e-commerce - e-business.docx

7/31/2019 e-Commerce - e-business.docx

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e-Commerce / e-business

Ecommerce

It is the process of purchasing and selling goods and services over electronic system such

as Internet.

Or

Transacting or facilitating business on the Internet is called ecommerce. Ecommerce isshort for "electronic commerce."

Popular examples of ecommerce revolve around buying and selling online. But theecommerce universe contains other types of activities as well. Any form of businesstransaction conducted electronically is ecommerce.

or

E-commerce has revolutionized the concept of conducting business by providing equalchance to all the businesses to mark their global presence. It has also eased thecustomers with online shopping and easy transactions. With the introduction of e-commerce business, communication has become effortless and has also changed a lot inrecent years for the better. Still, there are people who think that conventional businesspractices are far better then the e-commerce business.


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Benefits of E-Commerce

Reduced time. Shorter lead times for payment and return on investment inadvertising, faster delivery of product

Flexibility with efficiency. The ability to handle complex situations, product rangesand customer profiles without the situation becoming unmanageable.

Improve relationships with trading partners. Improved communication betweentrading partners leads to enhanced long-term relationships.

Lock in Customers. The closer you are to your customer and the more you work withthem to change from normal business practices to best practice e-commerce theharder it is for a competitor to upset your customer relationship.

New Markets. Expands the reach of your business to the global market :- Theforemost advantage of e-commerce is that it empowers the business to reach theglobal market. E-commerce caters to the demands of national as well asinternational business simultaneously and brings your business activities out ofgeographical boundaries. With e-commerce, even small businesses get the accessto the global market.

Round the clock availability :- E-commerce has abolished time restrictions onbusiness activities because with this you can execute business transactions 24X7.The time factor significantly turns into the increment in sales as well as profits.

Gives freedom to make choices :- It also gives customers an opportunity to look forcheaper and better quality products. With e-commerce, consumers can search thespecific product or service they require and can even find the direct manufacturerfrom where they can purchase products at comparatively less price. Shopping onlineis time saving and convenient. In addition to it, you also get to see the reviews ofother consumers that will help you in making beneficial purchase decision.

Cost effective : - E-commerce is proved to be highly cost effective for business

concerns as it cuts down the cost of marketing, processing, inventory management,customer care etc. It also reduces the burden of infrastructure required forconducting business. You can also collect and manage the information related to thecustomers efficiently, which in turn will assist you in developing efficient promotionalstrategy. Reduced costs by reducing labour, reduced paper work, reduced errors inkeying in data, reduce post costs

Limitations

Technological and inherent limitations :- The technological limitations of e-commerce have restricted a large number of people from using this revolutionizingtechnique. The major disadvantage of e-commerce is the limitation of the Internet,as it still has not touched the lives of every individual. Lack of knowledge restrictslarge number of people from using the internet and understanding onlinetransactions. Some people refuse to trust the legitimacy of online business andsome are not comfortable about disclosing their personal and confidentialinformation online. Authenticity of e-commerce businesses has always remained inquestion.

Not suitable for perishable commodities :- The biggest limitation of e-commerce isthat it is not suitable for perishable goods and food items. For purchasing such items


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people prefer the conventional way of shopping. Along with that, the time period alsoplays a significant role in delivering goods to the customers. Customers may need tomake lot of phone calls and e-mails for getting the products within the desiredtimeframe. Moreover, it becomes really troublesome to return the product or getrefund in case if you are not satisfied with the product.

After evaluating the pros and cons of e-commerce, we can clearly state that thebenefits of e-commerce are sufficient enough for overpowering the limitations. If aptstrategies are followed and technical issues are addressed properly, you can easilybuild up the customers trust in your system. The present scenario of e-commercecan also be changed for good, so that it can easily adapt to the ever changing needsof the customers as well as of the world.

e-Commerce Merchant Accounts:

An e-Commerce merchant account allows any (or almost) online business (also known asan e-Business or e-Commerce business) to accept credit cards/debit cards, gift cards and

other forms of payment cards online based on the CNP (card not present) transactionprincipals, including MOTO (mail order/telephone order) transactions. e-Commercemerchant accounts can also be referred to as: online credit card payment accounts, onlinecredit card processing accounts, credit card transaction accounts, and others. An e-Commerce merchant can get an e-Commerce merchant account from a merchant bank ora merchant service provider in his/her local area (city, state, country) or in another country(offshore/international e-Commerce merchant account). An e-Commerce merchantaccount is basically a service for which e-Commerce merchants apply, and thereafter useonline credit card processing services; just like you would expect an e-mail account towork for you providing SMTP and POP3 (i.e. e-mail transmission) services.

E-Commerce merchant accounts are acquired from either merchant banks or MSP(merchant service providers), as already stated above. The process of acquiring, orapplying for, an e-Commerce merchant account is different and depends on the provideritself (terms, guidelines and conditions), the type of e-Commerce merchant account andthe e-Commerce merchant. For example, some types of e-Commerce merchant accountscan be setup in just a few minutes, while others will take days to approve a merchant.Fees and rates will also differ much.

Some of the types of e-Commerce merchant accounts are:

Direct e-Commerce merchant account : a type of account usually applied for directlyat a merchant bank.

Local e-Commerce merchant account : an e-Commerce merchant account in oneshome country.

Offshore e-Commerce merchant account : an account outside the country of theapplying e-Commerce merchant. Also known, in some cases, as an internationalmerchant account.

High-risk e-Commerce merchant account : a merchant account for online

businesses with a high percentage of chargebacks and returns; for example, adult,IP telephone cards, internet gambling, etc.


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Third-party e-Commerce merchant account : see below for a basic explanation on3rd party merchant accounts.

Pharmacy e-Commerce merchant account : a specialized merchant accountdesigned specifically for online pharmacies and drug e-Stores.

Payment Gateways:

A payment gateway can be called the relay between the e-Commerce merchant accountaffiliated website (online shop) and the merchant bank, which is also connected to a largenetwork of credit card issuing banks. One of the other main functions of credit cardprocessing payment gateways, besides communication, is encryption. A payment gatewayuses SSL 128-bit encoding technology to encrypt and decrypt all the data being sentthrough it. Safety and security in online credit card processing is a very vital point. Withoutencryption all the credit card holders data could be stolen and used illegally.

Understanding how a payment gateway works is important as to know, for example, whyand where an error occurs that may lead to unsanctioned use, malfunction, etc. Thus, webring you a brief step-by-step working cycle of a typical (no auxiliary/externalverification/encoding/protection systems engaged) payment gateway:

A cardholder/customer orders a product or service at an e-Commerce merchantswebsite by clicking the Order or Send to Shopping Cart buttons.

The cardholder is taken to an automatically generated (by an integrated shoppingcart script) order form, where he/she is asked to provide the credit card details andthe shipping details.

After clicking the Submit Form button at the bottom of the form(s) all the data isencrypted (SSL 128-bit) by the cardholders web-browser, a key is generated andpassed on, along with the details, to the e-Commerce merchants payment gateway.

The payment gateway (if function available and switched on) decrypts some of theinformation (only for statistical usage, no credit card details are held), re-encrypts itand forwards it to the e-Commerce merchants acquiring bank.

The acquiring bank forwards the data to the credit card issuing bank for verificationand authorization.

The issuing bank sends a so-called response code back to merchant bank, and thelatter sends it to the payment gateway. This response code is used to denote anyerror that might have had occurred during the verification or transaction process.

If everything is in order the credit card is billed and, usually, at the end of the day thefunds are transferred to the merchant bank, where they are safely deposited untilthe payout day.

The e-Commerce merchants website also generates feedback based on the

response code received by the payment gateway. Some of the codes may beinterpreted as: You card has been billed.,Error. Insufficient funds., and so on.


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The whole process takes only a few seconds. The important part that payment gatewaysplay in online credit card processing is evident and must never be underestimated. Makesure that you get a secure, stable payment gateway with much flexibility and third-partyoptions.

Third party processors:

Third party processors are what e-Commerce merchants get when gettingthird partymerchantaccounts. For more information on 3rd party merchant account visit ourMerchant accounts section in our Articles knowledgebase. Basically, third party processorsare connected via an additional secure payment gateway to a direct credit card paymentprocessor. A third party processor contributes to the work of the direct processor, sharingits expenses, i.e. paying much less. Many third party processors make up a network of e-Commerce merchants sharing one secure direct merchant account. Third party processors

are great for beginner e-Commerce.

To sum everything up, and to differentiate the mixed up terms e-Commerce merchantaccounts, payment gateways and third party processors:

An e-Commerce merchant account is a whole service, a solution allowing e-Commercemerchants to accept credit card payments over the Internet; a payment gateway is onefragment of a whole system (chain of elements) involved in online credit card processing,functioning as a secure relay; a third party processor is a type of e-Commerce servicewhich makes up a network of direct merchant account affiliated e-Commerce merchants.

What Are Third Party Applications?

Third party applications are programs written to work within operating systems, but arewritten by individuals or companies other than the provider of theoperating system. Forexample, Microsoft systems come packed with several software applications. Of these,any program authored by Microsoft is a first party application. Any program authored by adifferent company or an individual is a third party application; the same being true for

Apple and Linux systems. In this equation the second party is the user.

Third party applications can be standalone programs or they can be small plugins that addfunctionality to an existing parent program. The former category is endless. On a typicalsystem, standalone third party applications include tens of dozens of programs. Webbrowsers like Opera,Safari andFirefox; andemailclients likeThunderbird, The Bat!,and Pegasus are some examples of popular standalone third party applications. Most anti-virus programs, firewalls, multimedia programs virtually any program not written byMicrosoft, Apple, or Linux, yet made to work on those systems falls into thiscategory.
http://www.gspay.com/third-party-merchant.phphttp://www.gspay.com/third-party-merchant.phphttp://www.gspay.com/third-party-merchant.phphttp://www.gspay.com/third-party-merchant.phphttp://www.wisegeek.com/what-is-an-operating-system.htmhttp://www.wisegeek.com/what-is-an-operating-system.htmhttp://www.wisegeek.com/what-is-an-operating-system.htmhttp://www.wisegeek.com/what-is-a-safari.htmhttp://www.wisegeek.com/what-is-a-safari.htmhttp://www.wisegeek.com/what-is-firefox.htmhttp://www.wisegeek.com/what-is-firefox.htmhttp://www.wisegeek.com/what-is-email.htmhttp://www.wisegeek.com/what-is-email.htmhttp://www.wisegeek.com/what-is-email.htmhttp://www.wisegeek.com/what-is-a-thunderbird.htmhttp://www.wisegeek.com/what-is-a-thunderbird.htmhttp://www.wisegeek.com/what-is-a-thunderbird.htmhttp://www.wisegeek.com/what-is-email.htmhttp://www.wisegeek.com/what-is-firefox.htmhttp://www.wisegeek.com/what-is-a-safari.htmhttp://www.wisegeek.com/what-is-an-operating-system.htmhttp://www.gspay.com/third-party-merchant.phphttp://www.gspay.com/third-party-merchant.php


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In some cases, computer users of Windows operating systems consider it more secureto use standalone third party applications for tasks such as email, newsgroups, Webbrowsing and Internet Relay Chat (IRC). Microsoft applications have traditionally beenthe target of the vast majority of hackers, viruses, Trojans and other security threats. Byusing a third partyapplication, one theoretically lessens the degree of potentialvulnerability.

A different kind of third party application provides additional functionality to a primaryprogram. These types of third party applications are referred to as pluginsoradd-ons. Theexisting parent program might itself be a third party application, or a first party application.Examples includeencryptionplugins for email applications, multimedia plugins for Webbrowsers to watch movies or see Flash content, or plugins that read certain types of files,such as the Adobe Acrobat plugin used for .pdf files.

Although plugins and add-ons are available for first party applications, the vast majority arewritten foropen sourcesoftware. Microsoft and Apple do not make thesource codeoftheir proprietary operating systems available to the public, limiting the ability of athird partyto write a plugin or add-on. Most third party applications are also proprietary,keeping source code a company secret.However, there are many third party applications that are open source and this categoryofsoftware is growing. The FirefoxWeb browserand Thunderbird email client are justtwo examples of open source third party applications that are quite popular. In part this isdue to the ever-growing catalog of handy add-ons and plugins that are freely available forthese programs. Open source first party applications are rare, with Linux operatingsystems creating the exception.

Transaction Processing Quality

Electronic payments are highly susceptible to fraud and abuse. Liability to merchants for

misuse of credit card data creates a huge expense on merchants, if the business were to

attempt mitigation on their own. One way to lower this cost and liability exposure is to

segment the transaction of the sale from the payment of the amount due. Some merchants

have a requirement to collect money from a customer every month. SaaS Payment

Processors relieve the responsibility of the management of recurring payments from the

merchant and maintain safe and secure the payment information, passing back to the

merchant a payment token. Merchants use this token to actually process a charge whichmakes the merchant system fully PCI-compliant.If you are in a high risk industry, prone to

frequent charge backs, what you need is to get a high-risk merchant processor. These

credit card processing companies work exclusively with industries that are prone to

frequent chargebacks, like online businesses.

Modern Payment Processing

Due to the many regulatory requirements levied on businesses, the modern paymentprocessor is usually partnered with merchants through a concept known as software-as-a-
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service (SaaS).SaaS payment processors offer a single, regulatory-compliant electronicportal that enables a merchant to scan checks (often called remote deposit capture orRDC), process single and recurring credit card payments (without the merchant storing thecard data at the merchant site), process single and recurring ACH and cash transactions,process remittances and Web payments. These cloud-based features occur regardless oforigination through the payment processor's integrated receivables management platform.This results in cost reductions, accelerated time-to-market, and improved transactionprocessing quality.

The different types of e-commerce

Business to Consumer (B2C)

B2C stands for Business to Consumer as the name suggests, it is the model takingbusinesses and consumers interaction.Online business sells to individuals. The basicconcept of this model is to sell the product online to the consumers.B2c is the indirect trade between the company and consumers. It provides direct sellingthrough online. For example: if you want to sell goods and services to customer so thatanybody can purchase any products directly from suppliers website.

Directly interact with the customers is the main difference with other business model.AsB2B it manages directly relationship with consumers, B2C supply chains normallydealwith business that are related to the customer.


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Business to Business (B2B)

B2B stands for Business to Business. It consists of largest form of Ecommerce. Thismodel defines that Buyer and seller are two different entities. It is similar to manufacturerissuing goods to the retailer or wholesaler. Dell deals computers and other associatedaccessories online but it is does not make up all those products. So, in govern to deal

those products, first step is to purchases them from unlike businesses i.e. the producers ofthose products.It is one of the cost effective way to sell out product through out the worldBenefits:o Encourage your businesses onlineo Products import and exporto Determine buyers and supplierso Position trade guides


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Consumer to Consumer (C2C)

C2C stands for Consumer to Consumer. It helps the online dealing of goods or servicesamong people. Though there is no major parties needed but the parties will not fulfill thetransactions without the program which is supplied by the online market dealer such aseBay.


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Peer to Peer (P2P)

It is a discipline that deal itself which assists people to instantly shares related computerfiles and computer sources without having to interact with central web server.If you aregoing to implement this model, both sides demand to install the expected software so thatthey could able to convey on the mutual platform. This kind of e-commerce has very lowrevenue propagation as from the starting it has been tended to the release of use due towhich it sometimes caught involved in cyber laws.


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m-Commerce

It deals with conducting the transactions with the help of mobile. The mobile deviceconsumers can interact each other and can lead the business. Mobile Commerce involvesthe change of ownership or rights to utilize goods and related services.

Further Classifications are,

o Businessto-Employeeo

E-Governmento E-Learningo None-Business e-commerceo Business-to-Business-to-Customero Intra-business e commerceo Exchange-to-Exchange


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Source

http://www.gspay.com/the-difference-between-merchant-accounts,-payment-gateways-

and-third-party-processors.php

http://www.wisegeek.com/what-are-third-party-applications.htm

http://en.wikipedia.org/wiki/Payment_processor

http://www.slideshare.net/GautamPatel4/38821274-ecommerceppt

http://www.dynamicwebs.com.au/tutorials/e-commerce.htm

http://blogs.weblinkindia.net/2010/03/30/benefits-and-limitations-of-e-commerce/
http://www.dynamicwebs.com.au/tutorials/e-commerce.htmhttp://www.dynamicwebs.com.au/tutorials/e-commerce.htm

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