GROUP - 05

2012

INSTITUTE OF BUSINESS MANAGEMENT22/11/2012

MANUFACTURER BUSINESS MODEL &

ELECTRONIC PAYMENT SYSTEM

GROUP MEMBERS:

ABHISHEK BHATNAGARABHISHEK PALAILZADHIRENDRASEETA PALSARJU VERMA

DefinitionBusiness modelBusiness model

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A business model is the method of doing business by which a company can sustain itself that is, generate revenue. The business model spells out how a company makes money by specifying its position in the value chain.

A set of planned activities designed to result in a profit in a marketplace.

It includes the roles and relationships among a firm's customers, allies, and suppliers; the major flows of product, information, and money; and the major benefits to the participants.

Definition Cont…

E-commerce business modelE-commerce business model

A business model that aims to use and leverage the unique qualities of the Internet and the World Wide Web.

Eight Key Ingredients of a Business Model

Key QuestionsBusiness Model Components

Value Proposition Why should the customer buy from you?

Revenue model How will you earn money?

Market opportunity What markets pace do you intent to serve, and what is its size?

Competitive environment Who else occupies your intended market space?

Competitive advantage What special advantages does your firm bring to the market space?

Market strategy How do you plan to promote your products to attract customer?

Organizationaldevelopment

What types of organizational structures within the firm arenecessary to carry out the business plan?

Management teamWhat kinds of experiences and background are important for the company’s leaders to have?

RELATION BETWEEN B2B AND B2C

Raw material producer

manufacturer

distributor

retailer

consumer

B2B

B2C

Introduction to B2C E-commerce

As the name suggests, it is the model involving business and consumers. In this model, online business sell to individual customers. Business to customer covers those e-commerce websites and transactions trough which organization sell goods to customer over the internet. B2C is also known as internet retailing or E-trailing.

B2C refers to a business communicating with or selling to an individual rather than a company

Business/organization

Customer

B2C

This category has expanded greatly in the late 1990s with the growth of public access to the Internet.

The business-to-consumer category includes electronic shopping, information searching (e.g. railway timetables) but also interactive games delivered over the Internet.

Popular items sold using B2C model are airline tickets, books, computers, videotapes, music CDs,toys ,music, health and beauty products, jewellery etc..

Introduction to B2C E-commerce (Cont…)

B2C e-commerce transactions

VISA

Order form

Order placed by user Shopping cart

credit card is charged

Order is competed

E-mail is sent to customer to merchant

Sent to warehouseShipping carrier picks up shipment

Capabilities and functionalities of B2C Model

With the conduction of business on the internet ,the role and importance of electronic markets has been increasing. It lets increase the efficiency of business performance .

Some of the capabilities which an electronic marketplace has, which speak of their potential are-

1. Instantaneous communication It helps in quick communication between the various participants of business systems. It also helps to reduce “Time to Market”.

2. Global Accessthe products and services offered through the electronic markets have global reach and give access to larger and new markets.

3. CustomizationElectronic markets allows to customize or configure goods according to user’s need .

4. Increased AvailabilitySince e-commerce provide access to company’s site 24/7 so there is much greater availability of products.

5. De-intermediation It helps in elimination the middleman, offering simplified electronic distribution and product differentiation based on customer choice.

6. CollaborationThey facilitate automation of transactions between electronic enterprises and support real time exchange of information and thus enable collaborative processing.

Manufacturer Model - Selling DirectThe manufacturer or "direct model", it is predicated

on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel.

The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences.

ADVANTAGES:Potential to earn an unlimited amount of money Be

your own boss Initial cost is fairly cheap Can receive start-up materials for a few hundred dollars or less Opportunities to meet new people Help you build confidence and become more outgoing You can lower your commuting costs Can use the internet to increase your sales E-mail potential customers

DISADVANTAGES:Promoting this type of business can be very time

consuming This type of business is highly competitive Unpredictable source of income

What Electronic Payment system is?Electronic payment system is a system which helps the customer or user to make online payment for their shopping.

To transfer money over the Internet.

Methods of traditional payment.oCheck, credit card, or cash.

Methods of electronic payment.oElectronic cash, software wallets, smart cards, and credit/debit cards.

OBJECTIVESTo understand the concept of Electronic Payment System and its security services.

To bring out solution in the form of applications to uproot Electronic Payment.

To understand working of various Electronic Payment System based applications.

Some Examples Of EPS:-

Online reservation

Online bill payment

Online order placing

Online ticket booking ( Movie)

Two storage methodsOn-line

Individual does not have possession personally of electronic cash

Trusted third party, e.g. online bank, holds customers’ cash accounts

Off-lineCustomer holds cash on smart card or software walletFraud and double spending require tamper-proof

encryption

Types of EPS

E- CASH

SMART CARDS CREDIT CARDS

E- WALLETSEFT

(Electronic Fund

Transfer)

E-Cash

A system that allows a person to pay for goods or services by transmitting a number from one computer to another.

Like the serial numbers on real currency notes, the E-cash numbers are unique.

This is issued by a bank and represents a specified sum of real money.

It is anonymous and reusable.

Electronic Cash SecurityComplex cryptographic algorithms prevent double

spendingAnonymity is preserved unless double spending is

attemptedSerial numbers can allow tracing to prevent money

laundering

E-Cash Processing

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Bank

Consumer

Merchant1. Consumer buys e-cash from Bank

2. Bank sends e-cash bits to consumer (after charging that amount plus fee)

3. Consumer sends e-cash to merchant

4. Merchant checks with Bank that e-cash is valid (check for forgery or fraud)

5. Bank verifies that e-cash is valid

6. Parties complete transaction

E-Wallet

The E-wallet is another payment scheme that operates like a carrier of e-cash and other information.

The aim is to give shoppers a single, simple, and secure way of carrying currency electronically.

Trust is the basis of the e-wallet as a form of electronic payment.

Procedure for using an e-wallet

1. Decide on an online site where you would like to shop.

2. Download a wallet from the merchant’s website.

3. Fill out personal information such as your credit card number, name, address and phone number, and where merchandise should be shipped.

4. When you are ready to buy, click on the wallet button, the buying process is fully executed.

Smart Cards

A smart card, is any pocket-sized card with embedded integrated circuits which can process data

A smart card is about the size of a credit card, made of a plastic with an embedded microprocessor chip that holds important financial and personal information.

This implies that it can receive input which is processed and delivered as an output

Smart card Processing :

Advantages of smart cards Stored many types of informationNot easily duplicatedNot occupy much spacePortableLow cost to issuers and users Included high security

Disadvantages of smart cards

The lack of universal standards for their design and utilization.

On the other hand, smart card applications are expected to increase as a result of the resolution of these disadvantages in the near future.

Credit cards It is a Plastic Card having a Magnetic Number and code on it.

It has Some fixed amount to spend.

Customer has to repay the spend amount after sometime.

Processing a Credit cards payment

Risk in using Credit cards Operational Risk Operational risk is the risk of loss resulting from

inadequate or failed internal processes, people and systems, or from external events.

Credit Risk Credit risk refers to the risk that a borrower will default on

any type of debt by failing to make payments which it is obligated to do . The risk is primarily that of the lender and include lost principal

and interest, disruption to cash flows, and increased collection costs.

Legal Risk Legal risk is a type of risks that means that a counterparty is

not legally able to enter into a contract.

EFT(Electronic Fund Transfer)

Electronic funds transfer is one of the oldest electronic payment systems.

EFT is the groundwork of the cash-less and check-less culture where and paper bills, checks, envelopes, stamps are eliminated.

EFT is used for transferring money from one bank account directly to another without any paper money changing hands.

Advantages of EFT contain the following:Simplified accountingImproved efficiencyReduced administrative costsImproved security

Online Banking

Types of Transactions: You may access certain account(s) you maintain with us by computer using your assigned user ID and password by accessing the online banking services. You may use the online banking service to perform the following functions:

Transfer funds between eligible accounts. Obtain balance information on eligible accounts. Review transactions on eligible accounts. Make loan payments.

Risks in Electronic Payment Systems:Tax Evasion

Businesses are required by law to provide records of their financial transactions to the government so that their tax compliance can be verified. Electronic payment however can frustrate the efforts of tax collection. Unless a business discloses the various electronic payments it has made or received over the tax period, the government may not know the truth, which could cause tax evasion.

Risks in Electronic Payment Systems:Fraud Electronic payment systems are prone to fraud. The

payment is done usually after keying in a password and sometimes answering security questions. There is no way of verifying the true identity of the maker of the transaction. As long as the password and security questions are correct, the system assumes you are the right person. If this information falls into the possession of fraudsters, then they can defraud you of your money.

Risks in Electronic Payment Systems:Impulse Buying

Electronic payment systems encourage impulse buying, especially online. You are likely to make a decision to purchase an item you find on sale online, even though you had not planned to buy it, just because it will cost you just a click to buy it through your credit card. Impulse buying leads to disorganized budgets and is one of the disadvantages of electronic payment systems.

Risks in Electronic Payment Systems:Payment Conflict Payment conflicts often arise because the payments

are not done manually but by an automated system that can cause errors. This is especially common when payment is done on a regular basis to many recipients. If you do not check your pay slip at the end of every pay period, for instance, then you might end up with a conflict due to these technical glitches, or anomalies.

Secure Electronic Transaction (SET) Protocol

Jointly designed by MasterCard and Visa with backing of Microsoft, Netscape, IBM, GTE, SAIC, and others

Designed to provide security for card payments as they travel on the Internet Contrasted with Secure Socket Layers (SSL) protocol, SET validates

consumers and merchants in addition to providing secure transmission SET specification

Uses public key cryptography and digital certificates for validating both consumers and merchants

Provides privacy, data integrity, user and merchant authentication, and consumer nonrepudiation

Cryptography

The SET protocol

Authentication

Integrity Privacy

Safety

Security Requirements of EPS

What Is payment Gateways??

A payment gateway is an e-commerce application service provider service that authorizes payments for e-businesses, online Shopping, etc.

Payment gateway protects credit cards details encrypting sensitive information, such as credit card numbers, to ensure that information passes securely between the customer and the merchant and also between merchant and payment processor.

CONCLUSION

Expand Market beyond Traditional geographic market

Override traditional marketing system into digital marketing system.

Made human life convenient as a person can pay his payments online while he is taking rest.

Thanks For Coordinatio

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