks and consumers, or companies and consumers. EFT adds another dimension to EDI allowing for direct deposit of payments without Cheque writing, receiving, processing or canceling.

Examples of EFT Systems Banking and financial payments  Large-scale or wholesale payments (e.g., bank-to-bank transfer),  Small-scale or retail payments (e.g. automated teller machines and cash dispensers.  Home banking (e.g. bill payment), Retailing payments  Credit Cards (e.g. VISA or MasterCard).

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49

 Private label credit/debit cards, Online electronic commerce payments  Token-based payment systems Electronic cash (e.g. DigiCash) Electronic Checks (e.g. Net Cheque)  Smart cards or debit cards (e.g. Mondex Electronic Currency Card) Credit card-based systems  Encrypted credit cards (e.g., SSL CyberCash, or SET encryption) 

Third-party authorization numbers (e.g. First Virtual)

(3) Debit cards: With a magnetic strip and an embossed identification number, debit cards are used by consumers to obtain money from automatic teller machines, to pay for goods or services at retail locations, and to access home banking or bill payment services. The major point is that debit cards provide no line of credit; purchases are directly debited to a consumer's bank account, or to the prepaid amount encoded on the card.

Debit cards are a substitute for cash or a personal Cheque.

(4) Smart Cards: Smart Card is a plastic card with an embedded chip and a tiny display that provides user with new password each time they log in a system. The smart card (also called a memory card) is a portable datastorage device with provision for identity and security, it differs from the prepaid telephone card, or debits card. It is very popular in Europe, because it contains microprocessors and memory chips that provide intelligence and the ability to store a significant amount of information. Smart Cards are designed to replace the traditional magnetic strip credit or bank cards

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introduced at the end of the 1960s. "Representatives of the financial services,

telecommunications,

entertainment,

publishing,

software,

computer and health care industries are joining with government agencies to create a multi-industry effort to accelerate the widespread use of smart card technologies", (Smart Card Forum 1993),

Examples: Citibank & Chase Manhattan Bank Smart Card: In October, 1997, Citibank and Chase Manhattan Bank launched a smart card. Primary purpose of the joining forces was to promote inter operability of smart card technology between MasterCard and VISA. Citibank and Chase Manhattan's expectations were that most purchases made with the cash equivalent loaded on the smart cards would be for $20 or less and this was basically confirmed by the pilot test. For purchases greater than $20, consumers generally would use their credit card. The program involved getting merchants to accept the smart cards as cash payments. Regarding security of the smart cards, PIN are required to download Cash, but not for purchases. If a consumer loses his/her smart card, the amount stored is lost and can be used by anyone processing the cards, the same as losing Cash.

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SMART CARD FACILITY (5) E-mail: Electronic mail (e-mail) provides for the electronic transmission of letters, messages, and other documents. There is a large installed base of email users in the corporate environment the learning curve has proved to be relatively short for new Users, ..

(6) Bulletin Board Systems: Bulletin board systems, or BBS, are computer networks accessible by modem that offers the facility for multiple subscribers to use information electronically. They provide access to computer files, games, email, discussion groups, and other services.

(7) Facsimile (Fax}: Facsimile technology is not new. In fact, it has been around in one form or another since 1924 (Jenkins and Lancashire, 1994).

One of its biggest advantages is the enormous installed base. It is probably the least controlled, most heavily used technology in today's office.

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52

(8) Electronic forms and forms date interchange: Electronic forms or forms automation software enables users to fill in forms on a desktop computer, automatically save the information to various databases, and selectively route forms and data transparently across most popular e-mail systems, such as Microsoft Mail, Lotus cc: Mail, Lotus Notes Mail. Its value is in its ability to link database, data collection, and data retrieval/presentation technologies. Much of the electronic forms software 3vailable today provides for links to transaction type databases, which still provide the core information resource for most corporations, as well as other local or departmental databases.

(9) Electronic Image Processing: Electronic Image Processing is not a recent innovation. It is the result of bringing together several older technologies to facilitate the following:  Converting images from paper to electronic code:  Classifying images for later retrieval Storing the images; and  Distributing the images.

(10) Bar codes: EAN (European Article Numbering) numbers which are used for identification items can be represented by bar codes. Bar codes allow numbers to be encoded in machine- readable form. The data can then be captured automatically, quickly and securely. A bar code is a pattern of parallel bars and spaces of predetermined widths representing .data that is then "read" by electronic scanners and transmitted either to a computer or to a storage device for subsequent transmission to a computer. The data is then interpreted or decoded by the computer.

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Bar codes are used extensively in the retail sector. The Universal Product Code symbol, chosen as the industry standard for grocers, is familiar to most people in North America.

(11) PKI Technology: The technology underlying e-trust is known as public key encryption or Public Key Infrastructure (PKI) and has been around for some time. Very briefly, PKI works by means of cryptographic keys issued in the form of digital certificates, which enables parties to communicate security over an insecure network such as internet.

E-commerce Standards Important standards of E-commerce are discussed as under: (i) Electronic Data Interchange (EDI): EDI is a common document structure designed to let large organizations transmit information over private networks. EDI is now finding the role on corporate web sites as well. (ii) Open Buying on the Internet (OBI): This standard is created by the Internet purchasing round table, is supposedt6 ensure that all the different E-Commerce systems can talk to one another. OBI, which was released

by OBI consortium, is backed by leading technology companies such as Actra, Intelsys, Microsoft, Open Market, and Oracle.

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(ii) The Open Trading Protocol (OTP): It is intended to standardize a variety of payments related activities including purchase agreements.

Receipts for purchases, and payments. It was created as a computing standard to OBI by a group of companies AT&T, Cyber cash, Hitachi.

18M, Oracle, Sun Micro Systems, and British Telecom. (iv) The Open Profiling Standard (OPS): A standard backed by Microsoft and Firefly. OPS let users create a personal profile of preferences and interests that they want to share with merchants. The idea behind it is to help consumers protect their privacy without banning online collection of marketing information. (v) Secure Socket Layer (SSL): This protocol is designed to create a secure connection to the server. SSL uses public key encryption, one of the strongest encryption methods around to protect data as it travels over the Internet. SSL was created by Netscape but now has been published in the public domain. (vi) Secure Electronic Transactions (SET): SET encodes the credit card numbers stored on merchants' servers. This standard, created by Visa and MasterCard, enjoys wide support in the banking community. The first SET-enabled commerce is already being tested in Asia. (vii) Trust: This partnership of companies seeks to build public trust in ecommerce by putting a Good Housekeeping-style seal of approval on sites that do not violate consumer privacy.

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E-COMMERCE AND INTERNET According to Cathey J. Medich, Executive Director of Commerce Net. "The Internet is redefining the model for electronic commerce to one that supports the complete seller-to-buyer relationship. This model includes promoting and communicating company and product information to a global user base, accepting orders and payments of goods and services online, delivering software and information products online. Providing ongoing customer support, and engaging in on line collaboration for new product development".

Electronic Commerce Systems relay on the resources the Internet, Intranets, Extranets, and other computer networks to support every step of titles process. For example E-Commerce can include interactive marketing, ordering, and payment processes on the World Wide Web. Extranets access to inventory data bases by customers and suppliers. Intranet access of

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customer records by sales representatives and customer service, and involvement in product developing via Internet news groups and E-mail Exchange.

E-commerce Software Solution Solutions like Intershop's ePages, iCat's Lemonade Stand, or Yahoo's Stores provide storefronts that are ready to go. Just pick a design and pop in your products: You are ready for business.

Other applications, such as Intershop 3.0 and iCat Professional, allow you to change standard templates that came with the packaged software so that you can customize the way your storefront will look and feel. These solutions also let you extend the standard features and behaviors contained in the templates - assuming you can "speak" their application languages.

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Advertising and awareness Marketing Post sale

Merchandising

CUSTOMER

service

Sales service

Fulfillment

sales transaction trahsaction processing

Process of Sales. & Marketing



Implementation of E-Commerce Solutions:

There

are three options:

Option 1:

Buy a ready-made system that closely matches your

specifications. This approach will give you a standardized set at e-commerce features with a few additional business rules built in as a bonus. If your business needs closely match what the package offers, buy it! This will save you money and a good deal of time. If the system is lacking some of your prioritized however, you may want to think again. The solution may be a good fit now, but will likely become obsolete as more and more features become later on in development. Trying to add these new features may mean

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work and’ training in the software down the road. Be sure to budget for ahead of time, if you're considering this option.

Option 2: Rent space

in a network-based, e-'commerce solution: These

solutions are inexpensive and include many common features. They're fast because the: whole store is administered through the Web. You don't need to install any software; you just look. Configure some settings, and pour in your product information. Then you're ready to go: instant storefront.

Option 3:

Build the system from scratch to your specifications. This

approach will give you the exact solution you need but will require expertise, time, and a sizable budget to pull it off. The advantage is that you can build the features and functions you need to be unique and competitive in the marketplace. So if you want to offer discounts any time, you'll need to take this approach.

There are a series of application engines out there to help you get these features. But you can create a commerce program in almost any programming language. Many early Web-based business interfaces were created in Perl or C++. More recently, a lot of work has been done with Microsoft's Active Server Pages and Allaire's Cold Fusion development environments. Also, Pandesic has released a new platform based upon a suite of e-commerce objects accessible through Active Server Page technology. The major functions on a website includes 

Displaying Products



Order and Transaction Processing



Attracting Customers

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59



Fulfillment and Customer Service



Building Your Customer Base



Cost- Effective Advertising



Keeping Track of Everything



Staying in E-Business

Electronic Stock Trading Electronic commerce creates threats and opportunities for brokers and intermediaries of all kinds-not only travel agents, but insurance brokers, loan brokers, stockbrokers, and brokers of food and mechanical parts as well. The threat to these intermediaries is that their customers will bypass them by obtaining information and meeting their purchasing needs through new, online channels. The opportunity for intermediaries is to use electronic commerce to create one of those new channels, thereby providing better service than a customer could otherwise obtain.

By 1997 Web-based information and transaction capabilities spanned most of the customer involvement cycle for buying and selling stocks and bonds. Private investors could obtain readily available data and analysis

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software to identify stocks they wanted to buy and sell. Some of it could be accessed for free from the home pages of companies providing search engines and other services not specifically related to finance. Investors could make the purchases through Web transactions, touch tone phones, or human agents. Their stock and bond holdings and transactions could be tracked.

They could obtain customer service information about the status of buy and sell orders. How the traditional brokerages would respond and whether they could maintain their much higher cost structure remained to be seen.

Electronic Banking The banking industry relied on computers for decades before electronic banking created new way&> to provide service. A first step in electronic banking for consumers was the advent of automatic teller machines (ATMs) popularized by Citibank in the late 1970s. Thanks to .ATMs, Citibank tripled its depositors from 1978 to 1987, increasing its local consumer market share from 4.5% to 13%, As happened in the Merrill Lynch case. the competition responded, Other banks banded together to produce their own network, the New York Cash Exchange, or NYCE, which began operation in 1985, and which Citibank eventually Joined. More recently, several national ATM networks permit customers to withdraw

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money from ATMs in all major cities in the United States and some cities abroad.

The next step in electronic banking for consumers is to provide additional banking 'services and transactions through personal computers linked to the Web or to private networks. In addition to providing history and bank balance information, electronic banking permits people to pay bills without writing checks. The electronic banking customer starts by identifying checks that are written to the same payee. Repeatedly, such as checks for rent, water, electricity, and car payments. The electronic banking system makes it possible to enter the amount of the check and then have the bank transfer the money into the payee's account without ever handling a physical check. For fixed payments such as rent, the amount can be entered once and then transferred automatically each month. For the customer, these electronic banking functions eliminate the annoyance of balancing a checkbook and some of the uncertainty about whether or not the check arrived. For the bank, the computer-to-computer transfers performed in electronic banking are more automatic and less expensive than processing paper checks for handling payment transactions.

Like many aspects of electronic commerce, electronic banking is more complicated than it might appear. For example, assume that the payee is a national firm with many offices and a number of different bank accounts for different purposes. To pay the bill, you need to specify which account at which bank should receive the funds. That bank may be out of state, and the payee's accounts receivable system may not be set up to receive payments directed to its bank; it may require that payments go to its accounts receivable department. To minimize the chance that a payment transaction

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will be lost or delayed, a bank offering the electronic banking service must verify in advance that each payee is set up to receive funds in this manner.

This is especi311y important if the electronic banking service combines multiple transfers to a given bank into a single transfer accompanied by a list of all payments that are included. It may be noted that subsequent changes in the payee's banking relationships might result in confusion or lost payments.

Electronic banking has advantages for people who write a lot of checks, but for others it is simpler to slip physical checks into preaddressed reply envelopes.

Secure Electronic Transaction Secure Electronic Transaction (SET) is a standard protocol for securing credit card transactions over insecure networks, specifically, the Internet.

SET is not itself a payment system, but rather a set of security protocols and formats that enables users to employ the existing credit card payment infrastructure on an open network in a secure fashion.

SET was developed by VISA and MasterCard (involving other companies such as GTE, IBM, Microsoft, Netscape, RSA and VeriSign) starting in 1996.

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SET was said to become the de facto standard of payment method on the Internet between the merchants, the buyers, and the credit-card companies.

When SET is used, the merchant itself never has to know the credit-card numbers being sent from the buyer, which provide a benefit for e-commerce.

FUTURE EXPECTATION ABOUT THE E-COMMERCE

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64

The Internet serves a great number of functions and not all of them should be classified as e-Commerce. The e-Business applications of the Internet are developing but they are a long way from fulfilling the predictions of the pundits. Internet e-Commerce has changed the life of a few web entrepreneurs but its effect on the lives of most other people has been very slight. The e-Commerce guru of ICL put it thus: 'Everyone agrees that electronic commerce is going to be big, very big or enormous. But nobody knows when. There is considerable disagreement about the historic impact of electronic commerce, let alone the future one. Although all commentators present forecasts for the short-term which contain truly eye-catching growth, their figures fail to achieve anything remotely approaching the size of existing modes of trade. And yet no commentator doubts the power of electronic commerce to challenge those existing modes.

In order to explain this paradox, many observers allude to technical, cost and infrastructure impediments. For electronic commerce to deliver its full promise, there will have to be business, social and cultural changes and these will take more than two or three years to complete.'

DRIVING BUSINESS ON THE INTERNET E-commerce will be the key driver of the Indian economy & will be the key revenue stream for companies in the days to come, many experts like Malay Sengupta, CMD, MSTC

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65

Ltd., R S Pandey, Steel Secretary, & Dr Debesh Das, IT Minister, WB at the inaugural session of Ecom, the seminar on E-commerce organized by MSTC Limited with The Economics Times on June 22, 2009 in Kolkata have agreed in this statement. & they gave their views in a different ways like: A case in point was host-company MSTC Limited that has successfully increased business manifold with the use of ecommerce.

1. WHY E-COMMERCE?  When MSTC has adopted e-commerce initiatives then it given them returns far above anyone’s expectations.

The other reason for the success of e-commerce  “It’s a paper-less process & it doesn’t give any unfair advantageous to any one party.”  “One major advantage that e-commerce users have now is that digital signatures are recognized by all courts of law & that electronic contracts are legally valid.

For example, Coal India went online on November 19, 2004 & coal is now booked electronically. & it’s not just the business to business format that is profiting for this, even customer buying daily-need product are turning largely to the internet. “& why

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not? If you can see 10 different TV sets on the net before choosing the one you want, you save the time of going to 10 different stores.”

2. THE LOOPHOLES:  “In a country like India brandwidth is a major problem, the internet is slow & for bidders it takes long to just log on.”  “The poor power supply in various part of the country that makes e-trading difficult.”  Security also remains a large issue especially when it comes to monetary transaction on the net. “The cyber laws are still not equipped to bring a fraudulent person to book.”  Electronic fraud might even happen at a nightclub when the card is handed over to the cash counter.  The inter-state transactions were difficult to make & many suppliers were unwilling to do that last bit of door- step delivery that is crucial in the B to C. 3. THE WAY FORWARD  E-Commerce is poised to take over the country in the next few years. Now people have started buying cars through the net which in itself is a pointer that electronic trade is here to stay.  “E-Commerce will be driven by personalized & niche thing hat are not available in stores,”

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 “The B to C sector has generated business worth Rs 2300 crore in 2007, & the growth has been 100 percent for the last 3 years, that in itself shows what E-Commerce is capable.”  “We have facilities like secured socket layering & firewalls that are impossible to hack. These will make e-transaction safer & promoted e-commerce.”

ELECTRONIC COMMERCE COMPANIES These companies make information available on line about their product and services, all of which are directly related to electronic commerce.

BroadVision, Inc. http:// www.broadvision.com

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Develop software to support foundations for electronic buying and selling.

Cardservice international http:// www.cardsvc.com Offer credit card services to internet merchants.

ClickShop com http:// www.checkshop.com/ Offer electronic shopping cart software called shopping 770 to be added to electronic shop web pages.

CyberCash, Inc. http:// www.cybercash.com/ Provider of payment service for the internet.

Checkfree Corporation http:// www.checkfree.com/ Provider of electronic payment services.

Verisign, Inc. http:// www.verisign.com

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A spin-off from RSADSI, Verisign provides public key certificates to individuals & companies.

Financial institutions The no. of banks offering some type of service over the internet, from simple information service to actual banking service, is growing rapidly.

Bank of America http:// www.bofa.com/ Currently offering information services on line.

BIBLOGRAPHY The sources that contributed to this project are as follows:BOOKS: E-COMMERCE THE CUTTING Edge OF BUSINESS

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KAMLESH K BAJAJ DEBJANI NAG  E-COMMERCE STRATEGY, TECHNOLOGIES & APPLICATIONS

DAVID WHITELEY  MANAGEMENT INFORMATION SYSTEMS CORPORATE COMMUNICATION (PAPER 4)

&

THE INSTITUTE OF COMPANY SECRETARIES OF INDIA

NEWSPAPER:- “ECONOMIC TIMES ” MAGAZINE:-

“digit”

WEBSITES:-1) www.google .com 2)www.e-commerce.com

Conclusion At last the conclusion comes that now a day -by- day ecommerce are getting lots of success. Today many companies have

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adopted the e-commerce. Because e-commerce has become the buzzword for successful businesses across the world, as also in India. So, it will be concluding that in the future e-commerce has growing faster. That means in the future e-commerce is one most important key factor to success of any company.

The Indian economy is expected to even overtake the US economy by 2045 & e-commerce, I am sure, will play a major part in that.