E-Commerce

Chanderprabhu Jain College of Higher Studies & School of Law
Plot No. OCF, Sector A-8, Narela, New Delhi – 110040
(Affiliated to Guru Gobind Singh Indraprastha University and Approved by Govt of NCT of Delhi & Bar Council of India)
Semester: II Semester
Name of the Subject: E-Commerce(BBA-106)
Introduction to
Ecommerce

Meaning of E-commerce
E-commerce (electronic commerce or EC) is the buying and selling of goods
and services, or the transmitting of funds or data, over an electronic
network, primarily the internet. These business transactions occur either as
business-to-business, business-to-consumer, consumer-to-consumer or
consumer-to-business. The terms e-commerce and e-business are often used
interchangeably. The term e-tail is also sometimes used in reference to
transactional processes for online shopping.

Reasons for online transaction
Top reasons people prefer online payments:
1. They eliminate geographical boundaries.
2. They’ve never been more convenient.
3. They give consumers more time
4. They provide an additional layer of purchase protection.
5. They replicate their existing financial habits
6. They provide cost-free benefits.

Types of E-commerce
There are 6 basic types of e-commerce:
• Business-to-Business (B2B)
• Business-to-Consumer (B2C)
• Consumer-to-Consumer (C2C)
• Consumer-to-Business (C2B).
• Business-to-Administration (B2A)
• Consumer-to-Administration (C2A)

1
1. Business-to-Business (B2B)
Business-to-Business (B2B) e-commerce encompasses all electronic
transactions of goods or services conducted between companies. Producers
and traditional commerce wholesalers typically operate with this type of
electronic commerce.
2. Business-to-Consumer (B2C)
The Business-to-Consumer type of e-commerce is distinguished by the
establishment of electronic business relationships between businesses and
final consumers. It corresponds to the retail section of e-commerce, where
traditional retail trade normally operates.

3. Consumer-to-Consumer (C2C)
Consumer-to-Consumer (C2C) type e-commerce encompasses
all electronic transactions of goods or services
conducted between consumers. Generally, these transactions
are conducted through a third party, which provides the online
platform where the transactions are actually carried out.
4. Consumer-to-Business (C2B)
In C2B there is a complete reversal of the traditional sense of
exchanging goods. This type of e-commerce is very common
in crowd sourcing based projects. A large number of
individuals make their services or products available for
purchase for companies seeking precisely these types of
services or products.

5. Business-to-Administration (B2A)
This part of e-commerce encompasses all transactions
conducted online between companies and public
administration. This is an area that involves a large amount
and a variety of services, particularly in areas such as fiscal,
social security, employment, legal documents and registers,
etc. These types of services have increased considerably in
recent years with investments made in e-government.
6. Consumer-to-Administration (C2A)
The Consumer-to-Administration model encompasses all
electronic transactions conducted between individuals and
public administration.

Advantages of e-commerce
• The main advantage of e-commerce is its ability to reach a global market, without
necessarily implying a large financial investment. The limits of this type of commerce are
not defined geographically, which allows consumers to make a global choice, obtain the
necessary information and compare offers from all potential suppliers, regardless of their
locations.
• By allowing direct interaction with the final consumer, e-commerce shortens the product
distribution chain, sometimes even eliminating it completely. This way, a direct channel
between the producer or service provider and the final user is created, enabling them to offer
products and services that suit the individual preferences of the target market.
• E-commerce allows suppliers to be closer to their customers, resulting in increased
productivity and competitiveness for companies; as a result, the consumer is benefited with
an improvement in quality service, resulting in greater proximity, as well as a more efficient
pre and post-sales support. With these new forms of electronic commerce, consumers now
have virtual stores that are open 24 hours a day.

Disadvantages of e-commerce
The main disadvantages associated with e-commerce are the following:
• Strong dependence on information and communication technologies (ICT);
• Lack of legislation that adequately regulates the new e-commerce activities,
both nationally and internationally;
• Market culture is averse to electronic commerce (customers cannot touch or
try the products);
• The users’ loss of privacy, the loss of regions’ and countries’ cultural and
economic identity;
• Insecurity in the conduct of online business transactions.

Challenges and Barriers in E-
Commerce
Most common e-commerce challenges in India:
1. Lack of proper knowledge/ poor market research
2. Choosing the right product
3. Profitability
4. Inventory
5. Returns and cancellations
6. Promotion
7. Logistic Challenges
8. Packaging

OPPORTUNITIES FOR E-
COMMERCE
1. E-business
2. E-commerce integration
3. Open and distance learning
4. E-commerce and E-insurance
5. Future media of e-commerce

CHALLENGES FOR E COMMERCE
1. Ethical issues
2. Security concerns
3. Perceptions of risk in e-service encounters
4. E-commerce Integration

E-commerce in INDIA
• India has an internet users base of about 450 million as of July 2017, about 40% of the
population. Despite being the second-largest user base in world, only behind China (650
million, 48% of population), the penetration of e-commerce is low compared to markets
like the United States (266 million, 84%), or France (54 M, 81%), but is growing at an
unprecedented rate, adding around 6 million new entrants every month. The industry
consensus is that growth is at an inflection point.[4]
• In India, cash on delivery is the most preferred payment method, accumulating 75% of
the e-retail activities. Demand for international consumer products (including long-tail
items) is growing much faster than in-country supply from authorized distributors and e-
commerce offerings.
• As of 2017, the largest e-commerce companies in India are Flipkart, Amazon, Paytm
and Snapdeal

Market size and growth
• India's e-commerce market was worth about $3.9 billion in 2009, it went up to $12.6 billion in 2013. In
2013, the e-retail segment was worth US$2.3 billion. About 79% of India's e-commerce market is
travel related.According to Google India, there were 35 million online shoppers in India in 2014 Q1
and was expected to cross 100 million mark by end of year 2016.CAGR vis-à-vis a global growth rate
of 8–10%. Electronics and Apparel are the biggest categories in terms of sales.
• According to a study conducted by the Internet and Mobile Association of India, the e-commerce sector
is estimated to reach Rs. 211,005 crore by December 2016. The study also stated that online travel
accounts for 61% of the e-commerce market.
• According to study done by Indian Institute of eCommerce, by 2021 India is expected to generate $100
billion online retail revenue out of which $35 billion will be through fashion e-commerce. Online
apparel sales are set to grow four times in coming years.
• India's retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by 2016
and $850 billion by 2020, – estimated CAGR of 10%.According to Forrester, the e-commerce market
in India is set to grow the fastest within the Asia-Pacific Region at a CAGR of over 57% between
2012–16.

Transition to INDIA in E-commerce
The year 2018 must be seen as a perfect launching pad for many e-commerce start-ups. Here are
few reasons for this speculation:
1. The country's economic structure is now GST-ready and the newcomers would not be
affected in any way by the new set of rules and regulations as they have never faced the pre-
GST phase and the challenges to moving into a new tax system.
In fact, with the fool-proof tax system like GST and new fiscal policies in the upcoming
budget session, the retail and e-commerce industry would be more organized and profitable.
2. The supply chain management, storage, and logistics infrastructure have improved since
last 2 years as various new smart cities and SEZs have been developed by the Government to
facilitate trade and provide a swifter transition of consumer orders. This will definitely give
the e-commerce retailers an edge over local sellers.
3. With more telecom & broadband internet providers jumping into the competition to provide
more internet data at fewer prices, consumers would not mind surfing the internet for their
needs anymore. This would also allow e-commerce companies to showcase their services to
the consumers in a broad size.

New job skill trends for 2018:
If we see the e-commerce trend closely, undoubtedly, the market is dominated by big players like
Amazon, Flipkart, etc. However, it will be very interesting to see other players coming up with
exclusive specialisations in a particular line of online retail trade such as - Caratlane, Bluestone,
GemsRatna, etc. In order to give stiff competition to the big e-commerce brands, these online
retailers would be keen to open up hiring of fresh ideas, creative and innovative techniques,
new-age imaging, designing, and programming in order to match the reach of established e-
stores.
Apart from the new entrants, the already established Indian origin e-commerce brands such as
Flipkart, Snapdeal, PayTM, etc would be eying on making their international presence and give
a competition to the International rivals such as Amazon and eBay. In order to achieve this, they
would definitely be looking at smart talent specialized in international trade and business
operations for a smoother transition of their business to international e-commerce markets.

E-commerce Transition Challenges
for Indian Corporate
Electronic Commerce is more than just buying and
selling products online. It also includes the entire
online process of developing, marketing, selling,
delivering, servicing and paying for products and
services. India has shown tremendous growth in the
E-commerce segment. With an internet user base of
over 300 million, India has third largest internet
population after US & China (see info-graphic
below).

India has witnessed a major breakthrough E-
commerce success stories particularly in e-retail in
Consumer Electronics & Fashion Apparel &
Home Furnishing segments. E-commerce creates
new opportunities for entrepreneurial start-ups.
Ease of Internet access, Safe and secure payment
modes coupled with aggressive marketing by E-
Commerce Giants has revolutionized this segment.
Rapid development in mobile technology has given
way to Mobile Commerce with many E-Commerce
companies shifting to App only model.

Challenges
• E-Commerce, in-spite of the opportunities it presents also has
poses certain challenges which are sometimes too much to
handle for start-ups:

Basic Structure of HTML
• Hypertext Markup Language (HTML) is the standard markup language for creating web
pages and web applications. With Cascading Style Sheets (CSS) and JavaScript, it forms a
triad of cornerstone technologies for the World Wide Web.
• Web browsers receive HTML documents from a web server or from local storage and
render the documents into multimedia web pages. HTML describes the structure of a web
page semantically and originally included cues for the appearance of the document.
• HTML elements are the building blocks of HTML pages. With HTML constructs, images
and other objects such as interactive forms may be embedded into the rendered page.
HTML provides a means to create structured documents by denoting structural semantics
for text such as headings, paragraphs, lists, links, quotes and other items. HTML elements
are delineated by tags, written using angle brackets. Tags such as <img /> and <input />
directly introduce content into the page. Other tags such as surround and provide
information about document text and may include other tags as sub-elements. Browsers do
not display the HTML tags, but use them to interpret the content of the page.

Markup
• HTML markup consists of several key components, including those called
tags (and their attributes), character-based data types, character
references and entity references. HTML tags most commonly come in pairs
like <h1> and </h1>, although some represent empty elements and so are
unpaired, for example <img>. The first tag in such a pair is the start tag,
and the second is the end tag (they are also called opening tags and
closing tags).
• Another important component is the HTML document type declaration,
which triggers standards mode rendering.
• The following is an example of the classic "Hello, World!" program, a
common test employed for comparing programming languages, scripting
languages and markup languages. This example is made using 9 source
lines of code:

CODING
• <!DOCTYPE html>
• <html>
• <head>
• <title>This is a title</title> </head>
• <body> Hello world!
• </body> </html>

Advanced text Formatting
• HTML provides us with the ability for formatting text just like
we do it in MS Word or any text editing software. In this
article, we would go through few such options.
1. Making text Bold or Strong
We can make the text bold using the tag. The tag uses both opening
and closing tag. The text that needs to be made bold must be within 
and tag.
We can also use the tag to make the text strong, with added
semantic importance. It also opens with and ends with 
tag.

• Example:
• <!DOCTYPE html>
• <html>
• <head>
• <title>Bold</title>
• </head>
• <body>
• 
• Hello GeeksforGeeks
• 
• Hello GeeksforGeeks
• 
• Hello GeeksforGeeks
• </body>
• </html>

2. Making text Italic or emphasize:
The tag is used to italicise the text. It opens with and ends with tag.
The tag is used to emphasize the text, with added semantic importance. It opens with
 and ends with tag.
Example:
• <!DOCTYPE html>
• <html>
• <head>
• <title>Italic</title>
• </head>
• <body>
• 
• 
• Hello GeeksforGeeks
• 
• Hello GeeksforGeeks
• </body>
• </html>

• Highlighting a text:
It is also possible to highlight a text in HTML using the tag. It has a opening tag and a closing tag

• Making a text Subscript or Superscript:
The element is used to superscript a text and element is used to subscript a text. They both have
opening and a closing tag.
Example:
• <!DOCTYPE html>
• <html>
• <head>
• <title>Superscript and Subscript</title>
• </head>
• <body>
• 
• 
• Hello GeeksforGeeks
• 
• Hello GeeksforGeeks
• </body>
• </html>

• Making text smaller:
The element is used to make the text smaller. The text that needs
to be displayed smaller should be written inside and tag.
Example:
• <!DOCTYPE html>
• <html>
• <head>
• <title>Small</title>
• </head>
• <body>
• 
• Hello GeeksforGeeks
• </body>
• </html>

• Striking through the text:
The <del> element is used to strike through the text marking the part as deleted. It
also has an opening and a closing tag.
Example:
• <!DOCTYPE html>
• <html>
• <head>
• <title>Delete</title>
• </head>
• <body>
• 
• <del>Hello GeeksforGeeks</del>
• </body>
• </html>

• Adding a text:
The <ins> element is used to underline a text marking the part as inserted or
added. It also has an opening and a closing tag.
Example:
• <!DOCTYPE html>
• <html>
• <head>
• <title>Inserting</title>
• </head>
• <body>
• 
• <ins>Hello GeeksforGeeks</ins>
• </body>
• </html>

Multimedia components in HTML
documents
• Major 5 Components of Multimedia
Multimedia applications can include many types of media.
The primary characteristic of a multimedia system is the use
of more than one kind of media to deliver content and
functionality. Web and desktop computing programs can both
involve multimedia components. As well as different media
items, a multimedia application will normally involve
programming code and enhanced user interaction.
Multimedia items generally fall into one of five main
categories and use varied techniques for digital formatting.

1. TEXT
2. IMAGES
3. AUDIO
4. VIDEO
5. ANIMATION

Components in HTML Documents
1. HEAD
2. TITLE
3. BODY
4. HTML
5. 
6. <HR>
7. <div>

8. BLOCKQUOTE
9. <PRE>
10. 
11. 
12. <UL>
13. <LI>
14. <OL>
15. <IMG>

16. <DD>
17. <DT>
18. <!COMMENT-->

Designing Of Webpage
Installing an HTML editor and setting up a folder, you
are ready to begin creating your page. Begin by
creating a file named index.htm or index.html as
your start page. All servers on the Internet look for
an index file if no file is specified.
Once you have created the index.htm or index.html
file and it is open in your HTML editor, we
recommend inserting the below source code into
your page. If your HTML editor automatically places
HTML code into your page

• <html>
• <head>
• <title>My first web page</title>
• </head>
• <body> Your web page content goes here
</body>
• </html>

The above code is a very basic example of the code
that helps make up every web page. As you can see,
the code starts with <html>, which is defining that
everything within <html> is HTML code. Next, you
have <head>, which is defining the heading of your
HTML document. Third, we have the <title> section
within <head>, which defines the web page title that
is displayed at the top of the Internet browser
window. Finally, the <body> section contains what is
shown on the web page.

<center><h1>Welcome to my web page</h1></center>
<hr>
 
Hello and welcome to my first website.
 
These are my favorite links: 
<ul> <li><a
href="https://www.computerhope.com">Computer
Hope</a></li> <li><a
href="http://www.google.com">Google</a></li>
</ul>

• As you can see from looking at the above code, you will
realize that the basic HTML commands are fairly simple to
use. First, we start off with <center>, which is telling the
browser to center the information in these tags. Next, the <h1>
or heading one statement tells the browser to display the text in
the largest heading style. Next, the <hr> tag tells the browser
to display a line straight across the screen. The third line
contains that creates a line break on the page. Next, the
 is short for "paragraph" and helps separate the text on the
page. Next, the tag is short for bold and will bold the text
contained in the tag. Next, the <ul> starts a bullet list and each
bullet is represented by the <li> tag. Finally, the "<a href" tag
is a method of creating a link to another location.

Viewing the website
• Now that you have created a basic website, you may want to
verify how the website looks. Being that you have files locally
stored on your computer, you will not need to connect to the
Internet to view your web page.
• Open the computer browser and type the location of your
web page. For example, if you have placed the index.htm or
index.html file within a "website" folder, you would type in
the browser c:websiteindex.htm or c:websiteindex.html
on a Windows PC. If you have Microsoft Windows or Apple,
you can also double-click the web page file to open the page
in a browser.

Working with frames, forms and
control
• HTML Forms are required, when you want to collect some
data from the site visitor. For example, during user
registration you would like to collect information such as
name, email address, credit card, etc.
• A form will take input from the site visitor and then will post it
to a back-end application such as CGI, ASP Script or PHP script
etc. The back-end application will perform required
processing on the passed data based on defined business
logic inside the application.
• There are various form elements available like text fields,
textarea fields, drop-down menus, radio buttons, checkboxes,
etc.

• The HTML <form> tag is used to create an
HTML form and it has following syntax −
• <form action = "Script URL" method =
"GET|POST"> form elements like input,
textarea etc. </form> Form Attributes

• Apart from common attributes, following is a list of the most frequently used form
attributes −
• Sr.No Attribute & Description
• 1 action
• Backend script ready to process your passed data.
• 2 method
• Method to be used to upload data. The most frequently used are GET and POST
methods.
• 3 target
• Specify the target window or frame where the result of the script will be displayed.
It takes values like _blank, _self, _parent etc.
• 4 enctype
• You can use the enctype attribute to specify how the browser encodes the data
before it sends it to the server. Possible values are −
• 5. application/x-www-form-urlencoded − This is the standard method most forms
use in simple scenarios.
• mutlipart/form-data − This is used when you want to upload binary data in the
form of files like image, word file etc.

HTML Form Controls
• There are different types of form controls that you can use to
collect data using HTML form −
• Text Input Controls
• Checkboxes Controls
• Radio Box Controls
• Select Box Controls
• File Select boxes
• Hidden Controls
• Clickable Buttons
• Submit and Reset Button

Text Input Controls
• There are three types of text input used on forms −
• Single-line text input controls − This control is used for items
that require only one line of user input, such as search boxes
or names. They are created using HTML <input> tag.
• Password input controls − This is also a single-line text input
but it masks the character as soon as a user enters it. They are
also created using HTMl <input> tag.
• Multi-line text input controls − This is used when the user is
required to give details that may be longer than a single
sentence. Multi-line input controls are created using HTML
<textarea> tag.

Key Challenges
• Module for online payments and integration with the current system
• Incorporation of new customers, maintain demographic data and migration
of the reward points for the customer royalty program
• They were using the proprietary American express's "Membership Miles
International" (MMI) system. American Express stopped support for this
application since last 4 years.
• The application went on critical path as it was getting increasingly difficult
for the bank to support and maintain this application on their own and that
too remotely
• The main concern of the bank was the possibility of loosing all the mails
related information of their existing customers.

The Solution
• This complex project was conducted to significantly enhance and improve
the technical and functional coverage of the electronic payments system at
the Bank
• Putting in place a new Membership Miles International (MMI) system
developed in AS400, replacing the banks old Mainframe system.
• Management of Credit Card Royalty program to administer reward points
earned or redeemed for American Express customers
• Incorporated new customers, maintain demographic data and migration of
the reward points for the customer royalty program
• Migration of the customer's existing data from old MMI to new AS400
system.
• User friendly menu, reports and screens developed for the process of
enrollment setup, maintenance, inquiry and transfer for the royalty
program.

• Value Additions Make your online payments
• Payroll management
• Payments to suppliers
• Conduct charges automatic loan payments
• Pay off credit cards
• Making account transfers and other services.
• These services are implemented by the Bank across the
Electronic Payment System (PES) which is developed using
Free RPG language and is currently deployed in the IBM I-
Series platform.

Business Benefits
• Includes SWIFT message capabilities within in electronic payments
processing.
• Addition of local interbank transactions (ACH Network).
• Includes availability in electronic payments online for credit card payments
of the Bank, so that the balances are updated real time.
• Minimizing response times of system processes, increasing efficiency in
the transfer, file distribution and posting.
• Optimizing the SPE to ensure efficiency with the increasing volume of
transactions from E-Banking.
• Creating and integrating pre-notifications response structures.
• Conceptualizing, designing and developing a new schema for PCI
modification. (Encryption and Decryption of Credit and debit cards).
• Addition of multi currency capabilities to the platform.

The different types of e-commerce payments in use today are:
• Credit Card
The most popular form of payment for e-commerce transactions is through credit cards. It is
simple to use; the customer has to just enter their credit card number and date of expiry in the
appropriate area on the seller’s web page. To improve the security system, increased security
measures, such as the use of a card verification number (CVN), have been introduced to on-
line credit card payments. The CVN system helps detect fraud by comparing the CVN number
with the cardholder's information.
• Debit Card
Debit cards are the second largest e-commerce payment medium in India. Customers who
want to spend online within their financial limits prefer to pay with their Debit cards. With the
debit card, the customer can only pay for purchased goods with the money that is already
there in his/her bank account as opposed to the credit card where the amounts that the buyer
spends are billed to him/her and payments are made at the end of the billing period.
• Smart Card
It is a plastic card embedded with a microprocessor that has the customer’s personal
information stored in it and can be loaded with funds to make online transactions and instant
payment of bills. The money that is loaded in the smart card reduces as per the usage by the
customer and has to be reloaded from his/her bank account.

• E-Wallet
E-Wallet is a prepaid account that allows the customer to store multiple
credit cards, debit card and bank account numbers in a secure environment.
This eliminates the need to key in account information every time while
making payments. Once the customer has registered and created E-
Wallet profile, he/she can make payments faster.
• Net banking
This is another popular way of making e-commerce payments. It is a
simple way of paying for online purchases directly from the customer’s
bank. It uses a similar method to the debit card of paying money that is
already there in the customer’s bank. Net banking does not require the user
to have a card for payment purposes but the user needs to register with
his/her bank for the net banking facility. While completing the purchase the
customer just needs to put in their net banking id and pin.

• Mobile Payment
One of the latest ways of making online payments are through mobile phones.
Instead of using a credit card or cash, all the customer has to do is send a payment
request to his/her service provider via text message; the customer’s mobile account
or credit card is charged for the purchase. To set up the mobile payment system, the
customer just has to download a software from his/her service provider’s website
and then link the credit card or mobile billing information to the software.
• Amazon Pay
Another convenient, secure and quick way to pay for online purchases is through
Amazon Pay. Use your information which is already stored in your Amazon
account credentials to log in and pay at leading merchant websites and apps. Your
payment information is safely stored with Amazon and accessible on thousands of
websites and apps where you love to shop.
• If you are planning to sell your products online, Amazon would be happy to help
you in setting up payment gateways for your products and services. You can also
consider selling on Amazon, one of the most popular e-commerce platforms in the
world. To sell on Amazon, please register yourself for free.

Risks in Electronic Payment Systems
• The Risk of Fraud
Electronic payment systems are prone to the risk of fraud. The system uses a
particularly vulnerable protocol to establish the identity of the person authorizing
a payment. Such things as passwords and security questions aren’t foolproof in
determining the identity of a person. So long as the password and the answers to
the security questions are correct, the system doesn’t care who’s on the other
side. If someone gains access to your password or the answers to your security
question, he will have gained access to your money and can steal it from you.
• The Risk of Tax Evasion
The law requires that businesses declare their financial transactions and provide
paper records of them so that tax compliance can be verified. The problem with
electronic systems is that they don’t fit very cleanly into this paradigm and so
they can make the process of tax collection very frustrating for the Internal
Revenue Service. It is at the business’s discretion to disclose payments received
or made via electronic payment systems in a fiscal period, and the IRS has no
way of knowing if it’s telling the truth or not. That makes it pretty easy to evade
taxation.

• The Risk of Payment Conflicts
One of the idiosyncrasies of electronic payment systems is that the
payments aren’t handled by humans but by an automated electronic system.
The system is prone to errors, particularly when it has to handle large
amounts of payments on a frequent basis with many recipients involved.
It’s important to constantly check your pay slip after every pay period ends
in order to ensure everything makes sense. Failure to do this may result in
payment conflicts caused by technical glitches and anomalies.
• The Risk of Impulse Buying
Impulse buying is already a risk that you face when you use non-electronic
payment systems. It is magnified, however, when you’re able to buy things
online at the click of a mouse. Impulse buying can become habitual and
makes sticking to a budget almost impossible.

Concept of E-money
• Broadly, electronic money is an electronic store of monetary value on a technical
device. The definition of electronic money is becoming more scientific and specific
with developments associated with it. The European Central Bank defines e-money
in the following words. “E-money can be defined as amount of money value
represented by a claim issued on a prepaid basis, stored in an electronic medium
(card or computer) and accepted as a means of payment by undertakings other than
the issuer” (ECB).
• E money is a monetary value that is stored and transferred electronically through a
variety of means – a mobile phone, tablet, contactless card (or smart cards),
computer hard drive or servers. Electronic money need not necessarily involve bank
accounts in transaction but acts as a prepaid bearer instrument. They are often used
to execute small value transactions.

Types of electronic money
• E-money is usually issued by an institution upon receipt of funds and is given a
value in a national currency like Rupee. Basically, money is of three types with the
first two being the most important. The first category is stored value cards that
contain prepaid money. Smart cards, prepaid cards and cards used in bus like
Mybus card, are examples of this prepaid payment cards. Second is the software
based electronic money where money is kept online in servers. Here, account
balances are kept at online service providers such as Paytm.
• Another type of e-money is virtual currencies without an issuer and that not
denominated in national currencies. But there are several conditions that makes
virtual currencies to be counted as electronic money. The ECB itself gives three
areas of electronic money.
• Empirically, the stored value cards like smart cards are used for standard retail
payment transactions. On the other hand, the software based online payments
supported by software based mobile wallets and digital wallets.

Electronic money in India
• In India, the field of electronic money is regulated by the RBI mainly under
Payment and Settlement System Act (PPS Act) 2007. The Act gives details
about the issue of electronic money under the name Prepaid Payment
Instruments. Separate Prepaid Payments Instruments guidelines are also
issued by the RBI on this behalf. As per the PPS Act, banks and non-bank
entities can issue pre-paid payment instruments in the country after
obtaining necessary approval / authorization from RBI.
• In 2002, a Working Group under YV Reddy has submitted report on
Electronic Money by making an extensive study about the potentials of
electronic money in India. Electronic money in the form of Prepaid
Payment Instruments are expected to push cashless transactions in the
country.

Infrastructure, Risks and issues in
EPS
1. Infrastructure Issues in EPS
Infrastructure is necessary for the successful implementation of electronic payments.
Proper Infrastructure for electronic payments is a challenge. 1.For electronic payments to be
successful , there is the need to have reliable and cost effective infrastructure that can be
accessed by majority of the population.
2. Electronic payments communication infrastructure includes computer network such as the
internet and mobile network used for mobile phone.
3. Good communication Infrastructure : Poor communication infrastructure &Internet and
mobile networking' is one of the reasons that hinder the repayment system or level of
internet penetration and poorly developed telecommunication infrastructure impede
smooth development and improvements in e"commerce.

Electronic Fund Transfer
Electronic funds transfer (EFT) is the electronic
transfer of money from one bank account to another,
either within a single financial institution or across
multiple institutions, via computer-based systems,
without the direct intervention of bank staff. EFT
transactions are known by a number of names. In the
United States, they may be referred to as electronic
cheques or e-cheques. When made within the same
financial institution, they are commonly known as
peer-to-peer transfers.

Electronic money account
• The term is related to electronic money, or e-money, which is
explained as a summary of different electronic payment systems,
used for electronic funds transfers and transactions globally.
• An electronic money account is used to store user’s money for
future payment transactions, such as online and in-store payments
and cash withdrawals.
• In Europe, electronic money accounts are provided by licensed e-
money institutions as defined under the 2009/110/EC Directive of
the European Parliament and Council.
• The European Union has been at the forefront of defining terms
related to e-money - since 2000, which is longer than other countries
or regions.

Types of EFT
• The term covers a number of different payment systems, for example:
• cardholder-initiated transactions, using a payment card such as a credit or
debit card
• direct deposit payment initiated by the payer
• direct debit payments for which a business debits the consumer's bank
accounts for payment for goods or services
• wire transfer via an international banking network such as SWIFT
• electronic bill payment in online banking, which may be delivered by EFT
or paper check
• transactions involving stored value of electronic money, possibly in a
private currency.

Steps of EFT
An EFT transaction requires the following steps:
• Making application
• Data preparation
• Data transmission
• Debiting remittance banks
• Crediting receiving banks
• Crediting beneficiary
• Task at service branch
• Task at beneficiary branch

Security issues in e-commerce
E-Commerce is defined as the buying and selling of products or services
over electronic systems such as the Internet and to a lesser extent, other
computer networks. It is generally regarded as the sales and commercial
function of eBusiness. There has been a massive increase in the level of
trade conducted electronically since the widespread penetration of the
Internet. A wide variety of commerce is conducted via eCommerce,
including electronic funds transfer, supply chain management, Internet
marketing, online transaction processing, electronic data interchange (EDI),
inventory management systems, and automated data collection systems. US
online retail sales reached $175 billion in 2007 and are projected to grow to
$335 billion by 2012 (Mulpuru, 2008).

This massive increase in the uptake of ecommerce has led to
new generation of associated security threats, but
eCommerce system must meet four integral requirements:
• privacy – information exchanged must be kept from
unauthorized parties
• integrity – the exchanged information must not be altered or
tampered with
• authentication – both sender and recipient must prove their
identities to each other and
• non-repudiation – proof is required that the exchanged
information was indeed received (Holcombe, 2007).

E-commerce Security Risks Currently Faced by Online
Retailers
• Credit Card Fraud
• Distributed Denial of Service (DDoS) Attacks
• Man-in-the-middle Attacks
• Bad Bots
• Malware
• Phishing Scams

Best Practices to Curb the Security Issues in E-commerce:
Fraud costs online retailers billions of dollars yearly. To solve the
security issues in e-commerce, merchants and payment
companies should collaboratively come up with effective
solutions. Though these security issues are becoming intense
with time, there are solutions that online retailers can
implement without affecting the user experience of their
sites. In other words, they can adopt the following solutions
without impacting the customer experience.

Choose a PCI Compliant Hosting Provider
• PCI compliant hosting providers usually have stringent procedures and policies in place for
guaranteeing secure payments. They also ensure that online shoppers can conveniently use
their debit or credit card to pay for goods or services. Measures that they adopt include risk
analysis, extensive monitoring, use of anti-malware software and encryption. Besides
relying on a PCI compliant hosting provider, online retailers should also deploy regular PCI
updates and scans on their sites to prevent security threats.
Use an Address Verification System (AVS)
• One of the safest ways online retailers can facilitate credit card processing is by the use of
an Address Verification System (AVS). This system is capable of comparing a customer’s
billing address against the information stored on file by a credit card issuer. It can block any
suspicious transactions if the information provided doesn’t match with the one stored on the
credit card.
Require stronger passwords
• The reason why hackers easily gain access to users’ login credentials is that most e-
commerce sites fail to ask users to provide stronger passwords. Hackers can utilize
algorithms to figure out the passwords easily. A strong password contains a mix of
alphabetical letters and numbers.

Security threats in Ecommerce
environment
The world today is coming closer. From
communicating to one person sitting at the other end
of the world to finalizing business deals, everything
has become fast and quick. The reason for this is the
massive internet boom which has made life easier for
the average person by providing a plethora of options.
What’s more it has also made your shopping
experience a more interesting and enjoyable one. You
can now get practically everything from online
shopping.

e-commerce threat
There are various types of e-commerce threats. Some are accidental, some are
purposeful, and some of them are due to human error. The most common
security threats are phishing attacks, money thefts, data misuse, hacking,
credit card frauds and unprotected services.
1. Inaccurate management
2. Price Manipulation
3. Snowshoe Spam
4. Malicious code threats
5. Hacktivism
6. Wi-Fi Eavesdropping

Basics of encryption and
decryption
In cryptography, encryption is the process of encoding a message or information in such a
way that only authorized parties can access it and those who are not authorized cannot.
Encryption does not itself prevent interference, but denies the intelligible content to a would-
be interceptor. In an encryption scheme, the intended information or message, referred to as
plaintext, is encrypted using an encryption algorithm – a cipher – generating ciphertext that
can be read only if decrypted. For technical reasons, an encryption scheme usually uses a
pseudo-random encryption key generated by an algorithm. It is in principle possible to
decrypt the message without possessing the key, but, for a well-designed encryption scheme,
considerable computational resources and skills are required. An authorized recipient can
easily decrypt the message with the key provided by the originator to recipients but not to
unauthorized users

Decryption
Decryption is the process of transforming data that
has been rendered unreadable through encryption
back to its unencrypted form. In decryption, the
system extracts and converts the garbled data and
transforms it to texts and images that are easily
understandable not only by the reader but also by the
system. Decryption may be accomplished manually
or automatically. It may also be performed with a set
of keys or passwords.

E-commerce applications in
Various industries
The applications of E-commerce are used in various business areas such as retail and wholesale
and manufacturing.Smartphones and tablets have completely changed the game for the E-
commerce industry. In the last few years the strategies of large and small companies alike
have shifted to become more mobile focused as consumers have rapidly embraced mobile
shopping.
Marketing:
• Data collection about customer behavior, preferences, needs and buying patterns is possible
through Web and E-commerce. This helps marketing activities such as price fixation,
negotiation, product feature enhancement and relationship with the customer.
Finance:
• Financial companies are using E-commerce to a large extent. Customers can check the
balances of their savings and loan accounts, transfer money to their other account and pay
their bill through on-line banking or E-banking.Another application of E-commerce is on-
line stock trading. Many Websites provide access to news, charts, information about
company profile and analyst rating on the stocks.

Manufacturing:
• E-commerce is also used in the supply chain operations of a company. Some
companies form an electronic exchange by providing together buy and sell goods,
trade market information and run back office information such as inventory control.
This speeds up the flow of raw material and finished goods among the members of the
business community. Various issues related to the strategic and competitive issues
limit the implementation of the business models. Companies may not trust their
competitors and may fear that they will lose trade secrets if they participate in mass
electronic exchanges.
Auctions:
• Customer-to-Customer E-commerce is direct selling of goods and services among
customers. It also includes electronic auctions that involve bidding. Bidding is a
special type of auction that allows prospective buyers to bid for an item. For example,
airline companies give the customer an opportunity to quote the price for a seat on a
specific route on the specified date and time.

Emerging trends in e-commerce
In today’s time, all thanks to advancement in technology nothing or no business is restricted
to one place, one city or even one country anymore. Everything is global. In the past few
years ecommerce industry has taken a ride and has come to become the need of the hour.
eCommerce industry as a whole is evolving at a great pace and as for 2014 and 2015, it has
already risen tremendously.
There are new trends emerging in this space, such as:
• Moving to Mobile Commerce
As per a recent report, it is predicted that by the end of 2016 almost a third of the
world’s population will have access to smartphone. Having this feature has become more of
a necessity. eCommerce stores must fit in all screens in order to enhance customer
experience or they may be losing on some serious business.As per recent Forbes study, 87 %
of the gen-X people spend most of their time on a digital devices every day than ever.
• Choose how you want to pay
Convenient and more payment options new businesses are emerging to facilitate new
payment models to enhance online shopping experience. They aim not only to make wider
options available but also to increase payment security for both buyers and sellers. In the
past few years, many new models and gateways have emerged like ewallets, Chip card
readers, magnetic cards , EMV and cashback services.

Multi Channel Model
• Inspite of booming eCommerce market, retailers have come to an understanding that Omni
Channel /Multiple channel is must for any business model. Though there has been a lot of buzz on
online shopping comfort, in reality it has been recorded that many customers may surf net all day
but at the end do need a brick and mortar store to make the final purchase. However,
new technologies such as instore digital services are emerging to make the physical store
experience better.
Seamless Shopping experience
• Many new features are being added by all companies to facilitate seamless shopping
for example stores are now offering easy on the spot or online payments , easy wallets with
discounts and coupons or unique store debit cards
• Social Ecommerce
• Retailers are adopting social media as their lead sales medium . Social network has come to play
the most important role in the retail world lately , almost 40 % purchases are made because of
social media handles . Thus , social network is sure expected to rise in the coming time.
• Quality rather than quantity
• Retailers have come to an understanding that now having more variety will not win
them customers, thus the focus has shifted to enhancing customised shopping experience by
introducing new features. The emphasis is now being laid on unique online features like
virtual trial rooms, zoom in pictures, 360 degree image view.

Customer Relationship
• With the increasing variety available the customer loyalty is now completely out of picture . It
requires well integrated technology supporting easy payments and high tech shopping experience
. The focus is now being shifted from discounts to better integrated technology services.
Customer service
• With the increasing online shopping, people are becoming more and more comfortable with the
concept of choosing amongst great variety at the comfort of their own space anywhere, anytime
24/7 . Thus , there will be a rise in customer support service feature in the coming time .
Smarter Customers
• With more shopping and payment options than ever , customers are more informed and
empowered now the stakes are much higher. It is utmost important to win their trust now
than ever, but maintaining quality and logistics.
Merging online and offline
• It has become important to merge online /offline systems to facilitate easy working . A well
integrated technology is crucial.
• “Change is the essence of life” in order to survive and make a mark in today's time retailers must
be extremely flexible and mouldable towards the smart customers changing needs. It requires
tools like social media monitoring , customer feedback & so on . It is the need today to
stay upbeat with the changing trends and technology to stay long.

Regulatory and social
consideration in e-commerce
The International Organization for Economic Cooperation and
Development (OECD) has recently issued their recommendation for
ecommerce best practices guidelines to help you understand consumer
privacy compliance, which focuses on:
• Company/Site Transparency
• Marketing Practices
• Online Disclosures
• Confirmation Process
• Payment
• Dispute Resolution

Legal considerations with e-
commerce
• Whether you are already running an online business or are still in the initial
stages, it's worth bearing in mind that there are certain regulations you must
adhere to when selling online.
• These regulations are to give consumers confidence while buying online and
to ensure that all traders are following the same basic standards. These
standards are:
• Electronic Commerce Regulations (ECRs)
• Consumer Protection (Distance Selling) Regulations 2000
• We recommend you get legal advice before beginning to sell online to ensure
you are meeting these standards or please see the Office of Fair Trading
website. We have a rough summary of them below.

Electronic Commerce
Regulations (ECRs)
• The points below must be clealy displayed somewhere on your
website or on any electronic data sent from your ocmpany including
the likes of e-mail.
• Identifying business information: Company name, postal address
(and registered office address if this is different) and email address
and the company’s registration number.
• Information on any trade bodies you are a member of.
• VAT number to be stated if registered.
• Clearly display prices and whether they include VAT and delivery
and have this information easily navigable.

Consumer Protection
(Distance Selling) Regulations
• Clearly state the details of the items or services on offer prior to a
sale such as: Cost of item or service and a description, identity of the
seller, delivery costs and times, Information on the cancellation
policy and returns (including details of any premium rate numbers
the consumer may have to call to return items).
• Confirmation of all orders placed in writing. A person making a
purchase online must be given acknowledgment of purchase and a
means of rectifying errors as soon as possible after the purchase.
• On top of this, when buying online (and over phone etc) a consumer
can claim a ‘cooling off’ period of 7 days where they can return
goods for a refund.

E-Commerce

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