E-commerce & Mobile Commerce: Introduction, Models

Electronic commerce refers to conducting business activities electronically over computer networks. Business activities that are strong candidates for conversion to e-commerce are: Paper based, Time-consuming, Inconvenient for customers.

Business-to-Business E-Commerce

B2B e-commerce is a subset of e-commerce. All the participants are organisations. It is a useful tool for connecting business partners in a virtual supply chain to cut resupply times and reduce costs

Many organisations use both: Buy-side e-commerce to purchase goods and services from suppliers. Sell-side e-commerce to sell products to their customers.

Business-to-Consumer E-Commerce

B2C e-commerce Customers deal directly with an organisation and avoid intermediaries; this is called disintermediation.

Reasons for steady growth: Cheaper goods and services via the Web. Online shoppers can design a personalised product. The use of social media networks to promote products and reach customers.

Consumer-to-Consumer E-Commerce

C2C e-commerce: Involves electronic transactions between consumers are facilitated by a third party. Popular sites include eBay, Craigslist, Etsy, Fiverr.

E-Government

E-government is the use of information and communications technology to: Simplify the sharing of information. Speed formerly paper-based processes. Improve the relationship between citisens and government.

Forms of e-Government: Government-to-consumer (G2C), Government-to-business (G2B), Government-to-government (G2G)

Introduction to Mobile Commerce

Mobile commerce (m-commerce) relies on the use of wireless devices. The Internet Corporation for Assigned Names and Numbers (ICANN): Created a .mobi domain to help attract mobile users to the Web.

Advantages of Electronic and Mobile Commerce

Reach new customers
Reduce the cost of doing business
Speed the flow of goods and information
Increase the accuracy of order-processing
Improve the level of customer service

Multistage Model for E-Commerce

Search and Identification
Select and Negotiate
Purchasing products and Services Electronically
Deliver Products and Services
After-Sales Service

E-Commerce Challenges

Dealing with Consumer Privacy Concerns: About one-third of all adult Internet users will not buy online due to privacy concerns.

Overcoming Consumers’ Lack of Trust: In online sellers

Overcoming Global Issues: Cultural, language, time and distance, infrastructure, currency, and legal challenges.

Setting Up E-Commerce Website

Many people new to websites and/or e-commerce are confused about what ecommerce means and involves.

Even those who are fairly adept at scripting are lost when it comes to complete the link. They can set up a store using some popular package such as OSCommerce and then are left stumped by the idea of making it work with a payment gateway to actually collect money and put it into their account.

The Basics – How Funds are Collected

Ecommerce simply refers to the practice of shopping online.

From the site owner’s perspective, it entails collecting funds from sales transactions on their website and depositing that money into the bank. In order to collect funds, you need to have a merchant account and a payment gateway (discussed below).

Basically, when a person enters their credit card number on a website, the card number and buyer information is sent to a payment gateway. This is done securely.

The payment gateway will interface with a payment processor to check availability of funds as well as any other criteria set for accepting transactions.

If the funds are available, the payment processor will then deduct the funds.

Merchant Accounts

A Merchant Account is a special type of account specifically for online retailers. They are designed to allow non-POS (point of sale) transactions using credit cards, or transactions where you don’t have the person’s credit card in hand. In other words, you don’t have a card swiper.

A merchant account is not the same as a bank account. It acts as a go-between between your payment gateway and your bank account, accepting funds from credit cards which are then deposited into your bank.

A merchant account is a relationship based on trust between you and the issuing bank. The bank takes funds from the buyer’s account and deposits into your account.

A payment processor takes care of checking for availability of funds and debiting from the credit card account.

The bank issuing the merchant account is trusting that you will fulfill your end of the transaction by providing the product or service that the buyer purchased.

Payment Gateways

A payment gateway serves as the front end to your merchant account, allowing you to manage funds, transactions, and the like. It also serves as a connection between your website and your merchant account. It takes data submitted via your secure order forms and presents it to your processing bank.

The processing bank then approves or declines the transaction and sends its response back to the payment gateway. The payment gateway then turns around and provides this data back to the merchant for appropriate handling of the transaction.

A payment gateway does not offer services such as merchant accounts or shopping carts, although some of the larger-known gateways do provide such options as value-added services.

Fraud Prevention Mechanisms

Fraud prevention is a big one because, as stated above, too many fraudulent transactions will result in chargebacks which could end up putting you on the Watch List and your merchant account closed.

Some of the common fraud detection mechanisms are:

1. Address Verification (AVS) which compares the customer’s address with that on file with the issuing bank
2. CVV2 which makes use of the 3-digit security code on the credit card (4-digit on American Express cards).

Most gateways will provide instructions on how to interface with their servers from your web store. Many gateway providers can get you set up with a merchant account at the same time as the gateway. So, in most cases, you do not need to sign up for them separately.

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