E-Commerce
A1] Working of Third Party – In First Virtual:
The following steps occur during a sale when using the First Virtual payment system:
1. From the customer, encrypted credit card number and the digital signature are sent to the merchant. [Digital Signature = Message Digest + Encryption]
2. From the merchants encrypted message is sent to third party encryption software.
3. Third party requests for check (credit card authenticity and A/C position from credit card processors.)
4. Credit card processors ask for verification (check requested by step 3from customer’s bank.)
5. Bank gives the authorization to credit card processors.
6. Credit card processors give the signal to the third party (processor) – OK, in case of correct credit card number and sufficient funds to make a purchase of his/her desire. If not then ‘NOT OK’.
7. Verified information is sent to merchant by third party.
8. Merchant sends the purchase information to customer only after receiving the ‘OK’ signal from the third party.
In First Virtual payment scheme instead of credit card number and digital signature (step 1), customer sends registered PIN to merchant who then ask the third party to verify the authenticity of PIN along with the credit card number and account position. Then the third party interacts with the customer through email for confirmation.
Procedural Overheads in Traditional Commerce:
Traditional commerce can broadly be defined as the exchange of valuable objects or services between at least two parties. Such activity includes all of the processes that each party undertakes to complete the transaction. The earliest form of traditional commerce is the barter system.
The activities which most businesses engage in as they conduct commerce are called business processes.
Classic business processes include:
- Transferring money and information
- Placing of orders for products
- Sending of invoices to consumers
- Delivery of goods.
It is clear today that some products are more suited to the internet than others. This is because the merchandising skills related to these products transfer more easily to the web. Products that are well suited are: commodity products such as books, CDs, and DVDs. These products are hard to distinguish from the same products or services from other sellers. Their features are standardized and well known by potential buyers.
Other products that are well suited to e-commerce include software which can be downloaded easily via the web, and the sale and purchase of services such as tickets and travel services. The web is an excellent medium for connecting potential buyers of services to supplier. Consumers can initiate many of the business processes required to complete sales and purchasing activities via a company’s website.
The web appears to support the sale and purchase of insurance and investment products, and provides an excellent infrastructure for online banking.
Characteristics of Traditional Commerce:
- Identity: Customers can easily authenticate the identity of a merchant simply by walking into a bricks-and-mortar store. Stores can be members of a community and neighborhood; they can be part of customers’ daily experience. There is concreteness about a physical store that no amount of HTML will ever match.
- Immediacy: Customers can touch and feel and hold the merchandise. Tactile cues can drive the decision to buy. A transaction that is face-to-face is usually unmediated: your communication with the merchant is not in the hands of a third party or technology (as with ordering by phone).
- Value: The item at the center of the commerce transaction — the product, service, or property that is to be sold/bought — has some kind of value. Its price is determined and validated through the performance of the transaction. The seller agrees to a selling price, and the buyer agrees to a buying price. The value of an item, especially the relative value an item has for the buyer, is much easier to appraise if that item is close at hand.
- Discourse: Customers can converse with the merchant face-to-face; unmediated conversation is basic to human communication. People want the feedback available from non-verbal behavior, which forms a large part of our judgment process.
- Community: Customers can interact with other customers and gain feedback about the merchant from other customers, as well as by observing the merchant interacting with other customers.
- Privacy: Customers can make purchases anonymously with cash; they usually don’t have to give their name or address. They don’t usually have to worry about what a store will do with their personal information, although this is becoming more of an issue with various recent attempts by lawyers to access private sales and rental records. Privacy is often a measure of how much of his or her identity a buyer wants to invest in a transaction; sometimes, we just want to quietly make our purchase and leave with it.
The problem for the online customer is that the web is new — to a large sector of the online audience — and online commerce seems like a step into an unknown experience.
Different Kinds of “Traditional” Commerce Models
Not every commerce transaction is identical, and not every transaction is the same type of transaction. In my experience, I have dealt with roughly five types of commerce transaction offline (this is not an attempt at taxonomy of commerce transactions, just my common-sense exploration of my own experience):
1. Retail Store:
This is by far the most common commerce experience in American culture: you walk into a store that is stocked with merchandise for immediate sale — bookstores, grocery stores, hardware stores — and find what you want, then purchase it. You leave the store with the product, assuming immediate ownership.
2. Retail Special Order:
When a retail store doesn’t stock the product you want, or is currently out of stock, you often have the option of special ordering the product. If a bookstore doesn’t care a small press book title that you want, and the title is in print, you can usually special order the title from the store; the store locates the product, buys it, then resells it you. Delayed gratification, but you have the advantage of dealing with a merchant face-to-face. I would consider rain checks in this same category.
3. Catalogue Store:
Smaller towns sometimes have catalogue stores, where a large merchant doesn’t see a local demand to keep a store stocked with merchandise, so they instead provide a storefront where people can come in and look at catalogues, and order from a company representative. Sears is a company that operates catalogue stores (or at least they used to), and Service Merchandise functions as a catalogue store for much of their “stock”.
4. Phone Order from a Catalogue:
Mail order catalogues, with their operators standing by, have been around longer than the internet. While you can’t touch and feel the merchandise prior to ordering, you can at least speak with a live person when placing the order; I’ve had some excellent shopping experiences with mail order catalog customer service reps.
5. Bargaining:
I find this the strangest form of commerce transaction; I simply am not used to bargaining… just give me a price, and I’ll decide whether or not to pay it. The United States U.S.
While these may be different types of commerce transactions, they are all clearly related. They share elements like the roles involved (seller and buyer), steps in the transactions (price must be agreed upon, money must change hands), and underlying concepts (the value of this merchandise to me, do I know this merchant?). Ultimately, these different transactions differ only slightly on some few elements, with the bulk of the transaction adhering to the internal models that we have built for what commerce is like.
In fact, based on our experience, we build frameworks to describe these transactions, with steps and meaningful elements, and we use these frameworks to understand every new commerce transaction in which we engage. These frameworks are called schemas, and we use these schemas to make sense of ecommerce web sites when we take our shopping online.
A2] A] E-commerce applications
1. Supply chain management;
2. Video on demand;
3. Remote banking;
4. Procurement and purchasing;
5. Online marketing;
6. Home shopping.
1. Supply Chain Management:
Before looking at the wide variety of e-commerce application areas that have flourished over the last decade in more detail, it is worth looking at one which may not be familiar to a reader, but which saves companies huge amounts of resources. The application involves a supply chain. A supply chain is a set of relationships between a number of companies who have a symbiotic relationship with each other in that one company supplies commodities or services to other companies which, in turn, supply commodities or services to other companies, and so on.
The example was originally described by Kalakota and Robinson (1999) in their excellent management introduction to e-commerce. It concerns the processes involved in getting a bottle of Listerine mouthwash to the shelves of a retail chemist. It consists of the following steps:
· In Australia
· The oil is then sold to a distributor in New Jersey
· At the same time as the eucalyptus oil is being extracted natural gas is being drilled in the Saudi Arabian desert in order to produce the alcohol that is added to the raw ingredients of the mouthwash.
· Union Carbide ships the alcohol to Texas City , Texas
· Farmers in the mid-west of America Texas City
· The ingredients are mixed and the mouthwash manufactured.
· The final bottles of mouthwash are sent to wholesalers or to the warehouses of chains of chemists from where they are distributed to individual retail outlets.
Figure 1 shows the information flows in this supply chain. This is an example of a supply chain. It represents a typical e-business application. There are a number of commercial imperatives for Warner Lambert: first, it should not overstock bottles of Listerine and incur costs because its resources are tied up in unsold goods; on the other hand, it should always stock enough bottles to satisfy demand in the time that the reordering and replenishing processes can take place. Second it should be able to get as quick a response to an order for raw materials as possible. This requires every company in the supply chain to move quickly to process an order from a company which follows it in the chain. An empty warehouse would be a disaster for Warner Lambert. A third commercial imperative is for the elimination of waste bureaucracy and indirect connections between companies from the supply chain. This is again connected with responsiveness: the more paper that is used and the more companies have to communicate using devices such as email the slower the process of reorder and replenishment will be. The ideal here is for a company higher up in the supply chain to share its data with companies further down the chain. For example, Warner Lambert should ideally be able to look at the stocks of the wholesalers and initiate a replenishment of those stocks when it discerns that they are becoming low – provided, of course, that some pre-agreement has been made about the quantities involved. An important point about an application such as this one is that information should be kept confidential as it flows across the internet.
Figure 1 A typical supply chain
2. Video on demand:
A Video on Demand system (VoD) is a distributed multimedia application that allows a user, through a remote terminal (e.g. a television and a set-top box), to access a video catalog composed of videos stored in several servers distributed in a network.
Since the customer has total freedom in choosing which video program he/she will watch and also in which interaction level (broadcast, NVod, QVod, TVod), this class of systems has an enormous potential of marketing application and some prototypes have been developed, particularly in the areas of education and entertainment. Video-on-demand systems, like other information systems (such as on-line bookstores and music distribution networks) need to implement efficient forms of presentation to show alternative options to its customer, due to its great amount of information and also great complexity trading scenarios. Thus, this kind of system can profit from the continuously running, semi-autonomous and personalized nature of agents.
The VoD and Multi-Agent Architecture
This work borrows the logical architecture of a VoD system shown in Figure 1. Since this architecture was conceived from domain ontology, it maps all the constraints formalized in the domain level and therefore can be specialized in different implementation scenarios. In the prototype, the Local Domain Networks (LDN) is departmental TCP/IP LANs, the Remote Access Network (RAN) is the Internet and the end-user's terminals are PC’s running a Java video system implementation. Other implementations could be considered without loosing the logical mapped constraints (e.g. ADSL links grouping set-top boxes terminals linked by an ATM network).
Fig.1 – Video on Demand Conceptual Architecture
The conceptual architecture divides the system in two layers, namely the management layer and the system layer. The purpose is to raise the system’s modularity and therefore reach a steadier structure in which different functionality is delegated to different subsystems. The management layer is responsible for: handling user’s authentication and login validation, video selection, user’s account consults; provider and servers catalog maintenance, user modeling and so on. The system layer otherwise is responsible for video storage, transmission and synchronized playback besides the user interaction handling.
The management layer is controlled by a entity named AMS (Application Management System) whose two main purposes are: first, to offer the user the management functionalities already mentioned, and last, to mediate the communication and also the trading activities in both a customer-to-business base (terminal-AMS) representing providers’ issues and customers’ interests and in a business-to-business base (AMS-provider and AMS-AMS).
A Consumer Buying Behavior (CBB) model, presented by Guttmann et al. which augment traditional marketing research is used to analyze consumers’ actions in electronic markets and identify agents’ roles.
Six stages in shopping experience are considered:
- Need Identification - the consumer realizes some unmet need.
- Product Brokering - information is retrieved so as to evaluate what to buy.
- Merchant Brokering - merchant-specific information used to determine who to buy from.
- Negotiation - prices and other aspects of the commercial deal are determined.
- Purchase and Delivery – purchasing stage.
- Service and Evaluation - post-purchase stage: evaluation of satisfaction.
3. Remote Banking:
Remote Banking is one of the most important modern banking services enabling the customer to make payments from any place in the world and at any time via a PC, fixed or mobile phone.
In the last decade, the Indian banking system has evolved to provide several types of remote banking channels. The objective of all types of remote banking is to provide extra convenience to customers and save service cost to the bank:
- Internet Banking
- Phone Banking
- ATMs
- Kiosks
- Mobile Banking
Internet banking:
Most private & MNC banks have set-up elaborate Internet banking infrastructure for their customers. Internet banking provides greater benefits to both customers & banks. Banks can reach a larger mass of people at low costs thus bringing down customer acquisition costs. They can also innovate quicker and satisfy specific customer needs. Customers, on the other hand can enjoy the convenience of banking sitting anywhere and use their bank accounts. Individual banks are at different levels of Internet banking infrastructure. Each customer is given a unique user name & password to access their accounts.
Some banks only allow customers to receive & accept information online, others have developed transactional sites. The highest level of Internet banking infrastructure completely negates the need to visit a bank branch and the customer can transact, transfer money, buy/sell in the stock market, pay bills and other merchandise through the Internet.
Although Internet banking is gaining pace, there are some risks associated with the same. The biggest concern is that of security & confidentiality. I.e. most people fear that they run the risk of their bank accounts getting misused if their account passwords get leaked. Hence, higher level of authentication & privacy requirements are being put in place to increase customer confidence on this aspect of banking.
Phone Banking:
Phone banking is a very popular remote banking channel since it involves a human interface unlike the other remote banking channels. Given that banking for Indians means faith & trust, a human interface gives greater confidence to customers with their banking needs.
Most banks allow all kinds of transactions on the phone but within specified limits. Each customer is given a unique PIN called T-PIN (telephone PIN). Customers can access bank accounts & funds by calling their banks at a toll free number 24/7/365. On calling, customers first need to provide certain verifications to the phone officer. This is to ensure that no misuse happens on the account. Typically, these verifications are a combination of parameters extremely personal to an individual. Hence, as long as individual does not share them with anyone, there are very few chances of misuse. Customers can use phone banking to check account balances, transfer funds, pay bills, make investments, stop cheque payments, get cash delivery, avail of loans, redeem their reward points earned on credit/debit cards, etc
ATM's:
ATM's are unmanned banking terminals where customers can access their bank accounts. The ATM/ debit cards are used at ATM's. Customers need to slip in their card & enter their unique PIN number; post which they get access to their account. They can then withdraw or deposit money, make bill payments, etc on their account. After finishing the transaction, a transaction slip is generated confirming the transaction done.
ATM banking has reduced the need to carry regular cash as well as for emergency. It is an extremely safe mode of remote banking as long as the PIN is unique & protected.
Kiosks:
This is the latest development on the remote baking front, also known as 'Touch-screen' banking. A kiosk is a self- service banking terminal that can be operated with both credit & debit cards. The Debit/credit card can be swiped at against the card reader at the kiosk and account accessed post entering the ATM PIN. Currently, very few banks like Citibank offer this facility to their customers at select ATM centers across the country.
Unlike an ATM, which is primarily used for cash transactions like withdrawals, deposits, etc, a kiosk is primarily used for non-cash transactions like cheque book request, printing bank account statements, funds transfer, etc.
Mobile Banking:
Mobile banking allows customers to make banking transactions on the mobile phone using the SMS facility. Unlike Phone banking, this does not require customers to call the bank. Most private & MNC banks currently provide this service as a value-added service to their customers.
With mobile banking, customers can do balance enquiry, stop cheque payment, bill payment, transfer funds, statement of account, etc at their own convenience. Mobile banking does not require a PIN since customers can access their own account only from their registered mobile number. For e.g.: If I register for a Hutch bill payment, I will register my mobile number on the Mobile
4. Procurement and purchasing:
The term procurement is used to describe the purchase of goods and services which are not directly used in the main business of a company. For example, a car manufacturer will procure stationery for its employees or procure training courses for them to attend in order to improve their skills.
A typical conventional procurement process consists of a number of steps:
· the person making the procurement expresses their need by typing in details of a requisition using either a computer-based or paper-based form;
· the form is then dispatched to a member of staff who checks that it has been filled in correctly, that the amount is no larger than the amount that they are able to authorize and that there are sufficient funds available for purchase;
· if the form is authorized then it is sent on to a member of staff who is concerned with the purchasing of the good or service that is required; they then fill in a purchase requisition and send it off to the company who supplies the item that is to be purchased. If the item is over the limit for authorization, then it is sent to someone who can authorize greater amounts.
·
This is in contrast to an e-procurement system which would automatically take the form produced by the person making the procurement, check that it satisfies all the company rules for procuring the item that is required, carry out authorization if it is below a certain limit or send the form to someone who can carry out authorization and then log the purchaser into the site of the supplier. He or she is then able to use this site to make the purchase, quoting an automatically generated procurement requisition number.
Again this is not hugely different to a conventional automated procurement system; however, it does cut out a number of inefficiencies at the purchase requisition end by virtue of the fact that the purchaser of a good or service is able to interact directly via the internet with the supplier. With procurement consuming as much as 10 per cent of a company's resources some large savings can be made by such an utilisation of e-commerce-based technology. Another example of the myth detailed in the previous section.
5. Online marketing:
Internet marketing, also known as digital marketing, web marketing, online marketing, search marketing or e-marketing, is the marketing (generally promotion) of products or services over the Internet.
Internet marketing is considered to be broad in scope because it not only refers to marketing on the Internet, but also includes marketing done via e-mail and wireless media. Digital customer data and electronic customer relationship management (ECRM) systems are also often grouped together under internet marketing.
Internet marketing ties together the creative and technical aspects of the Internet, including design, development, advertising, and sales. Internet marketing also refers to the placement of media along many different stages of the customer engagement cycle through search engine marketing (SEM), search engine optimization (SEO), banner ads on specific websites, email marketing,
Internet marketing is associated with several business models:
· E-commerce: A model whereby goods are sold directly to consumers (B2C), businesses (B2B), or from consumer to consumer (C2C).
· Lead-based websites: A strategy whereby an organization generates value by acquiring sales leads from its website. Similar to walk-in customers in retail world. These prospects are often referred to as organic leads.
· Affiliate Marketing: A process wherein a product or service developed by one entity is sold by other active sellers for a share of profits. The entity that owns the product may provide some marketing material (e.g., sales letters, affiliate links, tracking facilities, etc.); however, the vast majority of affiliate marketing relationships come from e-commerce businesses that offer affiliate programs.
· Local Internet marketing: A strategy through which a small company utilizes the Internet to find and to nurture relationships that can be used for real-world advantages. Local Internet marketing uses tools such as social media marketing, local directory listing, and targeted online sales promotions.
6. Home Shopping:
Purchases made from the buyer's home, via mail, telephone, door-to-door sales, fax, computer, or interactive television. In-home shopping has grown significantly since the advent of direct-response television, interactive television, infomercials, and cable network shopping channels. Product information is delivered to consumers at home via direct-mail promotions, catalogs, print advertisements, broadcast media, and outbound telephone. The primary motivator for in-home shopping is convenience; however, entertainment and impulse are also motivators.
B] The Different layers of OSI Reference Model:
The OSI, or Open System Interconnection, model defines a networking framework for implementing protocols in seven layers. Control is passed from one layer to the next, starting at the application layer in one station, and proceeding to the bottom layer, over the channel to the next station and back up the hierarchy.
1. Application (Layer 7):
This layer supports application and end-user processes. Communication partners are identified, quality of service is identified, user authentication and privacy are considered, and any constraints on data syntax are identified. Everything at this layer is application-specific. This layer provides application services for file transfers, e-mail, and other network software services. Telnet and FTP are applications that exist entirely in the application level. Tiered application architectures are part of this layer.
2. Presentation (Layer 6):
This layer provides independence from differences in data representation (e.g., encryption) by translating from application to network format, and vice versa. The presentation layer works to transform data into the form that the application layer can accept. This layer formats and encrypts data to be sent across a network, providing freedom from compatibility problems. It is sometimes called the syntax layer.
3. Session (Layer 5):
This layer establishes, manages and terminates connections between applications. The session layer sets up, coordinates, and terminates conversations, exchanges, and dialogues between the applications at each end. It deals with session and connection coordination.
4. Transport (Layer 4):
This layer provides transparent transfer of data between end systems, or hosts, and is responsible for end-to-end error recovery and flow control. It ensures complete data transfer.
5. Network (Layer 3):
This layer provides switching and routing technologies, creating logical paths, known as virtual circuits, for transmitting data from node to node. Routing and forwarding are functions of this layer, as well as addressing, internetworking, error handling, congestion control and packet sequencing.
6. Data Link (Layer 2):
At this layer, data packets are encoded and decoded into bits. It furnishes transmission protocol knowledge and management and handles errors in the physical layer, flow control and frame synchronization. The data link layer is divided into two sub layers: The Media Access Control (MAC) layer and the Logical Link Control (LLC) layer. The MAC sub layer controls how a computer on the network gains access to the data and permission to transmit it. The LLC layer controls frame synchronization, flow control and error checking.
7. Physical (Layer 1):
This layer conveys the bit stream - electrical impulse, light or radio signal -- through the network at the electrical and mechanical level. It provides the hardware means of sending and receiving data on a carrier, including defining cables, cards and physical aspects. Fast Ethernet, RS232, and ATM are protocols with physical layer components
A3] Future Directions of E-commerce:
E-Commerce has revolutionized the 21st century in a way that few other technologies have. Over the past decade, the phenomenon of e-Commerce has developed into a full-blown industry. Once used solely for business-to-business purposes, today nearly everyone has made at least one purchase using an e-Commerce platform.
E-Commerce appeals to the population at large for several key reasons.
· It is the most convenient way to shop.
· It doesn’t involve lines or long drives.
· E-Commerce typically offers a larger selection than brick and mortar stores.
· E-Commerce offers the ability to shop 24 hours a day
· Most e-Commerce stores offer bigger discounts and savings on their products.
· Comparison-shopping is simple because of the vast selection.
With all of the benefits offered to the typical consumer, it just makes sense that the business of e-Commerce will continue to boom. E-Commerce makes doing business easier and more economical for merchants and retailers. Advancements in technology have provided a fast, cheap way to sell and market products. Because of the mass appeal of the Internet and the enormous visibility, advertising and marketing has become an integral part of the ecommerce business model. E-Commerce also offers less overhead, a wider marketing base, and eliminates the need for a physical storefront. Those with the brick and mortar storefront also have ecommerce sites; this is the greatest proof that ecommerce is here to stay … it is just easier and much more efficient to find, compare and decide. The greater visibility ecommerce offers will mean that many businesses can expand far beyond their limits of a physical store, but it also means a market at risk of becoming saturated – which is why internet marketing is one of the most essential aspects of the e-Commerce business model.
On the surface, the future of e-Commerce looks bright. There are benefits for both the retailer and the consumer. In many ways, e-Commerce is becoming a self-fulfilling prophecy: as more consumers are drawn to the internet for their shopping needs, more and more retailers begin doing business on the internet, which leads to more consumers.
However, there are some major obstacles facing e-Commerce in the future. One of the major issues that must be addressed is that of market saturation. In any given niche, there may be millions of similar sites, and only effective marketing can give one site a lead over another. There is also the inability of consumers to view a product in real life, or ‘try it out’. This can lead to high return ratios for businesses, and inflated costs for consumers. Finally, many consumers are growing disturbed by the large number of email, spam or other marketing material that they begin receiving after making a purchase. These issues may eventually lead to significant changes in the ecommerce model.
However, have no doubt that technology and the market will respond to address these issues to further improve the shopping experience. Still other naysayers will argue that shopping in the “real world’ is still a social necessity. All I can say is maybe to some extent. Just consider the social networks like Twitter and Facebook. The web is socializing. Search around and you will find numerous groups of folks exchanging their ideas on products and services.
The future of ecommerce is bright. Most TV and other traditional media advertising are considered an intrusion. Ecommerce puts the control of when and how you will buy products and services into the hands of the buyer, that’s pretty powerful stuff, all pointing favorably towards ecommerce.
Security:
There are many options for securing communications on the internet. A great deal of work is being done with public key cryptography, and this will continue to lead in the market place. Nevertheless, there is no single dominant solution in a wide field of options and proposals. Security market has yet to determine the most appropriate level to implement security options. At the moment solutions are available for use at the application level (such as security protocols for email and the Web), at the session level (SSL, for e.g.) and at lower levels in that network (securing IP packet-level transmissions on the internet, for instance). Defacto standards are evolving rapidly; SSL for protecting data transmitted over the Web and S/MIME and PGP for protecting email messages.
More application using cryptography for electronic commerce, have to face multiple digital certificates in different formats – at least until some standard is developed. Initiatives like CryptoAPI and Intel’s Common Data Security Architecture (CDSA) are an attempt to provide layered security services that make it easier to share encryption algorithms and digital certificates between applications rather than write the required software from scratch.
Infrastructure:
For the past few decades banks and institutions that offer credit cards have created national and global electronic infrastructure for electronic funds transfers and credit card authorizations. These infrastructures operate over private networks and at least for the near term, are unlikely to move to the internet. But these same institutions are operating gateways between their services and the internet, making it easier for businesses to connect to their systems. These financial infrastructures are reaching out to a larger customer base and offering new services by embracing the Internet as another communication medium, thereby extending their own infrastructures.
New commercial endeavors are linking to existing financial systems but lack of interoperability remains a problem. Initiatives like developers are going their own individual ways, and may propose their own solutions before JEPI (Joint Electronic Payment Initiative) gets sufficient backing among both developers and users
Digital Cash:
Digital Cash intended to be the digital equivalent of real cash, each bank issues its own electronic cash tokens that are not compatible with systems used by other banks. Worrying about exchanging digital cash between banks even within same country would be intolerable.
The incompatibility of digital cash systems will remain a problem for consumer-to-business commerce for the next few years at least, but not for business-to-business commerce. EDI is a standardized way of transferring purchase and financial information, one that is usually negotiated between business partners before any transactions occur (Of course, the time required to set up EDI has been one of the reasons for it rather than limited usage). This approach of negotiating procedures will extend to other businesses as they use EDI over the internet, and these businesses are likely to follow similar procedures with payment systems other than EDI. In the absence of suitable infrastructures for these other payment systems, intermediaries such as Nets Inc. will continue to provide standardized methods of handling financial transactions between buyers and sellers.
Smart Cards:
Although smart cards have been around for more than a decade, they have not yet seen widespread use. Pre-paid or stored-value cards are currently in use for public telephones, tollbooths and mass transit systems in the US
The technology to support e-commerce using smart cards is still being developed and its being filed-tested on a limited basis. The Mondex smart cards use the digital cash system developed by David Chaum and Digicash.
Online Catalogs:
Online catalogs are likely to continue to be important part of electronic commerce, for both business-to-consumer commerce and business-to-business commerce. Dynamically generated custom catalogs search and draw data from corporate database, which will be crucial and standard way of doing things for some time.
Custom catalogs dynamically generated from corporate databases will be the norm. Customers visit a company’s web site to find out details about the products and services it offers, so that they can take their decision.
When they visit a different Web site, things might be done little differently, but the procedures are generally the same.
EDI:
Electronic data interchange (EDI) is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e. from one trading partner to another trading partner without human intervention.
Many large corporations have implemented EDI and they are routinely using it with their suppliers to simplify management of their supply chains and the handling of their financial transactions. The internet offers a low-cost alternative for transmitting EDI data with VAN. By itself, this won’t make EDI more appealing to smaller businesses, because they would still need to integrate EDI data with their internal systems, but it will help to further the acceptance of EDI.
Using the internet for EDI is less expensive than private networks. Standard bodies and developers for EDI are extending the standards to simplify negotiations between business partners and to add support for real time EDI. Finally VAN themselves are supporting Internet access for conducting EDI. EDI is being integrated with other software.
Electronic Mail:
Although the World Wide Web has received a lot of focus, other Internet based services, such as e-mail, can be equally important to e-commerce. For example, EDI VAN’s routinely use e-mail for transferring EDI data between partners. In the past, business have been reluctant to use Internet based e-mail for e-commerce because it lacks the necessary security, directory services and other options businesses have come t rely on. But that’s changing as newer protocols are being developed by the IETF. For instance, S/MIME is becoming an ad hoc standard for securing multipart e-mail, such as EDI documents, on the Internet.
One option that’s been missing from internet e-mail is a standardized way to acknowledge receipt of a message. The protocol for this is still being reviewed by the IETF>
Micro-transactions:
Although micro transactions and micro payment schemes have been mentioned a number of times, they both are certainly technologies that are still in their infancy. Limited pilot projects are now underway to test some of the technologies proposed for micro payments. Cybercash, with its Cybercoin software is the first company to offer a commercial system that supports micro transactions. Funds for these cash transactions typically from 25 are drawn from a customer’s existing bank account. Cybercash has already initiated a number of strategic alliances to support the system. Micro transactions using Cybercoin software are also being tested.
Software Agents:
One of the hot and perhaps over-hyped technologies advanced over the past few years has been software agents, self learning programs that users can instruct to perform acts on their behalf. A variety of uses for software agents have bee proposed. Two of immediate interest to e-commerce are retrieving selected product information and negotiating the sale of item.
Final Market Forecast:
As a final glance into the future here’s a brief look at markets for electronic commerce. The consumer-to-business market will continue to grow, driven by purchase of home computers and other Web-enabled devices as well as developments in new media for delivering increased bandwidth. For example, work is moving ahead on cable modems. Digital Subscriber Lines (DSL), satellite access and even Asynchrotance of e-commerce will increase, and then no longer requires the use of a personal computer, when e-commerce extends to non-computer devices such as televisions, automatic teller machines, point-of-sale terminals and other devices linked to smart cards.
