CONTENTS Unit Contents Page No. 1 Introduction to E-Commerce 1-24 2 Business Models for E-Commerce 3 E-Commerce Payment System 36-45 4 Applications of E-Commerce 46-52 5 53-73 1 Implementation of F-Commeree 74-81UNIT INTRODUCTION TO E-COMMERCE Unit Objectives: After going through this unit, you will able to + Define E-commerce, know the advantages and disadvantages’ of E- commerce + Understand types of ecommerce, E- Commerce infrastructire + Understand internet protocol, HTTP, ISP, domain name, mobile commerce 1.1_INTRODUCTION Electronic Commerce (EC) means the®process of selling, buying of goods, transferring services, products and exChanging’ information using computer network and the Internet. It also include servicing custome?s; collaborating with business partners, conducting e-leaming, intra basiness Activities, and conducting. electronic transactions within an organization, Electronic commerce draw8on tectmologies such as mobile commeree, electronic funds transfer, supply chain management, Intemet marketing, online transaction, processing, elecironie'daia fhterchange (EDD, inventory management systems, and automated data collection systems, 1.2_ DEFINITION: Ecommerce also called as intemet commerce or electronic commerce refers to the selling and buying of goods or items or services using the internet, and transfer of money and data to complete these transactions. 1.3_ E-COMMERCE FUNDAMENTALS. Ecommerce is the very fastest-growing area of business, motivated by improvement in technology and changing consumer behavior. The World Wide Web, the Intemet, secure online payments, broadband, user-friendly websites, tablets and smart phones have arrived and now many people are choosing to “be onlineas’well as ‘shop online” Ecommerce offers many benefits over traditional retail, international markets, exposure to new geographical and a streamlined buyer-to-seller or vice versarelationship, and unlimited growth potential Looking at it from the retailer’s point of view, the market forces of demand and E-Commerce Introduction to E-CommerceIniroduction to E-Commerce supply are no different for ecommerce .Ifthere is demand, and you can supply it, the Intemet generates an ever-expanding opportunity. Anyone can buy or sell anything to anyone online. E-commerce has various advantages to organization, customer and society as well as technical and non technical disadvantages. 1.3.1 Advantages of E-commerce to Organizations: + An organization can easily find more customers, best suppliers, and appropriate business partners across the world + Using e-commerce, organizations can develop their market to national and international level with lowcost. + E-commerce helps organizations to reduce the cost to cfeate process, retrieve, distribute and control the paper based informationby digitizing the information + E-commerce helps otganizations to provide better aiid quick customer + E-commerce helps to improve the brand iffage of the business, + E-commerce helps to make simpler the Business processes and makes them cfficient and faster. + E-commerce helps to increases the produetivity of organizations, + OE sommerce helps to reduée the papét work: 1.3.2 Advantages of E-commerce to Customers: + Customers can ériquire about service or product and place orders anywhere, anytime, fromany location, + Any time L€ht givés 24x7 support. Any time customer can do the transactions, + E-commétée application provides users with more variety of options and fastdelivery of services and products. + Acustomer can put review, feedback about a product or services and can see what other customers are buying, or see the review, feedback of other ‘customers before making a final purchase. + E-commerce application provides many more variety of options to compare and select the betterand cheaper options. + E-commerce provides various options of virtual auctions. + E-Commerce helps to increases the competition among organizations and asa result, organization provides more discounts to buyers or customers. + It gives readily available information, A customer can see the appropriate detailed information within seconds or in minimum time, rather than waiting for days or weeks.1.3.3 Advantages of E-commerce to Society + Customersneed not travel to anywhere to shop a product, thus less traffic on road and as result it controls the air pollution, + E-commerce helps in reducing the cost of products, so poor people can also purchase the products. + E-commerce helps in rural areas to access products and services, which are otherwise not available to them. + E-commerce helps the government to send public services{Such as educational, social services and healthcare at aminimum cost andin’ better ‘manner. 1.3.4 The disadvantages of e-commerce: 1.3.4.1 Technical Disadvantages + There can be lack of reliability, system Secutity, oF standards to poor implementationof e-commerce. + The software development industyy'or Information Technology industry is still developing and keeps changing Fapidly. + In many countries, network bandwidth of intemet speed might cause an + Special types of software, web servers oF network servers might be required by the vendor, setting the c-cémmierce environment. + Sometimes, it becomes fiat easy'to integrate website or an e-commerce software witheXisting databases or applications. + There could hardwate/ software compatibility issues, + Some e4ommérce software may be mismatched with several operating systemor any other component. 1.3.4.2 Non-technieal disadvantages + Primary cost: The cost of building /cteating an e-commerce application in- house may be very high. There could be delays in launching or implementing an e-Commerce application due to lack of experience and mistakes, + User resistance: Users may not belief the site being an unknown faceless seller, Such doubt makes it complex to convince traditional users to change from physical stores to e-commerce stores. + Privacy / Security: It is difficult to ensure the privacy or security on ecommerce transactions, + Lackof feel ortouch of products during online shopping isa problem. + E-commerce applications are still growing and changing rapidly. Introduction to E-Commerce CommerceIniroduction to E-Commerce + Internet access is still costly and is difficult to use for many potential customers, forexample, those living in distant villages. 1.4_ DIFFERENT TYPES OF E-COMMERCE 1.4.1 B2B (Business to Business) E-commerce Business to Business, is the biggest e-commerce model or type of E-commerce. In this model, both the buyers and sellers are business partners individuals, This model explains the transactions between a wholesaler and 2 retaileryor a wholesaler and manufacturer, Fig. 1.1 B2B E-commerce Pains pete Source: https:/iwww.tutorialspoint-com/e_Commerce/e_commerce_tutorial pdt Ina Business-to-Business E-coinéiée envionment, companies / business sell their online goods to other Companies business without being busy in sales to consumers. In most B2B)E-commerce environments entering the web shop will require a log in, B2B)web shop usually contains customer-specific discounts, customer-specifi¢ assortments and customer-specific pricing, B2B transactions\ean ifelude more quantity orders and bulk pricing. B2B transactions créates Strong and long lasting relationship between businesses. Products involved in B2B transactions are medical equipments, airplanes, gasoline, ships, office supplies and military equipments. These products or items arebigin ize atidnnot possible to consumers to purchase on their own, Eg. Alibaba, ExxonMobil Corporation, IBM, Amazon business, 1.4.2 B2C: (Business to Consumers) E-commerce It is most common business model. In a Business-to-Consumer (B2C) E- companies / business sell their online products or goods to consumers who are the end users of their services or products. Usually, Business to Consumers hops has an open access forall visitors, means that there is noneed fora person or user to login in order to make any product or item related inquiry.Fig 12B2CE-commerce Business Organization | Order [Processing — a Spies, Source: https://www-tutorialspoint.com/e_commerce/e_conimngice_ tutorial. pdf Online stores are able to show various proditets which give consumers more options to select from their experiences. Electroniés, Clothing, and outdoor funny equipments are justa few of the products that efficiently sold online inthe B2C. Only products are not limited in B2C e€dmineree. ‘The services like financial services, subscription, membership, tufotiiig areals0 distributed in B2C. The internet works as a marketplieé fn itself'and the ecommerce store works as the portal between businesses andGonsumérstiopping online. Eg. Amazon, Flipkart, Jabong ete, 1.4.3 C2B: Consumer to Business E-commerce : s. So the consumer This is the opposite of B2G, it is a Consumer to Busines provides some setyices\or, goods to the company. For example an IT service provider who sélls his\software or services to a company. This would be a C2B transaction, Fig 1.3 C2B Feommerce Places money foe particular conse Business Ormenietion | one, (_ Chatomer Source: https://www.tutorialspoint.com/e_commerce/e_commerce_tutorial pdf Processes Order E-Commerce Introduction to E-CommerceIniroduction to E-Commerce Ina Consumer-to-Business E-commerce, consumers usually post their services or products online on which business can post their bid. A consumer reviews the bids and selects the company /business that meets his price expectations. Consumer to business model allows businesses to get services from consumers. Consumers can provide services to business to increase their business. For eg, Popular blog writers can charge a fee to businesses wishing to have their {dea listed in order to get publicity. 1.4.4 C2C Consumer to Consumer E-commerce: In a Consumer-to-Consumet (C2C) E-commerce environment consurhers sell their online goods, products to other consumers. No companies involved, where the consumers are in direct contact with other consumer. It helps c@isuiners sell their personal assets and goods directly to an interested partyUsttally, goods tradedare bikes, cars, electronics et Fig 1.4C2C E-commerce Placer advertiomit ‘Want to sell products 2 ‘ : A Wart to buy products: Be ves ofeducts aia ae a Source :https:/wwavw-tutotialspoint.com/e_commerce/e_commerce_tutorial. pdf In C2C model OFtype Sf ecommerce platform doesn’t sell or buy any products, rather it servésas a mediator between selling consumer and buying consumer. ‘They can authori8 transactions and look in to smooth working of it Selling anitem byusing this site is as simple as opening site or app. Creating an account, listing)the items and waiting for customers for buy or purchase. No additional marketing is needed. Foreg. eBay, OLX, Quikr. 1.4.5B2G: (Business to Government) E-commerce B2G model isan alternative of B2B model. Such websites are used by government to exchange information and trade with various business organizations.Fig 1.5 B2GE-commerce Business Organization |=—=>| Website Government Source :https://www-tutorialspoint.com/e_commerce/e_commerce_tutorial.pdf Fig. no. 1.5 shows the Business to Government e-commerce, It shows that business organization can communicate with government through websites. Such websites are recognized by the government and gives a medium’to businesses! organizations to submit application forms o the government. 1.4.6 G2B: (Government to Business) E-commere Government uses B2G model website fo communigate® with business organizations. Such websites support application submission, tenders and auctions functionalities. Fig 1.6 G2B E-Commerce: lok Government =| ce a> ‘Business Organization lexus Source :https://www.tutorialspoint,com/é_commerce/e_commerce_tutorial pdf Above figure no. 1.6 hoW8 the Government to Business e-commerce. Itshows the government can comimtnicate with business organizations through websites 1.4.7 G2C: (Government to Customers) E-commerce: Government uses G2C model website to communicate with citizen. Such ‘websites support auctions of machinery, vehicles, or any other material Fig 1.7G2CE-Commerce So | =p => aus. Source :hitps://www-tutorialspoint.com/e_commerce/e_commerce_tutorial.pdf ‘Such website also provides services like registration for death, marriage, or birth certificates. Main objectives of G2C website are to minimize average time for falfilling people needs for various government services Introduction to ECommerceIniroduction to E-Commerce 1.5_ ECOMMERCE INFRASTRUCTURE: 1.5.1 Internet: ‘The Internet is a worldwide network of computers that allows people to view web sites, send email, download files such as images and mp3, post messages on newsgroups and forums, chat and much more. In 1960 The Internet was created by the Advanced Research Projects Agency (ARPA) of the U.S. government and was known as the ARPANet. Internet's first computers were at government and academic institutions and were mainly used for send mails and accessing files. From last twenty years it has seen the Inferhet accommodate such things as network LANs and ATM. Now the intémet is available on mobile phones and televisions. 1.5.1.1 Advantages of Internet: There are many advantages fo using the internetsuch a, Information There is a large amount (of informatioh-available on the internet on every topic or subject known so Fhan, ranging from conferences, trade fairs, government law and servicessnew ideas; technical support and ‘market information, b. E-mail : Email is now an important. commini¢ation tool in business. It is also superb for keeping in touch with business, family and friends. Itis free (no charge per use) when conipated to f3X;élephione, and postal services. ©. Sell or Buy products ; The internet is'a very effective way to sell and buy products all overthe world, 4. Services: Many sefvices areprovided on the internet like job seeking, hotel reservation, online banking, transfet money. Often these services are not available off-line oF€ost mare. fe. Leading-Kdge Image: Presenting your organization or company as leading-edge shows to your prospective customers and customers that you are financially strong and technologically savvy. And that you care about your glient8to take advantage of new technologies. Finally that you have the resources to support your customers in the most beneficial manner possible, Mote and more advertisers on radio, television, news papers and ‘magazinesare including a Web address. {Improved Customer Service: The companies are available to their clients 24 by 7. The Internet never sleeps. Anytime customer can access information about any services, product, or company, they can visit the company's Web site or web page. g Communities: It’s a way to mect up with people of same interest and discuss common issues. h, Low Cost Marketing: Creating colorful brochure without having to incur the costs of wasted paper proofs, long lead times between revisions, printers, and more. Then imagine a colorful product or goods or servicesbrochure that i interactive and which contains graphics, text, video and /or audio. That can be immediately updated without incurring the extra costs, of product material updates. i, Market Expansion: The Intemet is a worldwide system. Now days millions of peoples are using Internet and this number is growing day by day. By simply posting a Web Page you will get International markets. Lower Communication Costs: With the web page you can respond the queries asked by the customers. You can reply the queries immediately. For that it doesn’trequired mote cost. Low Cost Selling: Potential customers can get detailed information about your services or products at any time. And they can easily request additional information or order your products over the Internet on your Webpage 1.5.2. WWW (World Wide Web) and Web System World Wide Web (WWW), byname the Web, Tim Bemers-Lee and his colleagues staredthe development of the World Wide Web in 1989 at CERN, an Intemational Scientifie organization based in Geneva, Switzerland. They develop a protocol, HTTP (Hyper Text Transfer Protocol), which regulated communication between élients and servers. In January 1992 their text-based Web browser wastnade available for general release. Most important data or information aecess Service of the Intemet. The Web provides users access to 4'Wast array, ofdocumients or files that are connected to each other by means of hyperlinks. Electronic connections that connect related. pieces of informationitiordefte allow a user simple access to them. Hypertext permits theluser to Select a phrase or word from text and thereby access other documents thatcontain information pertaining to that phrase or word. Hypermediagdocumentsconnect to sound, images, movies and animations. Browser softwareallows users to view the retrieved documents. The Web works within the Internet's basic client-server system; Servers are computer programs that transmit and store documents to other computers on the network when requested to, while clients are programs that request files or documents from a serveras the user request for them. 1.5.3 Characteristics of Internet: a) Its global nature: Currently, billions of people in more than 190 countries are connected through this big interconnected web of computer networks. b) Easy to Use : The software, which is used to access the Internet (web browser) can be easily used and leamed. Itis designed very simple, ©) Accessibility : An Internet is a global service and accessible to everyone. Today, people located in a remote part or any location of world can use Internet. E-Commerce Introduction to E-Commerce 0910 Iniroduction to E-Commerce 4) Low Cost : Comparatively minimum cost is required to development and maintenance of Intemet services is comparatively low. ©) Interaction with Other Media : Intemet service has a highly interact with other media, For example, magazines and news, publishing houses have increased their business with the help of Internet services. 2 Resource sharing : Using internet service you can share various resources. g) Flexibility of Communication :Communication through Internet is flexible enough. It helps to communication through audio, video and text too. These services can be used at both individual and organizational levels. h) Security :Internet facility has to a helped the security system botliat the individual and national level with various components such 5 CCTV camera, ete i) Extension of Existing IT Technology :This helps to’sharing of IT technology by many users in organizations and even helps t6 other trading partners touse i) Speed and availabi Itsavailable atany time, Internet facility Helps toceess data Very quickly. k) _ Re-publication :The Internet allows statements or information to be easily re-published on various occasions to ah unlifhited visitors }) Anonymity Internet users do not have to/expose their true identity in order to post messages on bulletin boards of Send email. Users are able to write and make such postings/anenymotisly or-umder assumed names. This feature, combined both with the ability to devess the Intemet in the privacy of one’s office or own homevait the: responsive, interactive nature of communications ofijthe Intemet, has resulted in users being far less reserved about the contents oftheir messages. 1.5.4, Components of Internet: 1.5.4.1 Uniform ResourceLocators: Every doctiient on the fet has a unique address. This address is called as Uniform Resource Locator(URL). Several XHTMB/HTML tags include a URL attribute value, including online images, forms and hyperlinks. All of them use the same syntax to indicate the location ofa web resource, in spite of the type or content of that resource. That's why itis calledas Uniform Resource Locator. URL Elements AURL is made up of various parts, each of which gives information to the web browser to find out the page. It is easier to study the parts of a URL, in following example of URL, there are three key parts: the scheme, the host address, and the file path http://www. bharatividyapeeth.edwindex.htmThe Scheme The scheme explains the type of protocol and URL you are linking to and therefore, how the resource should be retrieved. For example, the majority web browsers use Hypertext Transfer Protocol (HTTP) to pass information to communicate with the web servers. So URL starts with http: ‘There are other schemes available shown in table no. 1.1. Itean be use any of them based on yourrequirement: ‘Table 1.1 Types of schemes Sr.No | Scheme Description 1 | nutp:7 [Hypertext Transfer Protocol (HTTP) is used fo ask for pages from Web servers and send them revetsé from Web servers to brovsers. 2 | https:i’ | with the use of digital certificate Seoure Hypertext Transfer Protocol (HTTPS) encrypts the data which is sent between the browser and the Web server. 3 | ftpur | Fite Transfer Protocol (FTP) is commonly used method to transmit large files across the web as well as it is used to upload source files to your web server. While HTTP is, more accepted for viewing Web sites because it is integrated with browsers, 4 | ites” |Use of ie isto show a file ison shared directory ona LAN or local hard dis ‘The Host Address: tosearch a website, An IPaddressis foursets of numbers n 0 and 255yfor example 68.178,158.133. Domain name forasite such as, apeeth.Com” Note that "www" is not really part of the domain name althoughitis always used in the hostaddress, The use ofhost address betw Swww.bharati ‘The File Path: ‘The file path starts with a forward slash character, and may composed of one or more folder or directory names. Each directory or folder name is separated by forward slash characters and the file path may end with a filename. Here index htmis the filename which is existing in html directory: hitps://www.bharatividyapeeth.edwhtml/index.htm 1.54.2 Internet Protocol: ‘The Internet Protocol (IP) is the protocol or set ofrules by using which data can be sent from one computer to another on the net. Each computer (known asa host) on the Internet has at least one unique IP address thatit identifies it from all other computers on the Internet. E-Commerce Introduction to E-Commerce u12 Iniroduction to E-Commerce When you receive or send data (for example, web page or an e-mail note), the message gets divided into little portion called packets. Each of these packets contains both the receivers and sender's Internet address. Once packet arrive at their destination they are handled differently with transport protocols. Mostly TCP and UDP transport protocols are used with IP. Today is Internet Protocol Version 4 (IPv4) is used. However, IP Version 6 (IPv6) is also starting to be supported. IPV6 provides for much big addresses and therefore for the possibility of many more Intemet users. IPv6 includes the competence of IPv4 and any server that can support IPV6 packets can also support IPv4 packets 1s ‘Transmission Control Protocol (TCP) TCP is a connection oriented protocol and gives end-to-end packet delivery. It works as back bone for connection. Ithas following features: + Transmission Control Protocol (TCP) communicates t0the Transport Layer of OSI Model. + TCPisaconnection oriented and reliableprotocol. + TCPofiers: © Reliability © Stream Data Transfer, © Full-duplex operatigh. © Efficient Flow Contiol © Multiplexing © Sending éndreceiving buffers + TCP gives comneetion ofiented end-to-end packet delivery. + TCP engures\ireliaBility by sequencing bytes with a sending acknowledgement ttumber that shows the destination the next byte the source stipposcto receive. + Iffbytes arennot acknowledged in specific time period then retransmit it by TCP. TCPServices Following services offered by TCP to the processes at the application layer: + Sendingand Receiving Buffers + Stream Delivery Service + Reliable Service + Bytesand Segments, + Connection Oriented Service+ FullDuplex Service Sending and Receiving Buffers: Itmay not be possible for receiving and sending process to produce and get data at same speed therefore, TCP requires buffers for storage at receiving and sending ends. Stream Deliver Servi TCP protocol is stream oriented because it permits the sending process to send. dataas stream of bytes and the receiving process to get data as stream of bytes, Reliable Service: TCP uses acknowledgement mechanism for sake of reliability, Bytes and Segments: ‘The TCPat transport layer groups the bytes into 2 packet calledsegments, Before transmission of these packets, these segments ate summarizes into an IP datagram. Connection Oriented Service: TCP offers connection oriented service in the followilig way: 1. TCP of process-1 informs TCP of process? afd after informing gets its approval. 2, Exchange data in both the ¢w9 Wireetion in TCP of process — 1 and TCP of process—2 After completing the dat’ ex¢liange, the two TCP’s destroy their buffers, ‘when buffers on both sides are empty. Full Duplex Service: Flow of data in both the divéetions at the same time means transmitting data in duplex mode. 1.54.4, HTTR, Hyper Text Transfer Protocol (HTTP) HTTP is a communication protocol. The communication between browser and server happens in request and response pairs so it is also known as request and, response protocol. It defines method for communication between web server and. browser. HTTPrequestcontains: + HeaderFields + Request ine + Messagebody + The first line ie. the Request line gives the request method i.e. Get or Post. + The second line gives the header which shows the domain name of the server from where index.htm is retrieved, E-Commerce Introduction to E-Commerce B14 Iniroduction to E-Commerce HTTP response contains: + Headers + Statusline + Message body Whenever you visita page on the web orintemet your computer uses the protocol i.e, Hypertext Transfer Protocol (HTTP) to download that page from another computer on internet. Step 1: Direct browser to URL, ‘When we wantto browse the web or page, we can use various types of computers (like desktops, phones and laptops), as long as the computer has a browser application installed on computers ‘The user either enters a URL in the address bar of the browser or uses link from analready opened page Eg. "http://www.example.com/index.htm!" Any URL starts with “http” it tell the browser thatit needs FIPTP (o fetch the file for that URL Step 2: Browser looks up IP We typically type careful human-ftiendly URLs into browsers, like "bharatividyapeeth.edu” and "imed.bharatividyapeeth edu". Those domain names map to IP addresses, thé'accbrate or eorreet location of the domain's computers. Its operated by the Domain Nahe System ‘The browser uses a DNS resolvérto nap the dornain to an IP address shows in fig no. 1.8 Fig 1.8 Mapping of dothain nate and IP address Source : httpsi//www.khanacademy.org/computing/ap-computer-seience- principles/the-intemet/http-htmV/a/hypertext-transfer-protocol-http Diagram with laptop on left and server on right, Laptop has browser window and arrow towards to server that’s named "www.example.com "DNS resolver" and has arrow back to laptop that says "93.184.216.34" 0", Server is named Step 3: Browser sends HTTP request Once the browser identifies the IP address of the computer hosting the requested URL, itsends an HTTP request shows in following figure. Fig. 1.8 Browsers sends HTTP request—— Source : https://www.khanacademy.org/computing/ap-computer-seience- principles/the-internet/http-html/a/hypertext-transfer-protocol-http 1.6_ INTERNET SERVICE PROVIDER (ISP) An ISP (Internet Service Provider) may bea company or organization which gives internet access to individuals or other companies . An ISP Keeps connections to other networks and ISPs, acting as a router for net or interiiet traffic between a customer's computer and the other machine"also €onmected to the internet anywhere else in the world, ISP offers following Services + Domainname registration + IntemetAccess + Dial-upaccess + Leasedlineaccess 1.6.1 Types of ISP: Access providers : They provideléecess to internet through cable, fiber optics, telephone lines or wi- fi Mailbox Provider: These type of ISP's offer mailbox hosting services. Hosting ISPs: Hosting Internet Service Provider offers e-mail, and other web hosting services suchas clouds and virtual machines et. Virtual ISPs: ‘Such ISPs gives internet access through other ISP services. Free ISPs: Free ISPs provides free internet services. E-Commerce Introduction to E-Commerce 1516 Iniroduction to E-Commerce .2'Types of internet connections © Dialup Connection © Leased Line Connection © ISDNConnection © Cable Modem © Broadband o DSL. o | V-SAT 1.6.3 Domain Name Adomain nameis the part of Internet or web address that comes after "www": For example, in www.bharatividyapeeth.edu the domain name is bharatividyapeeth.edu ‘A domain name is your Business Address so yowhave'to-cate while selecting a domain name. Your domain name should be cay type and easy to remember. How to Get a Domain Name? ‘When you plan to broadcast site online, then you have t6 buy domain name. This is all the time not necessary that the domain namé which you are looking that is available so in that case you will have iochoosein available domainname. are added to a When you purchase a domain-namé it isregisteréd) and then th large domain name register, and information about your website - including your Internet IP address is stored on a Domain Name System (DNS) server and your contact information isregisteted with your registrar. You can purchase domain niime from any domain registrar like GoDaddy 1 Domain Extension Types There are variotypés of domain extensions you can choose for your domain name. itis depends on your business type. For example; if youre in education and you want to register a domain name then youcan choose .edu extension. Following are the some extensions Most commonly used is com + .net=Stands for network and is usually used fora network of sites. + .com- Stands for company/commercial, butit can be used for any website + is, im - They are based on your country names so that you can go for country specific domain extensions + .org—Stands for organization and is supposed to be for non-profit bodies. + info - Stands for information. This domain name extension can be very useful, and as new comerit's doing well.+ biz—Anewerextension on the Internet and can be used to indicate that this siteis purely related to business. + tv—Stands for Television and are more appropriate for TV channel sites. 1.6.3.2 Domain Name types: There is a hierarchy inside the domain name registry that differentiates domains from one another. There ate three types of Domain Names these areas follows + Top-Level Domains (TLD) + Second-level domains + Third-level domains 1.6.3.3 Top-Level Domains (TLD) ‘The Internet Assigned Numbers Authority (IANA) released six top-level domain names in 1985. These top-level domains (TLD) also known as domain name extensions, It and represent the top level inthe Domain Name System hierarchy. They contain: + .com: short form for commercial, ‘¢om was the first top-level domain in general use. Initially” com was» created for use by commercial organizations + amet: means network net Was éreated explicitly for institutes that contributed in network technologies such as an ISP or an infrastructure company. + edu: short form féreduéation, it was made for education institutions. TLD edu becdme associated with only educational centers in America. Other counirySchools will use edu in combination with their country-level domain + .org: means organization, .org was created fornonprofits. These days, .ors is used as top-level domain by nonprofits, schools, for-profit businesses, and communities. + mil: short form for military, mil was created specifically for U.S. military branches. Now, it is common for .mil to use second and third-level domains in combination with the mil TLD. + gov: shorthand for goverment, gov, like mil, was restricted for American federal governmental agencies and personnel use only. 1.6.3.4Second-level domains ‘Second-level domains are domains that follow top-level domains within the DNS, order. For example, in Nike.com, Nike is the top-level domain, ccond-level domain of the .com E-Commerce Introduction to E-Commerce WIntroduction to E-Commerce Second-level domains are the name of the vendors or business that registered the domain name with a registrar. The project name, company name or brand name is the identifier for potential customers Country code second-level domains (ceSLD) are on the top of these general second level domains. In these type of cases, the second-level domain will be found to the rightoftthe period; el domain is .ca and the For example, in nike.co.ca, the country code top- eeSLDis co, 1.6. jird-level domains In DNS hierarchy, third-level domains obviously follow second-level domains. They can be found to the left of second level domains and are often eteired to as the sub domain. Bigger companies will often use third-level domaitis 8 identifiers that can differentiate between various departments. Generally speaking, “www” is the most common third-level domain. If a company use:ntultiple third-level domains, those are usually referring to a particula serverwithin the éompany. 1.7_E-COMMERCE VS TRADITIONAL COMMERCE a) Cost-Effective : E-commerce is. extremely eoSt élifective as compared to traditional commerce. In traditional commerce, there's a burden to offer the commission to the agent oF middlemen f@ sell the company’s product, The cost of commission to middlemen is elitninated in e-commerce as E- commerce provides af imimediate lihk between the business and therefore the customer. The total cOst required to run e-business is relatively less as ‘compared to the normal businéss or traditional business. b) Saving of Time “When We mention traditional commerce it takes an excessive amount of tinie fo finish a transaction but E-commerce is so fast and saves théleostly'time of both consumers and business. In tradition commerce, you have to travel physically for any quite purchase but in E- comritefée, a product are often ordered and therefore the transaction are oftén completed during a couple of minutes through the interne. ©) Customer Titeraction : In traditional commerce there's a face to face interactionbetween the customer and therefore the business or with any representative of that business, on the opposite hand in E-commerce there is no Face to Face interaction with business ll the transactions happen online. 4) Convenience of the Business and Customer for the purchasers and also the business. Customers can browse and see whole directories or catalogue of products, they will compare prices between the products and choose any product (of his choice) anytime and anywhere within the earth (where internet connection is available) with none roam from their home ot work-place. In Tradition commerce i's just a dreamand tough ‘commerce is convenient° 2 hy Dd ® Better Connectivity : Traditional commerce to its regular customer and viewers (future customers). Because organization's website are often accessed virtually (online) from anywhere , anytime by using the internet. Itis not necessary to travel away somewhere or move faraway from your workplace or home to seek outand buy the specified product. commerce provides very decent connectivity than Geographical Limit of Business: In traditional commerce, i's not very easy to expand the dimensions ofthe market from local to the national level ‘or national level to multi-national level. Business organizations Heed to make or face tons of expenses on the investment to enter the infertiational it's easier to expand the dimensidns of the market from local to national and international level. Iteaii'be done by hosting a website, by doing advertisements on the imtémet and after following legal terms, a business can come into the global Market. tis quite easy to draw in customers from global markets with E-Commerce at a coffee cost, Working Hours: In traditional commerce, the éxchange or trading of products and services can do onlyduring specific working days and through the precise slot. On another hand, in E-commerce, the selling and buying of products and services ean do atly day and anytime. Launching of new Items or Produets: In traditional commerce, it's very timely also as money consuming toiintfoduce a replacement product within the market and to understand the Fespionse of the purchasers. So the surveys. are done to understatid this dh itincreases the entire cost or expense. In e- commerce, it’s ea8¥ to intfoduce «product on the web site and that we can ‘get immediate/feedbatk trom the purchasers without spending a paisa According {6 the response of consumers, the products are often redefined and modifiedfor thesimplest launch. Process: Inlecttonic commerceall the processing of business transactions, are ailtomated, in order that they are quick and also helpful in minimizing the clerieal errors. When we mention Traditional commerce then there's ‘manual proeéssing of business transactions in it and it’s slower then E- commerce and also there are tons of chances of clerical errors because a ‘human can make more mistakes in comparison to machines, Business Relationship: E-Commerce is an automated process for business transactions so the clerical chances are less due to no human intervention, When we mention the interaction between the customer and business, as compared to E-commerce, traditional commerce is more trustful and increases the probabilities of higher account due to face to face interactions. Profit Making: profit of the organization or firm. It helps the organization to urge more profits by increasing the sales, by reducing other costs and by providing, ‘quick operating processes. In Traditional commerce, the value increases due to the involvement of the middlemen, and it reduces the margin of profit -commerce helps very much to increase the sales and Commerce Introduction to E-Commerce 1920 Introduction to E-Commerce » Physical Inspection of Goods: E-commerce doesn't allow any sort of physical inspection of products . While purchasing goods through E- commerce, customers need to trust on the electronic images and zip else but in traditional commerce, you'll physically inspect the products before purchase it. Chances of Fraud: During the transaction of E-commerce, tons of cyber frauds can happen. People generally fear to give bank and credit card details, because their information can be a leak. Lack of physical presence and unclear legal issues generate more chances for frauds. In traditional commerce, the probabilities of frauds are comparatively less becatise there's a private interaction between the customer (customer) and therefore the seller (business). 1.8 CATEGORIES OF NETWORK ‘There are four types of network categories: 18.1 LAN- Local Arca Network WLAN. Wireless Local Area Network MAN Metropolitan Area Network, WAN- Wide Area Network ocal Area Network ALLAN connects network devices over @ felatively short ot small distance. A networked schools, homes, or officebiilding, contains a single LAN, Very high data transmission speed in LAN ‘Ownership of LAN iSsingle Organization ‘Thereis leSseongestion in LAN. InLAN Thepropagation delay is short. Design andmaititenance of LANis easy. There is more fault tolerance in LAN. Fig. 1.9 Local Atea NetworkSource: http://mucins.weebly.com/24-categories-of-networks.html Above figure shows Local Area Network. It shows various personals computers, network printer, and server is attached to each other through switches. All available devices can access by all computers in LAN. 1.8.2 Wireless Local Area Network ‘Nowadays instead of wires or cables wireless medias or channels are used for data transmission. Itis called wireless Local Area Network, Fig, 1.10 Wireless Local Area Network ale: lp es 4 3 Source : htp://mucinsweebl¥.com/24-categories-of-networks.html AWAN spans alarge physieal distance. The Internet isthe largest WAN, across the Earth. A WAN. is @ geographically-dispersed collection of LANs. A network device called. router connects LANs toa WAN. The router maintains both aLAN address anda WAN address in IP networking A WAN differs from @ LAN in various important ways. Most WANs (like the Intemet) are not owned by any one organization but rather exist undercollective or distributed ownership and management, WANS tend to use technology like frame Relay, ATM, and X.25 for connectivity over the longer distances. 1.8.3 Wide Area Network A WAN is a network of network, It is connection of various LANs and WANS. WANS are slower than LANs and MANs and often require additional and costly hardware such as dedicated leased lines, routers, and complicated implementation procedures. + Low transmission speed in WAN as compare to MAN and LAN. + Ownerof WAN mightnot be one organization E-Commerce Introduction to E-Commerce 2122 E-Commerce Introduction to E-Commerce + Whereas there is long propagation delay. + Designand maintenance of WAN is also difficult than LAN as well MAN, jon than MAN in WAN. + Whereas thereis more cong + InWAN, there isalso less faulttolerance. Fig. 1.11 Wide Area Network EtheroetSwich Sener Source ; http://mucins.weebly.com/24zcategorigSof-networks html Above figure shows Wide Arca Neywork, It shows stetwork of different nations like Toronto, NewYork and Seattle WAN can helipto worldwide network. 1.8.4 Metropolitan Area Network Anetwork spanning 2 physical area larger than a LAN but smaller than a WAN, such asa metropolitaiteity Fig, 1.12 Metropotitan AreaNetwork eat Source :http://mucins.weebly.com/24-categories-of-networks.htmlAMAN is operated and owned by a single entity such as a large corporation or government body. + While the transmission speed of MAN is average. + MAN’sownership can be private or public. + While there is more congestion in MAN. + ‘There ismoderate propagation delay in MAN. + Design and maintenance in MAN is difficult than LAN + While there is less fault tolerance. in MAN 1.9_M-COMMERCE M-commerce (mobile commerce) is that the buying and selling of products, and services through wireless handheld devices Ifke smart phones and tablets. Asa sort of e-commerce, m-commerce enables users to access online shopping platforms without having to use a personal’compufer. samples of m-commerce include in-app purchasing, mobile banking, virtual marketplace apps just like the Amazon mobile app or a digital wallet like Apple Pay, Android Pay and Samsung, Pay. Over time, content delivery over wireless devices has become faster, safer and scalable, The industries affeéted mostby m-commerce include: + Financial services, Which iicorporates mobile banking (when customers use their handheld deyices'to access their accounts and pay their bills) also as brokerage services, during which stock quotes are often displayed and trading conducted from an equivalent handheld device. + Telecoftimunications, during which service changes, bill payment and accouritreviews can all be performed from an equivalent handheld device. + Service and fetal, as consumers are given the power to put and buy orders on-the-fly + Information services, which include the delivery of monetary news, sports figures and traffic updates to one mobile device. 1.9.1 Types of m-commerce M-commerce are often categorized by function as either mobile shopping, mobile banking or mobile payments. Mobile shopping allows for a customer to get a product from a mobile device, using an application like Amazon, or over an internet app. A subcategory of mobile shopping is app commerce, which may be a transaction that takes place over a native app. Mobile banking includes any handheld technology that permits customers to conduct fanatical transactions. this is often typically done through a secure, dedicated app provided by the banking. E-Commerce Introduction to E-Commerce 2324 E-Commerce Introduction to E-Commerce institution, Mobile payments enable users to shop for products in-person employing a mobile device. Digital wallets, like Apple Pay, allow a customer to shop fora product without having to swipe a card or pay with physical cash. Advantages and drawbacks of mobile commerce 1,9.2 The advantages of m-commerce include: + Added customerretention by being more easily accessible. + More convenience for patrons in comparing prices, reading reviews,and ‘making purchases without the necessity of a personal computer + Widersort ofproducts and services. + Automatesa businesses’ point of customer contact and sales. 1.9.3 Disadvantages of m-commeree include: + A poorly executed mobile experience can deter customeéts from making purchases. + Mobile payment options aren't availablein every, geographic location and, should not supportevery sortof digital wallet. Questions: What is E-commerce? Explain in detailits advantages and disadvantages. Define E-commerce. Explain its @dvantages, Yo ofganization, customer and society. Define E-commerce. Explait{istechnical afd now technical disadvantages. How traditional business, is diftér [fom E-eommerce? Explain with proper example, ‘What is Internet? Explain fdetail its advantages. ‘What are the various components of Internet? Explain in detail Explain in detail Various haracteristics of Internet. Explain indetailtypesof business models with proper example. What is$P? Explain in detail various ISPs. What is Mobiléeommerce? Explain its advantages and disadvantages Short Notes Internet Protocol TP HTTP Domain Names ‘Types of domain names Network categoriesUNIT 2 BUSINESS MODELS FOR E-COMMERCE. Unit Objectives: After going through this unit, you will able to + Understand business models, + Understand concept and types of EDI. 2.1 B2B (Business to Business) Business Model Business to Business, isthe biggest e-commerce model ortype'ofé-commerce. In this model, both the buyers and sellers are business individuals Fig2.1 B2B Ecommerce model Source: https://www.tttorialspoint.com/e_commerce/e_commerce_tutorial pdf This mode! explains the transactions between a wholesaler, or a retailer, or a wholesaler andmantifacturer. In a Businesséto-Business their online goods'to other companies / business without being busy in sales to consumers. In most B2B E-commerce environments entering the web shop will require a log in, B2B web shop usually contains customer-specific discounts, customer-specific assortments and customer-specific pricing. commerce environment, companies / business sell B2B transactions can include more quantity orders and bulk pricing. B2B transactions creates strong and long lasting relationship between businesses. Products involved in B2B transactions are medical equipments, airplanes, gasoline, ships, office supplies and military equipments. These products or items are bigin size and not possible to consumers to purchase on their own. Eg, Alibaba, ExxonMobil Corporation, IBM, Amazon business. Following are the leading items in B2B e-commerce. + Shipping and Warehousing + Electronics E-Commerce Business Models For E-Commerce 2526 E-Commerce Business Models For E-Commerce + Motor Vehicles + Paper + Petrochemicals + Office produets + Agriculture + Food: 2.1.1 Key Technologies Following are the key technologies used in B2B e-commer + Internet — Intemet represents the network of networks «connetting computersall over the world. Itisalso known as World Wide Web, + Electronic Data Interchange (EDI) ~ EDI is system used t6 exchange of documents ina structured and machine processable format + Intranet ~ Intranet represents a dedicated network of Coniputers within a single organization + Back-End Information System Integration = "Database management systems are known as back-end informatfon systems used to manage the business data. + Extranet - Extranet represents'a ihetwork®where the outside business partners, customers or suppliers)"€an haves limited access to a portion or partof enterprise intranet/network. 2.1.2 Architectural Models Following are the architecturalmodelsin B2B e-commerce — + Buyer Oriented marketplace ~ In this type of model, buyer has her/his ‘own emarket or market place. A Buyer company opens a bidding site, He invites suppliersto bidén product's catalog, + Supplier Oriented marketplace — In this model, supplier provides a ‘common matketplace is used by both business users as well as individual catstometseA supplier offers an e-stores for sales promotion, + Intermediary Oriented marketplace ~ In this. model, market place run by an intermediary company where business sellers and buyers can transact with each other. 2.2, B2C : (BUSINESS TO CONSUMERS) BUSINESS MODEL: It is most common business model. In a Business-to-Consumer (B2C) E companies / business sell their online products or goods to consumers who are the end users of their services or products. Usually, Business to Consumers E-commerce shops have an open a there is no need for a person or user to login in order to make any product or item. related inquiry. for all visitors, means thatFig2.2B2C Business Model Source: https://www.tutorialspoint.com/e_commerce/e_commerce_tutorial pdf Online stores are able to show various products which gives Consumers more options to select from their experiences. Electronics, Clothing, and outdoor funny equipments@reéjust afew of the products, that efficiently sold online in the B2C.Only*products are not limited in B2C ecommerce. ‘The services like financial Services, Subscription, membership, tutoring arealso distributed in B2C The internet works as a marketplace itselfand the é-commerce store works as, the portal between businesses andeosisumer shopping online. Eg. Amazon, Flipkart, Jabongete: In the B2C model, a consumer goes t0 the online store or website, search and selects a catalog, ordersithe catalog, and-an email or purchase order send to the business organizationsAftertece’ving the purchase order, goods are dispatched to theauthentic customer, Key features of the BZC model ~ + Highinyestfients in terms of software /hardware, + More advertising required to attract users orcustomers + Supportor good customer care service. Consumer Shopping Procedure Following are the steps used in B2C e-commerce = Aconsumer~ + First verify therequirement, + Then searches available items on the website or web stores meeting the requirement then + compares similar items for delivery date, price, orany other terms. + place the purchase order. + Make the payment ofbill E-Commerce Business Models For E-Commerce 2128 E-Commerce Business Models For E-Commerce + receives the delivered item and inspect/review them. + After this consults the vendorto get after sells service support or returns the products or items if not satisfied with the delivered items orproducts 2.3 C2B: CONSUMER TO BUSINESS , BUSINESS MODEL Thisis the opposite of B2C, it isa consumer to business, So the consumer provides 1 some services or goods to the company. For example an IT service provider who sells his software or services to a company. This would be a C2B transaction. Fig2.3C2B Basiness Mods — wie oe rene meee / manimagay 20 o Baines Orescaton (eee ia eS Source: https://www.tutorialspoint.cori/e_comimerce/e commerce_tutorial.pdf Ina Consumer-to-Business E-commerce, consumers usually post their services or products online on which business” can post their bid. A consumer reviews the bids and selects the company /business thaf meets his price expectations. Consumer to busin -ss model allow8 businesses to get services from consumers. Consumers can provide servicesto business to increase their business. Foreg. popular blog writers €am charge a fee to busin idea listed in order to get publicity. wishing to have their 2.4 C2G:(CONSUMER TO CONSUMER) BUSINESS MODEL In a Constimer-to*Gonsumer (C2C) E-commerce environment consumers sell their online goods, products to other consumers. No companies involved, where the consumers are in direct contact with other consumer. It helps consumers sell their personal assets and goods directly to an interested party. Usually, goods tradedare bikes, cars, electronics ete.Fig2.4 C2C Business Model Places advertisement Website Want tall produets Wantto buy products recelves products Source :hitps:/Avww.tutorialspoint.com/e_contmerce/e_eommerce_tutorial.péf In C2C model or type of ecommerce platfortH doesn't! ox. own any products, rather it serves asa mediator between selling consumer and buying consumer. ‘They can authorize transactions and lookitito smooth working of it Selling an item by using this site is as/simple aS opeding site or app. Creating an account, listing the items and wailing foréusfomers for buy or purchase. No additional marketing is needed. Forexample eBay, OLX, Quik 2.5_ ELECTRONIC DATAINTERCHANGE (EDI) EDI means Electronic, Datajinterchange. EDI is an electronic way of sending business documents intetnally in an organization, betwe departments oF externally with customers, suppliers, orany subsidiaries. its various internal In organization Paper documents are replaced with electronic documents using EDI suchas spreadsheets, word documents etc. The organizations ike automakers, banking, retailing, healthcare, travel, insurance, manufacturing, government , industries, federal government can use EDI system to exchange documents between them. Some of the documents used in EDI- + Purchase orders + Sales order + Invoices + Shipping Requests + Business Correspondence letters + Acknowledgement + Financial information letters E-Commerce Business Models For E-Commerce 2930 E-Commerce Business Models For E-Commerce 2 Fi Source : https:/;www.cdibasies.com/what- 5.1 EDI Transactions: ig. 2.5 EDI Transaction edi/how-does-ei-Work Above figure no, 2.5 shows EDI transactions areas follows A program or EDI software generates a file that contaifs the processed or converted document. ‘The documento file is then conyerted intgan agreed EDI standard format. he file containing the conyéHted document is Sent electronically on the network tothe trading. partner of thabusiness ‘The trading partner reéeives thedoetitent or il. After receiving the file an aéknowledgement document is generated and sent to the sender organization. 66 Requirement ofEDI EDI softwate : EDL software is used to convert organization data in to standard format, EDI standards : Date can be transmitted in EDI standards, These standards, areagteed byboth partners. Eg. ASC-X12, GS1 EDI, HIPPA, EDI FACT. Network /VAN : Value Added Network. Third Party Network : you can use third party network like ISP. VAN provides communication between two parties involved in business, It also stores agreement between two companies. Charges may be very high. Private Network : dedicated lease Tine between two partners. Only two business partners can do the transaction using this network line.2.7 TYPES OF EDI: ‘There are various types of EDI. a) Direct EDI/ Point-to-Point Direct EDI, itis also called Point-to-point EDI. From last many years companies, are using Direct BDI. It was viewed as an alternative toa Value Added Network. It establishes a single dedicated network line between two trading partners. In this, type or approach, an every organization must communicate with each trading partner by their own, which means managing hundreds or thousands of separate connections. Inthe direct EDI type or approach, both business partner connectditectly via the Internet. This type is very complex because various business péttntts are using different protocols or standards for communication. Your system must competent to support all these various types of protocols of various partnés, This approach o type of EDI is most commonly used by big organizations that have business partners or trading partners with whom thy exchange frequently a high volume of EDI documents. If you want to choose the direct conneétion approach’ you will need to buy a software package that allows you to tse All the agreed upon protocols, such as SFTP, AS2, FTPS. Then you will need "agree with every one of your partners on ()) Which of these communicatioti protocols of methods you will use and (2) While exchanging your files of EDI documents which specific protocol settings tobeused. Fig. 2.7 Direct connectionsituation, Source : https://www.edibasics.com/types-of-edi/point-to-point! b) EDIvia VAN The majority of EDI still take place via VAN. The growth of low cost, flexible approaches, such as EDI via AS2 or Web EDI has started to change this situation. But due value-added services provided by VAN providers this option is preferred, ‘The VANis a private and secure network where EDI documents can be exchanged between trading partners. Mailbox will be provided to an organisation. To retrieve the documents through mailbox organization should check mailbox periodically. ‘The majority VAN providers offer an alerting facility that informs’ alerts the sender when messages have been sent successfully and informs the recipient that they have anew message waiting, E-Commerce Business Models For E-Commerce 3130 E-Commerce Business Models For E-Commerce Inaddition to secure communications, EDI via VAN gives : + Toretrieve their messages Trading/ business partners connect o the VAN. Full mailbox facilities service. Messages are automatically sent to the accurate mailbox. + Authentication and check up of all EDI messages. The VAN will confirm authority of message and identity of trading partners, AILEDI messages are recorded and tracked foraudit purpose. + Message notice. when message enters in their mailbox then Trading partners are informed about the same. + Additional services. VAN providers offer an wide range, of sétvices facilities including data recovery, backup, document mapping and ‘compliance. VAN provider delivers value added services: + Back-office integration + Community and trading partner enablement + Fullymanaged services + Management information ©) EDIviaAS2: AS2 is one of the most popular methods fortransferring reliable and secure EDI data on the Internet. For EDI data AS2 creatés.an “envelope” and sent data securely using eneryption and digital signatureoyer theinternet It initially involvestwo computers — a server and client— connecting in a point- to-point manner via the web Eg. Walmart is famous éxample of EDI via AS? in retail sector. EDI via AS2 requires server of receiving organization to listening out of message address to it, Like doing call to phone with no answering machine. If the servetyis not available then the message will be missed. So many organizations'6r_ businesses decided to use an EDI provider to provide AS2 connectivity. Following benefits provides by EDI network provider for your AS2: + ‘Theprovider handles the exchange of AS2 set-up information + Documents are exchanged in real-time + Theprovider completes AS2 testing for you and your partners, + Youbenefit from the provider's shared infrastructure, skills and security. + You can comply with AS2 consent without incurring the cost of the AS2, hardware, software, firewalls and expertise.d) _ EDIvia PTP/VPN, SFTP, FTPS: SFTP, FTPS and FTP over VPN are also most commonly-used communication protocols for the transforming of EDI documents via the Internet. FTP (File Transfer Protocol) with VPN (Virtual Private Network) : FTP was the first reliable, robust file transfer protocol. It is used in many ‘organizations for file exchange within a organization ot company. FTP does not provide security for document exchange with other organizations over the internet, Because of this reason, businesses or companies that uses PIP. in combination with VPN software and provide security layer. Still, neither FTP by itself nor FTP with VPN provide non-repudiation While file being exchanged, It does not provide for message management features that provide confirmation to the sender that documents have been” successfully decrypted and received. Even though FTP with VPN does hot deal with these important B2B issues. EDI Network Services Provider Wwhd'then provides the ‘message management, non-repudiation and intefaperabilityrequired. SFTP (Secure Secure) ‘Transfer Protocol)-and FEPS (File Transfer Protocol Both FIPS and SFTP are securé “Internet protocols. The main difference between these two protocol is How’ each protocol performs encryption and provides security. Internet Enigineering Task Force developed security layer for SFTP. Both protocols keeping data safe whilé moving over the Internet and encrypt the data while in transit, and thenydecrypt it upon arrival at its destination. However, neither provides non-replidiation or message management. EDI Network Services Providet'who then provides interoperability, message management and non-repudiationy ©) WebEDI: Web EDI is simply doing EDI by using an Intemet browser. It converts paper- based documents in to a web form. The form will contain fields using which you can add information. Once all the related ot appropriate information is added, then it is automatically converted into an EDI message and sent via secure Internet protocols such as Hyper Text Transport Protocol Secure (HTTPS), File ‘Transfer Protocol Secure (FTPS), or AS2, This can be specially beneficial when working with business partners in countries where IT and EDI skills are inadequate. For Companies or trading partners it’s not necessary to install any EDI software or manage a critical EDI environment, Web EDI allows to small and medium sized businesses to create, tum around , receive and manage electronic documents using a browser. Simple forms are allows to business partners to communicate and comply with each other. E-Commerce Business Models For E-Commerce 3334 E-Commerce Business Models For E-Commerce ‘Web EDI is based on hub and spoke model. In which main trading partner acts as hub and smallerpartneracts as a spokes. Inhub and speak model: + The hub organization or business partner uses EDI and develop s a web forms to use for its medium sized and small trading partners. + These web forms may be hosted on the hub’s site or an EDI network service provider. + Via web browsers trading business partners connect to the web forms to exchange documents with sender and receiver partner ) Mobile EDI: Arising area for EDI is in mobile communications, Still, EDI applicationis were not designed for mobile users. There have been doubts about whether user want to use mobile phone to do purchase order or any other transaction when he is out of the office. Consider supply chain efficiencies, Sales persohican check the status of delivery to a supplier. Business manager able to analysi8> supplier, performance in re- negotiation meeting, Now these types of Mobile EDI application®'are coming. There is problem with mobile device ie, Quality and size of screen mobilescteen js poor. iPad and tablet computers are using forthe same. These devices are used very eflestively in Orgdizations. Some companies are started to launch apps to help their stpply chain, You can download supply chain app and use it for your business Now Direct Exchange (DEX) is used by/retail sector to help the flow of goods and information through supply éhain. Using mobile device delivery boy can scan barcode ofitem to create anelectronic invoice. This data is sentto receiver through an in-store dockinig station, The receiver open invoice in the receiving system and scan the deliyereditemsto verify quantities. After checking data, final digital invoice send back to suppliersystem using his mobile device. Using DEX one US retailer reduce ditrationof delivery by 15t0.45 minutes. 2.8 Advantages of an EDI System + Shorter processing life cyele— Orders or request of buyer can be processed immediately as they are entered into the system. It gives quick response. It reduces the processing time of transfer documents, + Decrease in data entry errors. ~ By using EDI no need to require repetition of data entry so reduces errors. while using a computer for data entry. + Less paperwork — All documents are stored as electronic documents, no need to maintain paper documents. So there is a huge reduction in paperwork.Electronic form of data— Itis very easy to share or transfer the data, as it ispresentin electronic format. Standard Means of communication — EDI uses standard format for ‘communication. Formats are known to both parties due to that it leads to clear communication. Cost saving — Due to fast processing, time is saved and orders are processed very quickly and effectively, EDI proves to be highly cost effective Improves relation in Business partners. Due to transparency in business activities itimproves relation between trading partrers EDI helps to increases the productivity of organizations, Business need not travel to anywhere to shop a product, thus less traffic on road and as result it controls the ar pollution. Availability of data at any time. Using EDI your Planning becomes easy. 2.9 DISADVANTAGES OF EDI + Notaffordableto small orgatsizations diets high initial cost + Itrequires EDI softwareywhich arenat feasible to small business + Itrequires EDI standards. + Barriertoentry + Technologically’non Sayyy Companies or small organizations can’t use EDI + Extra cost is requiredtoestablish business ‘Questions: Explain in detail vatious models o Define EDI. Explain its advantages and disadvantages ‘What is EDI? Explain in detail various types of EDI. Write shortnotes on Requirements of EDI. Process of EDI B2B business model E-Commerce Business Models For E-Commerce 3536 E-Commerce Payment System UNIT-3 E-COMMERCE PAYMENT SYSTEM Unit Objectives: After going through this unit, you will able to + Understand limitations in traditional payment methods and need for Electronic Payment systems + Understand different ypes of E-commerce Payment Systems 3.1_ INTRODUCTION E-commerce sites use electronic modes of payment for papétless, nionetary transactions, E-payments have significantly improved the eaSeof carrying out online transactions. It has revolutionized the way we carry 6ut our businesses by reducing the paperwork, transaction costs, and labor/Costft has enabled the business organization to expand their market reach/expansion by offering user friendly and faster mode of payment systetts, LIMITATIONS OF TRADITIONAL PAYMENT SYSTEM. Lack of Convenience - Physically deliveting or posting paper cheques by snail-mail not only makes the proces®’of payment cumbersome but also leads to many annoyinig¢ireumstances sometimes. 2. Lack of Security “\When the consumer sends non-encrypted, confidential data on a piece 6f papery post, itmay be read by anyone. This can lead to security issues, 3. Lack of Coverage) Businesses that span larger arcas need faster transactions everywhere. This is not possible without the bank having brancli¢s neatall the eompany offices. 4. Lack of Eligibility Having a bank account is an important constraint an notali potential buyers may have one. 5. Lack of Support for Micro-transactions — For traditional payments of small amounts between farther areas, the cost of transaction may exceed the amount of transaction itself. 3.3_ REQUIREMENT OF E-PAYMENT SYSTEM Following entities must work in a coordinated or compatible system for payment processing to work successfully Payment Gateway : A payment gateway is a technology used by merchants to accept credit card or debit card purchases from customers. The term includes not only the physical card-reading devices found in. brick and mortar retail stores butalso the payment processing portals found in online stores. However, brick-and- mortar payment gateways in recent years have begun accepting phone-based payments using Near Field Communication technology. Bank Clearinghouse : A clearing house is a financial institution formed to facilitate the exchange (ic., clearance) of payments, securities, or derivatives transactions. The clearing house stands between two clearing firms (also known as ‘member firms or participants) Merchant: A merchant account is a type of business bank account that allows a business to accept and process electronic payment card transactions. Mefchant accounts require a business to partner with a merchant acquiring bank who facilitates all communications in an electronic payment transaction Merchant account relationships are essential for online businesses, These account relationships involve added costs which some brick and mortar establishments may choose not to pay by accepting only cash for deposits in. Standard business deposit account. Merchant accounts are a type 6fcommeréialbank account The different security requirements of digital payments/are' mentioned below: + Confidentiality + Integrity + Authentication + Availability + Authorization + Non-repudiation 3.4_ INTERNET PAYMENT SYSTEMS — To overcome tie drawbacks of traditional payment systems several new electronic payment Systems are developed like e-Cash, e-Cheques, credit cards, smarts cards etc, Some of the commonly used Intemnet Payment systems are: 3.4.1 Credit card payment (e.g., SET prot credit cards are one of the most widely used modes of e-payment, Credit card is small plastic card with a unique number attached with the user’s account. It enables customers to buy goods and. services without paying right away. A contract between the card holder and the card issuing bank allows the retailer to directly send the bill to the card holder's bank. The bank makes the payment to the retailer on customer's behalf. The card holder can repay the bank within a certain time period, The time period is usually 30045 days, Credit cards are issued by banks (eg, SBI, HDFC) and by credit companies (eg. ‘Visa, Master Card), Credit card also issued by departmental stores (eg. Boygner). ‘The actors involved in the credit card systemare: + Thecardholder~C\ tomer + The retailer ~ seller of goods and services who can accept credit card payments E-Commerce [Payment System 3738 E-Commerce E-Commerce Payment System + Thecardissuer bank ~ card holder’s bank + Theacquirerbank—the merchant's bank + The card brand ~for example, Mastercard or Visa, Credit card payment process: Step 1: Bank issues and activates acredit card to a customer on their request Step 2: During payment, the customer presents the credit card information to the retail site orto the retailer from whom he/she wants to purchase a product/serviee Step 3: Retailer validates the customer's identity by asking for approval fidim the card brand company. Step 4: Card brand company authenticates the credit card and/makes the transactionon behalf of the customer on credit, Retailer keeps the séles Slip, Step 5: Retailer submits the sales slip to acquirer banks and gets the service charges paid to hinvher, Step 6: Acquirer bank requests the card brand gomipany to lear thé credit amount and collects the payment, Step 7: Now the card brand company asks the fssuerbank'to clearthe amount and it gets transferred to the card brand company Fig3.1: How credit Card system Works* PARTICIPATING eae * Fs 8. syne anne om echo 1 Comumor race, consumer "oun Source : https:/iwww.slideshare.netimaryasholevar/chapter-4-payment-systems- in-ecommerce The following are the limitations of Debit and Credit Cards + They ate identification cards owned by the issuer & restricted to one user i.e. cannot be shared between multiple users. + Theyarenotlegal tender. + Their usage requires an account relationship and authorization system provided by the bank.3.4.2 E-cash: Cash is still a dominant form of payment as the consumer still mistrusts the banks and believes that non-cash transactions are inefficiently cleared. Electronic, or Digital Cash, however, have properties of paper cash combined with computerized convenience, security and privacy. Properties of cash are: + Cash isa legal tender ic. payee is obligatory to take it Itis negotiable ice. can be given or traded with someone else. + Itisabearer instrumenti.e. whoever poses it, owns it + Anyone can hold and use it, even those withouta bank account. + Itplacesno risk on part of receiver. Fig3.2: How digital Cash Works: DIGIEASH BANK ___ ntgrengnt wnntors el ‘si Mig 1 ba Bh ty ies wi a secourt ba Y Even ak ~ unnbented O° a a MERCHANT 3 Send request e-caah tone” 2 Downines geal adsnpenel sy 41 att accent stan CONSUMER Source: https://wwwWs]ideshate.net/maryasholevar/chapter-4-payment-systems- in-ecommerce Above Fig.2 shows working of digital cash 1) Consumer Wants to establish account with bank, 2) Consumer download digital wallet with private and public keys. 3) Consumer send request for e-cash coins 4) Bank sende-cash to consumer in encrypted format. 5) Consumer spend e-cash. 6) Merchanttransfer e-cash coins to his bank, 7) Bank credits merchants account at bank. Properties of Digital Cash are: 1. Ithas monetary value. It is backed by paper cash, bank authorized credit or abank certified cashier's cheque. 2. Its exchangeable as payment for other digital cash, paper cash, goods or E-Commerce [Payment System40 E-Commerce Payment System services, lines of credit, bank notes or obligations, electronic benefit transfers etc. 3 @ Gi) It is storable and retrievable, Cash can be stored on computer's memory, in smart cards, or on other easily transported standard or special purpose devices, Remote storage or retrieval enables users to exchange digital cash fromanywhere Digital cash is based on cryptographic systems called "Digital Signatures" ‘These are similar to the signatures used by banks on paper cheques to authenticate a customer. This provides security for transactions of digital sh as it makes the task of copying or tampering with while it is being exchanged This is achieved by using the following technologies, whfchare nothing but new and very efficient versions of the old art of cryptogtaphy Digital cash can be purchased from an online currency server (or bank) in 2 steps: ‘The first step is establishment of an account which is assogiated with a ‘unique digital number , which is also its digital signature, AS this number is only known to the customer and the bak, forgerys which is possible in paper cheques becomes very difficult ‘The second step is maintenance of sufficient mohey'in the account is required to back any purchase. 3.4.3 Electronic cheque - The electronic cheques are modeled on paper cheques, except that they are initiated clectronfeally They use digital signatures for signing and endorsing and require theuseof digital cértificates e payer, the payer's bank and bank account. They are delivered transmission using telephone lines or by public networks. Benefits of Electronic cheques Fig.3.3 tis well suitéd forcleatingmicro payments. ‘Conventional étypiostaphy of e-cheques makes them easier to process than systems based on puiblie key cryptography (like digital cash), They ean sétve corporate markets, Firms cariiige them in more cost effective manner, ‘They create float, availability of which is an important requirement of Commerce theque working 4 seedecrea 2 acount > eros ‘satenert eorene Tener pr3.4.4 Smart card - A smart card, integrated circuit card (ICC) or chip card is any pocket-sized small card with embedded integrated circuits. Smart cards are made ofplastic, generally polyvinyl chloride. ‘Smart card looks similar to a credit card or a debit card, but it has a small microprocessor chip embedded in it. The chips carries customer's work-related and/or personal information, Smart eards can also be loaded with cash and the storedamount is deducted after every transaction. ‘Smart cards can provide authentication, identification, application processing and data storage. ‘Smart cards may provide very strong security authentication for siagle sign-on (SSO) within large organizations. At the time of reading the card power is supplied by the card readet. Cards do not contain batteries ‘Smart cards can only be accessed using @ unique PIN that is assigned to it Information in Smart cards is stored in encrypted format and is therefore secure They provide faster processing and are less expensive. ‘Sodexo and Visa Cash cards are examplesof smartcard. ‘Types of Smart Cards: There are two types of smart cats a) Contactsmart cards b) Contactless smarteards a) Contact Smart @ards? This typ@jof Cards have Isquare centimeter contact area, comprising various'gold-plated contact pads. When card inserted in reader these pads provide: eleétrical connectivity. Pads can be used as communication ‘medium inbetween smart card and mobile telephone or host. b) Contactless Smart eards: In this type card communicates through RF induction technology. These cards ate powered by the reader. These cards require antenna to communicate, Contactless cards do not have internal power source. Example of contactless smart cards are Hong Kong's Octopus card, London's Oyster card, Pasmo cards used for public transportation 5 Electronic Funds Transfer: It is a very popular or famous method of transferring money from one bank account to another bank account. Accounts of both parties can be in the same or different banks. Fund transfer can be done using an online portal or through ATM (Automated Teller Machine), E-Commerce [Payment System 4142 E-Commerce Payment System It is used for both debit transfers, such as mortgage payments and for credit transfers, such as payroll payments. ‘Tocompletean EFT, the receiving party must provide the information: + Thetype of account receiving funds + Thename of the bank receiving funds + Therecipient’s account number + Thebank’s ABA routing number Internet-based EFT has gained popularity recently, In this case, a customefTogs in to the bank's website and links payee’s account to their account. LH6/sBe then places a request to transfer certain amount to that account. Custosmer’s bank transfers the amount to payce’s account if itis in the same bank, otherwise the ‘transfer request is forwarded to an ACH (Automated Clearing House) to transfer the amount to payee’s account and the amount is deducted front the customer's account, Once the amount is transferred to payee’s accourity the customer is notified of the fund transferby the bank ‘Types of EFTs ‘The most common types of EFTs includes + Wire transfers: Used for nontegularpayments, such as the down payments, + Pay-by-phone systems: Allows uséts.i6 transfer money or pay bills over the phone + Online banking: Available,¢ia tablet, smartphone, or personal computer. Using online bankingyusets cam access accounts to transfer funds, check balance and make payments, + Direct deposit: Ehablesibusinesses to pay employees. New employees during boarding. procéss typically specify the financial institution to receive the direct deposit payments, + Automated’ Teller Machines (ATMs): Allows deposits and cash withdrawals, fund transfers and checking of account balances at multiple locations, such as retail stores ,branch locations, airports and shopping malls, + Debit cards: Allows users to pay for business transactions and have those funds deducted from the account linked to the debit card. 3.4.6 Digital Token Based E-Payment Systems: Electronic tokens are digital analog of various forms of payments backed by a bank or financial institution, There are two types of tokens: (a) Real Time Tokens (Pre-paid tokens): Users prepay for tokens. They are exchanged between buyer and seller, as a form of currency to settle transactions, Examples of these are DigiCash, Debit Cards ete.(b) Post Paid Tokens: Post paid tokens are based on the identity of holder. The customer is authenticated by verifying their identity with the bank before processing transaction, Examples -Electronic cheques, Credit card data ete 3.5 _ STEPS FOR ELECTRONIC PAYMENT: 1. Buyerselects the product from the Button initiating the payment. sommerce platform and clicks on Buy 2. Customer's info is collected by the e-commerce platform. This inf sent tothe payment gateway / payment aggregator for verification 3. Payment aggregator collects card info in a secure server arid forwards this through its Acquiring Bank (Payment aggregator's bank)'to the Card networks like VISA, MasterCard. 4. The Card Network checks with the Issuing bank (Customer Bank) whether the transaction canbe initiated or not. 5. Ifeverythingis correct, consumeralc oreatd is debited by the Issuing bank. 6. After transaction, issuer bank sends ednfirmation to the card network. Who further notifies itto the aequiringbank and theh to the payment aggregator. 7. Paymentaggregator now sends Confirmation to the Merchant, who further informs the consumer. 8 The consumer is alsé-ntified, by his bank (issuing bank) about the transaction 3.6 PAYMENT SECURITY: There are four é8sentiah security requirements to ensure security of online payments, theseare 1, Authentication: The buyer's identity should be verified before online transactions arécarried out 2. Integrity: Information should be protected from being altered or destroyed accidentally or maliciously, usually during transmission, Eneryption: Only those who have an authorized decryption key should be able to decode the message, Messages should be indecipherable for everyone else 4. Non-repudiation: Merchants need be protected against the customer's unjustifiable denial of placed orders, and customers need to be protected against the merchants’ unjustifiable denial of past payment. 5. Confidentiality — Information should not be available or accessible to an ‘unauthorized users. Itshould not be interrupted during the transmission, 6. Availabili = Information should be available whenever and wherever required within atime limitspecified. E-Commerce [Payment System 43E-Commerce Payment System 7. Auditabili Data should be recorded in such a way that it can be audited for integrity requirements, 3.7_NETBANKING This is another popular way of making e-payment. It isa simple way of paying for online purchases directly from the customer's bank. It enables the customer to make a transaction using the money that is already there in the customer’s bank. Net banking does not require the customer to have a card for payment purposes but they need to register with their bank for the net banking facility. Upon selecting Net Banking as the mode of payment on the E customer is asked to provide their net banking ID and pin on the issuitie bank portal. If the credentials match, the bank makes the payment and debits the amount from the customer's account, commerce website, the Benefits of Net banking to Bank and Customer Banks have various benefits by introducing Net-Bankings a) Quicker time to market, b) —_Betterreach to customers, ©) Capacity to launch new products and setvices rapidly and successfully, 4) Greatercustomerloyalty. ©) Ability to understand custométswantsaind Reeds Customers: a) Transfer funds fromone account fo another account in same bank or other banks, b) View accourit balance and give facility to download statements, ©) Facility to create fixeddeposits, 4) ‘Through RTGS receive payments ormake payment, ©) Regtiest foreheque book 1) ReqitestfoFDemand Draft, 2) Pay post paid mobile bills or refill a prepaid mobile card or h) Requestor debit card, i) Utility bills payment can be made. j) Make purchase or sales of securities.Questions: Explain various limitations of traditional payment systems, Whatis ayment? Explain in detail credit card payment system. Explain E-cash and debit card payment system of e-commerce. Explain in detail process of E-paymentsystem Write Short notes on Electronic Fund Transfer ‘Smart Cards Requirement of e-payment system. E-payment security Netbanking E-Commerce [Payment System 45