E-commerce,

E- Payment

& EDI

By:

Akhil Kaushik

What is Commerce?

• Commerce is a division of trade or production which deals

with the exchange of goods and services from producer to final

consumer.

• It comprises the trading of something of economic value such

as goods, services, information or money between two or more

entities.

• Commerce primarily express the fairly abstract notions of

buying and selling.

What is E-Commerce?

• E-commerce refers to aspects of online

business involving exchanges among customers,

business partners and vendors.

• Ex: suppliers interact with manufacturers,

customers interact with sales representatives and

shipment providers interact with distributors.

Advantages of E-Commerce? Increased Access: Now, consumers can buy and get

access to goods all around the country even the world.

Cost of doing business is reduced is minimized by e-

commerce.

Convenience: Businesses can go to their supplier's

website and order the products they need.

Availability: Now, business transactions can be done

24 * 7 * 365.

• Mass customization

• Lower telecommunications cost

• More choices & price comparisons

Disadvantages of E-commerce?

• Security: Biggest problem of ecommerce, is the issue

on security.

– Credit card details theft or loss of other financial

info.

– Identity theft.

• Tax to the government: As business can be done in

the internet just as easily as clicking a button, paying

the appropriate tax can be easily is evaded.

E-commerce v/s Traditional Commerce

Traditional Commerce

Face to Face

Printed & written documents

Customization is rare

Telephone or postal mailcommunication

Payment by Cash, check or CC

Ads: print med, radio, tv

Merchandize deliver immediately

i.e. Customer takes merchandisehome.

Electronic Commerce

No personal contact

Documents on the web

Web pages personalized for a particular customer

E-mail communication

Payment: credit card, direct withdrawal, fund transfer (paypal)

Ads on web, radio, TV

Merchandise deliver home 2-5 days

Business Models

• Brick-and-Mortar Businesses: Businesses that have

only a physical presence.

• Click-and-Mortar or Combined Businesses:

Businesses that have both an online and an offline

presence.

• Store Front Model Businesses: Enhance brick-and

mortar business through web presence.

• Click Business: Businesses which exist only online.

Types of E-commerce

• Business-to-Business(B2B)

• Business-to-Consumer (B2C)

• Business-to-Government (B2G)

• Consumer-to-Consumer (C2C)

• Consumer-to-Business (C2B)

• Consumer-to-Government (C2G)

• Government-to-Business (G2B)

• Government-to-Consumer (G2C)

• Government-to-Government (G2G)

• Mobile commerce (M-commerce)

What is B2B e-commerce?

B2B e-commerce is simply defined as e-commercebetween companies.

Logistics - transportation, warehousing anddistribution (e.g., Procter and Gamble).

Application service providers - deployment, hostingand management of packaged software from a centralfacility (e.g., Oracle and Linkshare).

Outsourcing of functions in the process of e-commerce, such as Web-hosting, security andcustomer care solutions

Examples of B2B E-Commerce Heinz selling ketchup to McDonalds

Intel selling microprocessor to Dell

GlobalSources.com

TradeKey.com

Made-in-China.com

Busytrade.com

DIYtrade.com

TradeIndia.com

India-Mart.com

What is B2C e-commerce?

• B2C is commerce between companies and consumers

• It involves:

– customers gathering information;

– purchasing physical goods (such as books or

consumer products) or information goods (or

goods of electronic material or digitized content,

like software, or e-books);

– for information goods, receiving products over an

electronic network.

B2C e-commerce

• B2C e-commerce reduces transactions costs as we

can eliminate the middle men

• Major thing in B2C model is customer care

• Cautions in B2C:

– Check for security.

– Check for shipping price.

– See the previous service going through the reviews of the old customers

– Purchasing by appropriate cards.

Some of the examples of the B2C model are:

• www.sony.com

• www.dell.com

• www.amazon.com

• www.store.microsoft.com

• www.landsend.com

• www.bestbuy.com

What is B2G e-commerce?

• B2G commerce is generally defined as

commerce between companies and the public

sector.

• It refers to the use of the Internet for public

procurement, licensing procedures, and other

government-related operations.

• Ex: Rental of on-line applications and

databases

• Ex: TCS working for passport processing

What is C2C e-commerce?

• C2C is simply commerce between private

individuals or consumers.

• This type of e-commerce is characterized by

the growth of electronic marketplaces and

online auctions, where other consumers can

bid for what they want from among multiple

consumers.

• Ex: www.ebay.in, www.olx.in

C2C e-commerce

This type of e-commerce comes in at least three forms:

• Auctions facilitated at a portal, such as eBay, which allows

online real-time bidding on items being sold in the Web.

• Peer-to-peer systems, such as the Napster model (a protocol

for sharing files between users used by chat forums similar to

IRC) and other file exchange and later money exchange

models.

• Classified ads at portal sites such as Excite Classifieds and

eWanted (an interactive, online marketplace where buyers and

sellers can negotiate and which features “Buyer Leads & Want

Ads”).

C2B e-commerce

• Consumer to Business (C2B) e-commerce – when an

individual sells products and services to a business

–Ex: Google ads or Amazon ads

–You can also advertise businesses on your personal Web site

(called an affiliate program) and receive monies for visitors

who jump from your site to the business’Web sites

• Amazon pay royalties to individuals who advertise

amazon on their site.

• Also opportunities here for good blogging web-sites

C2G e-commerce

• In this model, an individual consumerinteracts with the government.

• It is not that popular approach and is quiterare.

• A possible example could be when a hacker isoffering his services to the government fordefense against cyber terrorism

E-Government• E-Government (short for electronic government, also known

as e-gov, digital government, online government, orconnected government) is digital interactions between agovernment and citizens (G2C), government andbusinesses/Commerce (G2B), and also between governmentand governments /agencies (G2G).

• The e-Government delivery models can be briefly summed upas:

• G2C (Government to Citizens)

• G2B (Government to Businesses)

• G2G (Government to Governments)

G2B e-commerce

• This model involves transactions between a

government and business organizations.

• Ex: The govt. plans to build a fly over. For this, the

government requests for tenders from various

contractors online.

• Example: The govt. selling research services

through Universities and Institutes of Technology

to SMEs (Small and Medium sized Enterprises).

G2C e-commerce

• In this model, the government transacts withan individual consumer.

• Ex: Paying taxes, registering vehicles, grantapplications, etc.

• Ex: harsamadhan.gov.in

• Ex: jamabandi.nic.in

G2G e-commerce• This model involves transactions between 2 governments.

• It may also be defined as the electronic transactions between

two governments within a nation like centre & state govt. or

state & state information sharing, not commerce in most of

the occasions.

• Vertical Govt. Integration – e-commerce among govt.

agencies up and down and local levels. Example: Village

councils dealing with the Dept. of the Environment.

• Horizontal Govt. Integration – e-commerce among agencies

within one level. Example: National Highways Authority of

India (NHAI) dealing with the Heritage council.

G2G e-commerce

Advantages:• E-democracy

• Paperless office

• Speed, efficiency &

convenience

• e-participation

Disadvantages:• Hyper-surveillance

• False sense of

transparency and

accountability

• Digital divide

• Cost

What is M-commerce?

• M-commerce (mobile commerce) is the buying and

selling of goods and services through wireless

technology i.e., handheld devices such as cellular

telephones and personal digital assistants (PDAs).

• Applications of M-commerce are:-

– Mobile Ticketing

– Information Services

– Mobile Banking

Internet Advertising:

• Advertising is a form of communication whose purpose is to

inform potential customers about products and services and

how to obtain and use them.

• Advertising in the web pages

• Advertising before playing any videos

• Advertising as a scroll bar while playing videos

• Advertising in between the videos

• Advertising while the pages loads

• Advertising by search engines

• Pop-up ads and pop-behind ads

Security Aspects

• Most ecommerce merchants leave the mechanics to their

hosting company or IT staff, but it helps to understand the

basic principles.

• Any system has to meet four requirements:

– privacy: information must be kept from unauthorized

parties.

– integrity: message must not be altered or tampered with.

– authentication: sender and recipient must prove their

identities to each other.

– non-repudiation: proof is needed that the message was

indeed received.

ELECTRONIC PAYMENT

Electronic Payment

Various modes of payment are:• Cash• Credit Card• Bank Cheques• Debit Cards• Money Orders• Traveler’s Cheques• Tokens (or coupons)

Online Commercial Environment

• The e-com organizations must provide onlinecommercial environment for its clients.

• They must engineer and implement atechnique through which users can

–browse through their products online,

–purchase them and

– get delivered at the same time in case ofdigital products.

The merchant’s website should be able to collect some information about the

customer

• Product delivery timings and address

• Transaction settlement

• Gathering of marketing information for future needs

• Confirmations

• Order status reports

Digital Cash (or Electronic Cash)

• Electronic money (also known as e-currency, e-money,

electronic cash, electronic currency, digital money, digital

cash, digital currency, cyber currency) refers to money

which is only exchanged electronically.

• Typically, this involves the use of computer networks, the

internet and digital stored value systems.

– Electronic Funds Transfer (EFT),

– direct deposit,

– digital gold currency and virtual currency

• Ex: Singapore has an electronic money program for its public

transportation system (commuter trains, bus, etc.), based on

the (FeliCa) system.

Electronic Finds Transfer (EFT)

• Electronic Finds Transfer (EFT) is definedas the “transfer of funds initiated throughan electronic terminal like telephone,computer or magnetic tape so as to order,instruct, or authorize a financial institutionto debit or credit account”.

Categories of EFT

• Banking & financial payments: Large scale orwholesale payments (bank-to-bank transfer), smallscale payments like home banking like bill payments,etc.

• Retailing payments: Credit cards (Visa orMasterCard), debit cards, charge cards like AmericanExpress.

• Online e-com payments: Token based paymentsystems (digicash, e-checks, etc).

How does Digital Cash work?

• Digital cash schemes operate in the following manner:

– A user installs a "cyber wallet" onto computer.

– Money can be put in the wallet by deciding how much is

needed and then sending an encrypted message to the bank

asking for this amount to be deducted from the user's

account.

• The bank then generates "serial numbers", encrypts the

message, signs it with its digital signature and returns it.

• The user is now entitled to use the message (coin or token) to

spend it at merchant sites.

• Merchants receive e-cash during a transaction and see that it

has been authorized by a bank.

Online Digital Cash Model

Offline Digital Cash Model

Online vs Offline Cash Model

Online Cash Model

• Always on & up Internet connection is required

• No extra hardware required

• Less chances of fraud

• No latency in funds transfer to merchant

Offline Cash Model

• Internet connection to bank is not needed to be always up.

• Extra hardware required (TRD)

• More chances of fraud

• Latency in funds transfer

ELECTRONIC DATA INTERCHANGE (EDI)

Electronic Data Interchange

• Electronic data interchange process is the computer-to-computer exchange of business documentsbetween companies.

• It is the structured transmission of data betweenorganizations by electronic means w/o any humanintervention.

Electronic Data Interchange

• It is more than mere e-mail; for instance,organizations might replace bills and even chequeswith appropriate EDI messages.

• EDI replaces the faxing and mailing of paperdocuments.

• EDI documents use specific computer record formatsthat are based on widely accepted standards.

Traditional Working Approach

EDI Working Approach

Electronic Data Interchange

• Business partners – The exchange of EDI documents is typicallybetween two different companies, referred to as business partnersor trading partners.

• Business documents – These are any of the documents that aretypically exchanged between businesses like purchase orders,invoices and Advance Ship Notices. Also bill of lading, customsdocuments, inventory documents, shipping status documents.

• Standard format– Because EDI documents must be processed bycomputers rather than humans, a standard format must be used sothat the computer will be able to read and understand thedocuments. There are several EDI standards in use today, includingANSI, EDIFACT, TRADACOMS and XML.

EDI Working

Benefits of EDI

• Computer-to-computer exchange of information is much lessexpensive than handling paper documents.

• Much less labor time is required

• Fewer errors occur because computer systems process thedocuments rather than processing by hand

• Business transactions flow faster

• Reduction in inventory levels

• Better use of warehouse space

• Fewer out-of-stock occurrences

• Lower freight costs through fewer emergency expedites.

What is required for EDI?

• Software for communications

• Value Added Network(VAN) service for EDI transmission

• Mail-boxing of EDI transactions

• Mapping and translation software

• Installing upgrades to software as needed

• Mapping labor

• Testing with EDI trading partners

• Upgrades for new versions required by trading partners

T H A N K S