OBJECTIVES:

In this chapter you will be able to:

1. State the components of e-commerce,
2. Differentiate the different payment options of cyber stores;
3. Explain the different international and local payment gateways;
4. Evaluate international and local cyber stores.
OVERVIEW
Buying and selling online has broken the boundaries between geographic locations.
Chapter 1 will show you how e-commerce works together with its components that allow people
to buy and sell online. It will also give you the opportunity to evaluate websites and give you idea in
creating your own cyber-store.

ELECTRONIC COMMERCE
Buying and selling online has broken the boundaries between geographic locations. These days,
you can order or buy just anything over the internet especially when you have a credit or a debit card.

SYSTEM COMPONENTS AND FUNCTIONS

Electronic commerce or e-commerce is the act of selling products or services over the internet. It is
also known as e-business. You may refer to merchants performing e-commerce as “e-tailers” and
their websites as “cyber-stores”. A cyber-store is composed of that following:
 STOREFRONT
 SHOPPING CART
 PAYMENT GATEWAY
Let us now find out what each one’s function is.
1. STOREFRONT - The website that lists their products and their details.
Clicking an item will allow the user to view additional details about the product. Items are usually
organized according to category.
2. SHOPPING CART – A web application that is incorporated into the storefront that allows customers
to put items in the “shopping basket”. The shopping cart may be part of the system or provided by a
third-party.
Below is a sample shopping cart as shown in shopee.com

The illustration above shows a list of products under a category together with the price.
Textboxes beside the price allow the user to indicate the number of units he or she wants to buy.
Clicking the Add to Cart button will put the item in the shopping basket. As illustrated, the shopping
basket contains 1 unit of Mini Component. There is also a link labeled as Cart Contents. Clicking it will
display a page enumerating the different items in the cart as shown below.
The shopping cart also allows the user to review the items in the shopping basket. The user may
then decide to remove or continue with his or her online shopping. The checkout button allows the user
to finalize the transaction. Checking out is like going to the cashier to pay for the items the user wants
to purchase. Processing of payments is done through a payment gateway.
3. Payment Gateway – A system that processes credit card payments made by customers. It serves
as the middleman between storefront and the banks.
Before the gateway processes the transaction, billing information is
usually requested first from the user. This is to allow the e-retailer to
validate the order and use the information for deliveries.
Afterward, a set of payment options is given to the user. When paying
using a credit card, the following details are required:
 Credit card owner
 Credit card number
 Credit card code
 Credit card expiration date
Beside is a page on shopee.com requesting for the credit card
information. Filing out the credit card details and clicking the Submit
button will initiate the credit card transaction.
1. Billing or credit card information is sent from the cyber-store to the
payment gateway. Technical details on how to send the information from
the cyber-store depends on the gateway.
2. The payment gateway contacts the merchant bank and requests that the transaction be made. The
merchant bank and requests that the transaction be made. The merchant bank is a bank where the
cyber-store owner holds an account.
3. The merchant bank initiates a credit card transaction to the credit card issuer.
4. The credit card issuer validates the transaction and sends the information back to the merchant bank.
The merchant bank updates the e-tailer’s account and sends information to the payment gateway. The
payment gateway sends the confirmation to the cyber-store and the user is informed whether or not the
transactions has been completed by displaying a page similar to the one below. The user then prints
the page reference.
When paying through checks or money order, a page displaying the payment information is shown.
Compared to credit card payments, paying through checks or money order takes time. Orders are only
processed once the check or money order takes time. Orders are only processed once the check or
money order has been cleared which usually takes days. However, money order is an alternative for
people who do not own debit or credit cards. Credit card transactions are finished in a matter of seconds
and orders are processed immediately.

REFERENCE:
Patino, Dennis Cesar R., Developing Useful Computer Applications for Today’s World. Fundamentals of E-Commerce
Application Development. PHOENIX Publishing House. Second Edition