E-commerce And Its Business Model

SICS 3653: E-COMMERCE SICS 3653: E-COMMERCE AND E-BUSINESSAND E-BUSINESS

Ebenezer Nortey Yebuah Ebenezer Nortey Yebuah (ETONY)(ETONY)

outlineoutline Introduction to E-CommerceIntroduction to E-Commerce

• Definition of E-Commerce and E-businessDefinition of E-Commerce and E-business• Major types of E-Commerce (briefly)Major types of E-Commerce (briefly)• History of E-CommerceHistory of E-Commerce• Benefits of E-Commerce to Benefits of E-Commerce to

OrganizationsOrganizations ConsumersConsumers society society

• Limitations of E-CommerceLimitations of E-Commerce The digital economyThe digital economy

• The new Business environmentThe new Business environment• Business pressuresBusiness pressures• Organizational responsesOrganizational responses

E-MarketingE-Marketing• E-marketing issuesE-marketing issues• Economics of E-marketingEconomics of E-marketing• Effects of marketing on organizationsEffects of marketing on organizations

E-Commerce technology/infrastructureE-Commerce technology/infrastructure Communications networkCommunications network Security and legal issuesSecurity and legal issues

• Need for E-Commerce securityNeed for E-Commerce security• Basic security issuesBasic security issues• Types and treats and attacksTypes and treats and attacks• Security risk managementSecurity risk management• Securing E-Commerce communicationSecuring E-Commerce communication

Business models for E-CommerceBusiness models for E-Commerce Implementation of E-business systemsImplementation of E-business systems

Definition of E-Commerce and Definition of E-Commerce and businessbusiness

E-CommerceE-Commerce: the process of buying, selling, or exchanging products, : the process of buying, selling, or exchanging products, services, and information through computer networks.services, and information through computer networks.

• CommunicationCommunication: the delivery of goods, services, information, or payment : the delivery of goods, services, information, or payment electronicallyelectronically

• CommerciaCommercial: the ability to buy and sell products, services, and information l: the ability to buy and sell products, services, and information electronicallyelectronically

• Business processBusiness process: completing business process electronically i.e. replacing : completing business process electronically i.e. replacing physical process with informationphysical process with information

• ServicesServices: tool for improving the quality of customer services, and increasing the : tool for improving the quality of customer services, and increasing the speed of service delivery whiles cutting costspeed of service delivery whiles cutting cost

• learninglearning: enables online training and educations: enables online training and educations

• CollaborativeCollaborative: supports inter and intraorganizational collaboration: supports inter and intraorganizational collaboration

• CommunityCommunity: provides a meeting place for members to learn and collaborate.: provides a meeting place for members to learn and collaborate.


CommerceCommerce: transactions between : transactions between business partners. (electronically=e-business partners. (electronically=e-commerce)commerce)

E-businessE-business: the buying and selling of : the buying and selling of goods and services and also serving goods and services and also serving customers, collaboration with business customers, collaboration with business partners, and conducting electronic partners, and conducting electronic transactions with an organization.transactions with an organization.


Various forms of E-Commerce based on the level Various forms of E-Commerce based on the level of digitalization,of digitalization,

Of the products/services Of the products/services The processThe process The delivery agentThe delivery agent

Brick and mortar organizationBrick and mortar organization: : zero digitalization i.e. zero digitalization i.e. pure physical organization.pure physical organization.• Conduct all their business activities on physicallyConduct all their business activities on physically

Virtual organizations Virtual organizations : : digitalization of 1 i.e. (pure play)digitalization of 1 i.e. (pure play)• Does all business tractions inline.Does all business tractions inline.

Click and mortarClick and mortar: : partial digitalization i.e. click and mortarpartial digitalization i.e. click and mortar• Has an online presence, but does basic business processes physicallyHas an online presence, but does basic business processes physically

Types of E-CommerceTypes of E-Commerce The nature or transaction or interaction is mostly used to class the The nature or transaction or interaction is mostly used to class the

E-CommerceE-Commerce• Business-to-business B2BBusiness-to-business B2B: transactions between business partners : transactions between business partners

• Business-to-consumer C2CBusiness-to-consumer C2C: transactions between business : transactions between business organizations and individual shoppersorganizations and individual shoppers

• Consumer-to-business C2BConsumer-to-business C2B: transaction in which individuals sell : transaction in which individuals sell products and services to business products and services to business

• Consumer-to-consumer C2CConsumer-to-consumer C2C: transactions between individual : transactions between individual consumersconsumers

Interdisciplinary nature of E-Commerce: computer science, Interdisciplinary nature of E-Commerce: computer science, marketing, consumer behavior, finance, economics, management marketing, consumer behavior, finance, economics, management information systems, accounting, management, business, law, information systems, accounting, management, business, law, robotics, public administration and engineering.robotics, public administration and engineering.

History History Electronic funds transferElectronic funds transfer (early 1970s) (early 1970s)

““It use was mostly limited to large organizations, financial It use was mostly limited to large organizations, financial institutions, and a few hardcore business”institutions, and a few hardcore business”

Electronic Data InterchangeElectronic Data Interchange,,““use to transfer routine documents, which expanded electronic use to transfer routine documents, which expanded electronic

transfers from financial institutions to manufacturers, retailers, transfers from financial institutions to manufacturers, retailers, services industries etc”services industries etc”

Internet and the world wide webInternet and the world wide web: the commercialization : the commercialization of the internet, saw the coining of the term E-COMMERCE.of the internet, saw the coining of the term E-COMMERCE.

E-Commerce applications quickly multiplied due to the rapid E-Commerce applications quickly multiplied due to the rapid development of new networks, protocols, and EC software, due to development of new networks, protocols, and EC software, due to increase in competition and other business pressures increase in competition and other business pressures

There has been many innovative applications, ranging from There has been many innovative applications, ranging from online direct sales to E-learning.online direct sales to E-learning.

Benefits of E-CommerceBenefits of E-Commerce The E-Commerce revolution is as profound as the The E-Commerce revolution is as profound as the

change that accompanied the industrial change that accompanied the industrial revolution (Clinton and Gore 1997)revolution (Clinton and Gore 1997)

E-Commerce enormous potential benefits to E-Commerce enormous potential benefits to organizations, individuals and society, organizations, individuals and society, considering considering • The global nature of the technologyThe global nature of the technology• The opportunity to reach millions of peopleThe opportunity to reach millions of people• Its interactive natureIts interactive nature• The variety of possibilities for its useThe variety of possibilities for its use• The resourcefulness and rapid growth of its supporting The resourcefulness and rapid growth of its supporting

infrastructure (especially the web)infrastructure (especially the web)

Benefits of E-CommerceBenefits of E-Commerce Organizational benefitsOrganizational benefits

• Global reachGlobal reach: can easily and quickly locate the best suppliers, more customers : can easily and quickly locate the best suppliers, more customers and more suitable business partners. i.e. buy cheaper and sell more.and more suitable business partners. i.e. buy cheaper and sell more.

• Cost reductionCost reduction: EC decreases the cost of creating, processing, distribution, : EC decreases the cost of creating, processing, distribution, storing and retrieving paper-based information.storing and retrieving paper-based information.

• Supply chain improvementSupply chain improvement: supply chain inefficiencies can be minimized e.g.. : supply chain inefficiencies can be minimized e.g.. Inventory and deliver delaysInventory and deliver delays

• Extended hours:24/7/365Extended hours:24/7/365• CustomizationCustomization: pull-type production (build-to-order): pull-type production (build-to-order)• New business modelsNew business models: tendering (reverse auction), name-your-own-price model, : tendering (reverse auction), name-your-own-price model,

affiliate marketing, viral marketing etc.affiliate marketing, viral marketing etc.• Vendors’ specializationVendors’ specialization: EC enables high degree of specialization: EC enables high degree of specialization• Lower communication cost:Lower communication cost: EC lowers telecommunications cost. EC lowers telecommunications cost.• Efficient procurementEfficient procurement: EC can reduce administrative cost, purchasing prices, and : EC can reduce administrative cost, purchasing prices, and

reducing cycle time.reducing cycle time.• Improved customer relationsImproved customer relations: EC enable close customer relations: EC enable close customer relations• Up-to-date company materialUp-to-date company material: EC enables company information to be updated by : EC enables company information to be updated by

the minutethe minute• No city business permits and feesNo city business permits and fees• etcetc

Benefits of E-CommerceBenefits of E-Commerce Consumer benefitsConsumer benefits

• ubiquityubiquity: EC allows shopping 24/7/365 from almost any : EC allows shopping 24/7/365 from almost any location.location.

• More products and servicesMore products and services: EC gives more choices.: EC gives more choices.• Cheaper products and servicesCheaper products and services: EC providers price variety : EC providers price variety

for goods and servicesfor goods and services• Instant deliveryInstant delivery: e.g. digitized product: e.g. digitized product• Information availability:Information availability: relevant and detailed information relevant and detailed information

in secondsin seconds• Participate in auctions:Participate in auctions: virtual auctions virtual auctions• Electronic communitiesElectronic communities: consumers can interact with other : consumers can interact with other

consumersconsumers• Get it you wayGet it you way: customization and personalization of : customization and personalization of

products and servicesproducts and services• No sales taxNo sales tax: most online sales are tax free: most online sales are tax free

Benefits of E-CommerceBenefits of E-Commerce

Societal benefitsSocietal benefits

• Telecommuting:Telecommuting: more people work and shop more people work and shop at homeat home

• Higher standard of livingHigher standard of living: competitive prices : competitive prices allow lower income earners to shop moreallow lower income earners to shop more

• Hope for the poorHope for the poor: great opportunity for the : great opportunity for the poor to sell, buy and learn new skillspoor to sell, buy and learn new skills

• Availability of public servicesAvailability of public services: health care, : health care, education, and distribution of government education, and distribution of government social services can be done at a reduce cost to social services can be done at a reduce cost to a large number of people.a large number of people.

LimitationsLimitations TechnologicalTechnological

• Lack of universally accepted standards for quality, Lack of universally accepted standards for quality, security, and reliabilitysecurity, and reliability

• Telecommunication bandwidth is insufficient (mostly for Telecommunication bandwidth is insufficient (mostly for m-commerce)m-commerce)

• Software development tools are still evolving.Software development tools are still evolving.• Difficulties in integrating the internet and EC software Difficulties in integrating the internet and EC software

applications and databases.applications and databases.• Special web servers are needed in addition to the Special web servers are needed in addition to the

network servers (added cost)network servers (added cost)• Internet accessibility is still expensive and/ or Internet accessibility is still expensive and/ or

inconvenientinconvenient• Order of fulfillment of large-scale B2C requires special Order of fulfillment of large-scale B2C requires special

automated warehouses automated warehouses

LimitationsLimitations Non-technologicalNon-technological

• Security and privacy concerns deter some customer from Security and privacy concerns deter some customer from buyingbuying

• Lack of trust in EC and in unknown sellers hinder buyingLack of trust in EC and in unknown sellers hinder buying• Many legal and public policy issues, including taxations, Many legal and public policy issues, including taxations,

remain unresolvedremain unresolved• National and international government regulations sometimes National and international government regulations sometimes

get in the wayget in the way• Difficulty in measuring some benefits in EC. (e.g. advertising,) Difficulty in measuring some benefits in EC. (e.g. advertising,)

lack of matured measurement methodologylack of matured measurement methodology• Some customers like to touch and feel the productSome customers like to touch and feel the product• Adamant to change from physical to virtual storeAdamant to change from physical to virtual store• Lack of trust in paperless, faceless transactionsLack of trust in paperless, faceless transactions• Insufficient number (critical mass) of sellers and buyers (some Insufficient number (critical mass) of sellers and buyers (some

cases) needed to make profit cases) needed to make profit • Increasing number of fraud on the netIncreasing number of fraud on the net• Difficulty to obtain venture capital due to the dot-com disaster Difficulty to obtain venture capital due to the dot-com disaster

Digital EconomyDigital Economy The Digital revolutionThe Digital revolution

• Digital Economy: an economy that is based on digital technologies, including Digital Economy: an economy that is based on digital technologies, including digital communications networks, computers, software, and other related digital communications networks, computers, software, and other related information technologies.information technologies.

Digital networking and communications infrastructures provides the global Digital networking and communications infrastructures provides the global platform over which people and other organizations interact, platform over which people and other organizations interact, communicate,, collaborate and search for information.communicate,, collaborate and search for information.

Choi and whinston says this platform is characterized by Choi and whinston says this platform is characterized by

• A vast array of digital products: databases, news & information, books, software A vast array of digital products: databases, news & information, books, software ETC, that delivered over a digital infrastructure any time, anywhere in the worldETC, that delivered over a digital infrastructure any time, anywhere in the world

• Consumers and firms conducting financial transaction digitally through digital Consumers and firms conducting financial transaction digitally through digital currencies or financial tokens that are carried via network computers and mobile currencies or financial tokens that are carried via network computers and mobile devicesdevices

• Microprocessors and networking capabilities embedded in physical goods such Microprocessors and networking capabilities embedded in physical goods such as home appliances and automobilesas home appliances and automobiles

Digital EconomyDigital Economy Digital economy: the convergence of computing and Digital economy: the convergence of computing and

communications technology on the internet and other networks communications technology on the internet and other networks and the resulting flow of information and technology that is and the resulting flow of information and technology that is stimulating e-commerce and vast organizational changes.stimulating e-commerce and vast organizational changes.

This convergence is enabling all types of information (data, audio, This convergence is enabling all types of information (data, audio, video, etc) to be stored, processed, and transmitted over networks video, etc) to be stored, processed, and transmitted over networks to many destinations worldwideto many destinations worldwide

The digital economy is creating a digital revolution, evidence by The digital economy is creating a digital revolution, evidence by unprecedented economy performance and the longest period of unprecedented economy performance and the longest period of uninterrupted economic expansion in certain parts of the world.uninterrupted economic expansion in certain parts of the world.

Web-based E-Commerce systems are accelerating the digital Web-based E-Commerce systems are accelerating the digital revolution by providing competitive advantage to organizations revolution by providing competitive advantage to organizations

The new business environmentThe new business environment

Highly competitive (due to economic, Highly competitive (due to economic, societal, legal and technological societal, legal and technological factors) factors)

Quick and sometimes unpredictable Quick and sometimes unpredictable changechange

The need for more production, faster The need for more production, faster and with fewer resourcesand with fewer resources

The new business environmentThe new business environment Huber (2003) “new business environment Huber (2003) “new business environment

created due to accelerated advances in created due to accelerated advances in science”science”

This advances creates scientific knowledgeThis advances creates scientific knowledge

This scientific knowledge feeds on itself This scientific knowledge feeds on itself resulting in more and more technologyresulting in more and more technology

Rapid growth in technology results in a Rapid growth in technology results in a large variety of more complex systems.large variety of more complex systems.

The new business environmentThe new business environment

As a result the business environment is As a result the business environment is characterized bycharacterized by• A more turbulent environment ( more business A more turbulent environment ( more business

problems and opportunity)problems and opportunity)• Stronger competitionStronger competition• Frequent decision making by organizationsFrequent decision making by organizations• Large scope for decisions considerations Large scope for decisions considerations

(market, competition, political and global)(market, competition, political and global)• More information/knowledge needed for More information/knowledge needed for

decisions decisions

Pressure on businessesPressure on businesses

Market and economicMarket and economic• Strong competitionStrong competition• Global economyGlobal economy• Regional trade agreementRegional trade agreement• Extremely low labour cost in some Extremely low labour cost in some

regionsregions• Frequent and significant changes in Frequent and significant changes in

marketsmarkets• Increase power of consumersIncrease power of consumers


SocietalSocietal• Changing nature of workforceChanging nature of workforce• Government deregulation- more Government deregulation- more

competitioncompetition• Shrinking government subsidiesShrinking government subsidies• Increased importance of ethical and Increased importance of ethical and

legal issueslegal issues• Increased social responsibility of Increased social responsibility of

organizationsorganizations• Rapid political changesRapid political changes


Technological Technological • Increasing innovations and new Increasing innovations and new

technologiestechnologies• Rapid technological obsolescenceRapid technological obsolescence• Rapid decline in technology cost versus Rapid decline in technology cost versus

performance ratioperformance ratio

Pressure on businessesPressure on businesses Business as usual no more enough (price Business as usual no more enough (price

reduction & closure of unprofitable facilities)reduction & closure of unprofitable facilities)

Need for new innovations (Need for new innovations (critical response critical response activitiesactivities))• CustomizationCustomization• Creating new productsCreating new products• Providing superb costumers services Providing superb costumers services

E-commerce facilitate most of these responsesE-commerce facilitate most of these responses

Organizational responsesOrganizational responses Strategic systems: provides org. with Strategic systems: provides org. with

strategic adv. strategic adv. • Increase their market shareIncrease their market share• Better negotiation with their suppliersBetter negotiation with their suppliers• Prevent competitors from entering their Prevent competitors from entering their

territoryterritorye.g. FedEx tracking systeme.g. FedEx tracking system

Continuous improvement efforts & BPR: Continuous improvement efforts & BPR: continuous efforts to improve productivity, continuous efforts to improve productivity, quality and customer servicesquality and customer services• E.g. Dell ERP and Intel’s customer trackingE.g. Dell ERP and Intel’s customer tracking

Organizational responsesOrganizational responses Customer relationship management: e.g. personalization, sales-Customer relationship management: e.g. personalization, sales-

force automationforce automation

Business alliances: org. enter collaborate for mutual benefit aided Business alliances: org. enter collaborate for mutual benefit aided mostly by e-commerce.mostly by e-commerce.

Electronic marketsElectronic markets

Reduction in cycle time & time to market: e.g. use of extranetReduction in cycle time & time to market: e.g. use of extranet

Empowerment of employees: the ability to take decision on Empowerment of employees: the ability to take decision on costumers (decentralization)costumers (decentralization)

Supply chain improvement: Supply chain improvement: • Reduce supply chain delaysReduce supply chain delays• Reduce inventoriesReduce inventories• Eliminate inefficienciesEliminate inefficiencies

Organizational responsesOrganizational responses

Mass customization: production of large Mass customization: production of large customized items ( in an efficient way)customized items ( in an efficient way)

Intra-business: from sales force to Intra-business: from sales force to inventory controlinventory control

Knowledge management: the process Knowledge management: the process creating or capturing knowledge, storing creating or capturing knowledge, storing and protecting it, updating, maintaining and protecting it, updating, maintaining and and usingusing it. it.

Combining itCombining it

How can org. turn digital to gain How can org. turn digital to gain competitive adv by using EC?competitive adv by using EC?• Right connective networksRight connective networks

Brick & mortar against digitalBrick & mortar against digital Brick & mortarBrick & mortar

• Selling in physical storesSelling in physical stores• Selling tangible goodsSelling tangible goods• Internal inventory/production Internal inventory/production

planningplanning• Paper catalogsPaper catalogs• Physical marketplacePhysical marketplace• Physical & limited auctionsPhysical & limited auctions• Broker-based service transactionsBroker-based service transactions• Paper-based billingPaper-based billing• Paper-based tenderingPaper-based tendering• Push productionPush production• Mass production (standard)Mass production (standard)• Physical based commission Physical based commission

marketing marketing • Word-of-mouth slow Word-of-mouth slow

advertisementadvertisement• Linear supply chainLinear supply chain• Large amount of capital neededLarge amount of capital needed• Cost>valueCost>value

DigitalDigital• Selling onlineSelling online• Selling digital goodsSelling digital goods• Online collaborative inventory Online collaborative inventory

forecastingforecasting• Smart e-catalogsSmart e-catalogs• Electronic market-spaceElectronic market-space• Online auctions everywhere, Online auctions everywhere,

anytimeanytime• Electronic Info-mediaries, value Electronic Info-mediaries, value

added servicesadded services• Electronic billingsElectronic billings• Pull productionPull production• Mass customizationMass customization• Affiliate, viral marketingAffiliate, viral marketing• Explosive viral marketingExplosive viral marketing• Hub-based supply chainHub-based supply chain• Less capital neededLess capital needed• Small fixed costSmall fixed cost• Cost=valueCost=value

Electronic marketplacesElectronic marketplaces

Electronic marketplace: a space in which Electronic marketplace: a space in which sellers and buyers exchange goods and sellers and buyers exchange goods and services for money (or for other goods and services for money (or for other goods and services) services) electronically.electronically.

Functions of markets:Functions of markets:• matching buyers and sellersmatching buyers and sellers• Facilitating exchanges of goods/services and Facilitating exchanges of goods/services and

payments associated with market transactionspayments associated with market transactions• Provide institutional infrastructure Provide institutional infrastructure

Electronic marketplacesElectronic marketplaces

Together with IT, EC has greatly Together with IT, EC has greatly increased market efficienciesincreased market efficiencies• by expediting or improving the by expediting or improving the

functions of marketfunctions of market• And lowering transaction and And lowering transaction and

distribution cost distribution cost • Leading to a well-organized “friction-Leading to a well-organized “friction-

free” markets free” markets

Market-space componentsMarket-space components CustomersCustomers: the hundreds of millions of people surfing the web are : the hundreds of millions of people surfing the web are

potential buyers of goods/services offered on the net. They looking forpotential buyers of goods/services offered on the net. They looking for• good dealsgood deals• Customized itemsCustomized items• Collectors itemsCollectors items• Entertainment etcEntertainment etc

Organizations are the major consumers of EC activities. (85%)Organizations are the major consumers of EC activities. (85%)

SellersSellers: millions of : millions of storefrontsstorefronts on the Web offering a huge variety of on the Web offering a huge variety of products. ( sells can be done directly from sellers site or from E-products. ( sells can be done directly from sellers site or from E-marketplacesmarketplaces

ProductsProducts: both physical and : both physical and digital productsdigital products (what are the advantages (what are the advantages of a digital product?)of a digital product?)

InfrastructurInfrastructure: hardware, software, networks etc.e: hardware, software, networks etc.

Market-space componentsMarket-space components Front end: the portion of an e-seller’s business processes through Front end: the portion of an e-seller’s business processes through

which customers interact, e.g. seller’s portal, e-catalogs, shopping which customers interact, e.g. seller’s portal, e-catalogs, shopping cart, search engine and payment gatewaycart, search engine and payment gateway

Back end: activities that support online order-taking. E.g. order Back end: activities that support online order-taking. E.g. order aggregation and fulfillment, inventory management, purchasing aggregation and fulfillment, inventory management, purchasing from suppliers, payment processing, packaging and deliveryfrom suppliers, payment processing, packaging and delivery

Intermediaries: create and manage online markets. Match buyers Intermediaries: create and manage online markets. Match buyers and sellers, provide some infrastructure services to and help and sellers, provide some infrastructure services to and help buyers/sellers to institute and complete transaction. (mostly buyers/sellers to institute and complete transaction. (mostly operate as computerized systems)operate as computerized systems)

Other business partners: includes business collaboration mostly Other business partners: includes business collaboration mostly along supply chain.along supply chain.

Support services: ranging from certification to trust servicesSupport services: ranging from certification to trust services

Types of electronic marketsTypes of electronic markets

There are various types of marketplaces There are various types of marketplaces • B2CB2C

Electronic storefrontsElectronic storefronts Electronic mallsElectronic malls

• B2BB2B Private e-marketplacePrivate e-marketplace

• Sell-sideSell-side• Buy-sideBuy-side

Public e-marketplacesPublic e-marketplaces consortiaconsortia

Types of electronic marketsTypes of electronic markets B2CB2C

• Electronic storefronts: single company’s Web site where Electronic storefronts: single company’s Web site where product/services are sold (electronic store)product/services are sold (electronic store)

A storefront has various mechanism for conducting saleA storefront has various mechanism for conducting sale• Electronic catalogs (presentation of product information in an Electronic catalogs (presentation of product information in an

electronic form)electronic form)• A search engine ( a program that can access a database of A search engine ( a program that can access a database of

Internet resources, search for specific information/keywords, Internet resources, search for specific information/keywords, and report the result)and report the result)

• An electronic shopping cart: order processing technology that An electronic shopping cart: order processing technology that allow shoppers to accumulate items they wish to buy while allow shoppers to accumulate items they wish to buy while they continue to shop)they continue to shop)

• E-auction facilitiesE-auction facilities• A payment gateway etc.A payment gateway etc.

• Electronic malls: an online shopping center where many Electronic malls: an online shopping center where many stores are locatedstores are located

Types of electronic marketsTypes of electronic markets B2BB2B

• Private E-Marketplace: owned by a single company Private E-Marketplace: owned by a single company Sell-side E-Marketplace: a private e-market in which a Sell-side E-Marketplace: a private e-market in which a

company sells either standard or customized to qualified company sells either standard or customized to qualified companiescompanies

Buy-side: a private e-market in which a company buys from Buy-side: a private e-market in which a company buys from invited suppliersinvited suppliers

• Public E-Marketplace: e-market usually owned by am Public E-Marketplace: e-market usually owned by am independent 3independent 3rdrd party with many buyers and many party with many buyers and many sellers (exchanges)sellers (exchanges)

• Consortia: usually owned by a small group of major Consortia: usually owned by a small group of major sellers or buyers usually in the same industrysellers or buyers usually in the same industry

• What is a vertical and horizontal e-market place? What is a vertical and horizontal e-market place?

Auctions Auctions Auctions: a market mechanism by which a seller Auctions: a market mechanism by which a seller

places an offer to sell a product and buyers make places an offer to sell a product and buyers make bids sequentially and competitively until a final bids sequentially and competitively until a final price is reached.price is reached.

Limitations to offline auctions:Limitations to offline auctions:• Short time for each item (little time to make decision to Short time for each item (little time to make decision to

bid or not)bid or not)• Sellers don’t get the right price (or buyers pay more)Sellers don’t get the right price (or buyers pay more)• Little time to examine productLittle time to examine product• Physical presences limits the potential biddersPhysical presences limits the potential bidders• Difficulty in moving goods to auction sitesDifficulty in moving goods to auction sites• Pay of rents or auction sites, advertisement and Pay of rents or auction sites, advertisement and

payment of auctioneers and employees add to costpayment of auctioneers and employees add to cost

E-AuctionsE-Auctions

Electronic auctions (e-auctions): auctions Electronic auctions (e-auctions): auctions conducted online.conducted online.• Dynamic pricing: change in price due to Dynamic pricing: change in price due to

demand and supply relationships at any given demand and supply relationships at any given time. time.

Dynamic pricing has several forms (bargaining and Dynamic pricing has several forms (bargaining and negotiations)negotiations)

There are 4 major forms of dynamic pricing There are 4 major forms of dynamic pricing depending on how many buyers or sellers there are,depending on how many buyers or sellers there are,

• One buyer, one sellerOne buyer, one seller• One seller, many potential buyersOne seller, many potential buyers• One buyer, many potential sellersOne buyer, many potential sellers• Many buyers, many sellers Many buyers, many sellers

E-AuctionsE-Auctions One seller, one buyerOne seller, one buyer: negotiations, bargaining and bartering usually used. (Prices : negotiations, bargaining and bartering usually used. (Prices

mostly determined by each party’s bargaining power as well as demand and supply mostly determined by each party’s bargaining power as well as demand and supply in the market and possibly the business environment)in the market and possibly the business environment)

One seller, many buyersOne seller, many buyers: (forward auction) a seller entertains bids from buyers.: (forward auction) a seller entertains bids from buyers.• English and Yankee auctions: prices increase as auctions progressEnglish and Yankee auctions: prices increase as auctions progress• Dutch and free fall: prices go down as auctions progressDutch and free fall: prices go down as auctions progress

Assignment (what is English, Yankee, Dutch and free fall auctions) to be submitted before mid-day 29Assignment (what is English, Yankee, Dutch and free fall auctions) to be submitted before mid-day 29thth Feb.. Feb.. 20082008

One buyer, many sellersOne buyer, many sellers::• Reverse auctions: a buyer places an item for bidding (tendering) on a request for quote (RFQ) Reverse auctions: a buyer places an item for bidding (tendering) on a request for quote (RFQ)

system, potential sellers bid for the item with price reducing sequentially until no more system, potential sellers bid for the item with price reducing sequentially until no more reductions and the lowest bidder wins (mostly B2B G2B mechanism)reductions and the lowest bidder wins (mostly B2B G2B mechanism)

• Name-your-own-price model: a buyer specifies the price ( and other terms) they willing to buy Name-your-own-price model: a buyer specifies the price ( and other terms) they willing to buy to able suppliers. (mostly C2B model started by priceline.com)to able suppliers. (mostly C2B model started by priceline.com)

Many sellers, many buyersMany sellers, many buyers: (double auction) multiple buyers and their bids are : (double auction) multiple buyers and their bids are much with their multiple sellers and their asking prices, considering the quantities.much with their multiple sellers and their asking prices, considering the quantities.

E-AuctionsE-AuctionsBenefit to sellersBenefit to sellers

Increase revenues from Increase revenues from broadening customer base broadening customer base and shortening cycle time.and shortening cycle time.

Chance to bargain instead Chance to bargain instead of a buying at a fixed price.of a buying at a fixed price.

Optimal price setting Optimal price setting determined by the marketdetermined by the market

Can liquidate large Can liquidate large quantities quicklyquantities quickly

Improved customer Improved customer relationship and loyaltyrelationship and loyalty

Benefits to buyersBenefits to buyers

Opportunity to find unique Opportunity to find unique items and collectible.items and collectible.

Entertainment. Entertainment.

Anonymity, with help of a Anonymity, with help of a 33rdrd party, buyers can be party, buyers can be anonymousanonymous

Convenience, can bid from Convenience, can bid from anywhere with any anywhere with any connected gadget. No need connected gadget. No need to travel to the auction site to travel to the auction site

Benefits to e-auctioneersBenefits to e-auctioneers

Higher repeat purchaseHigher repeat purchase

High stickiness to the web High stickiness to the web sitesite

Expansion of the auction Expansion of the auction business.business.

E-AuctionsE-Auctions

Limitations: major limitations are,Limitations: major limitations are,• Lack of securityLack of security• Possibility of fraudPossibility of fraud• Limited participationLimited participation

Types of E-Auction FraudTypes of E-Auction Fraud

Bid shielding: having fake (phantom/ghost) Bid shielding: having fake (phantom/ghost) bidders bid at very high prices and then bidders bid at very high prices and then later pull out at the last minutelater pull out at the last minute

Shilling: placing fake bids on auction items Shilling: placing fake bids on auction items to artificially jack up the bidding priceto artificially jack up the bidding price

Fake photos and misleading descriptionsFake photos and misleading descriptions Improper grading techniquesImproper grading techniques Selling reproductionsSelling reproductions

Types of E-Auction FraudTypes of E-Auction Fraud

Failure to pay Failure to pay Failure to pay the auction houseFailure to pay the auction house Inflated shipping and handling costInflated shipping and handling cost Failure to ship merchandiseFailure to ship merchandise Loss and damage claimsLoss and damage claims Switch and returnSwitch and return Other frauds, e.g. sale of stolen goods, the Other frauds, e.g. sale of stolen goods, the

use of fake ids, selling to multiple buyersuse of fake ids, selling to multiple buyers

Protecting against E-Auction FraudProtecting against E-Auction Fraud

User id verificationUser id verification Authentication serviceAuthentication service Grading servicesGrading services FeedbackFeedback Insurance policyInsurance policy Escrow serviceEscrow service Nonpayment punishmentNonpayment punishment AppraisalAppraisal PhysicalPhysical verificationverification

Communications and networksCommunications and networks The extranet is the major network structure used in e-market The extranet is the major network structure used in e-market

place and exchanges.place and exchanges.• Extranets connects both the internet and the companies individual Extranets connects both the internet and the companies individual

intranets.intranets. Internet: a public, global communications network that provides Internet: a public, global communications network that provides

direct connectivity to anyone over a LAN through an ISP or directly direct connectivity to anyone over a LAN through an ISP or directly though ISPthough ISP

Intranet: a corporate LAN or WAN that uses internet technology Intranet: a corporate LAN or WAN that uses internet technology and is secured behind a company’s firewall.and is secured behind a company’s firewall.• It operates as a private network with limited access (only employees It operates as a private network with limited access (only employees

with authorization can use it)with authorization can use it)• It usually contains sensitive informationIt usually contains sensitive information• It can be used to enhance communication and collaboration among It can be used to enhance communication and collaboration among

authorized employees, customers, suppliers, and other business authorized employees, customers, suppliers, and other business partnerspartners

• Because access is though the net, it doesn’t require any additional Because access is though the net, it doesn’t require any additional implementation of leased networkimplementation of leased network

Communications and networksCommunications and networks

Extranets: a network that uses a virtual Extranets: a network that uses a virtual private network (VPN) to link intranets in private network (VPN) to link intranets in different locations over the internet different locations over the internet (extended internet)(extended internet)

• VPN: a network that creates tunnels of secured data VPN: a network that creates tunnels of secured data flows, using cryptography and authorization algorithms, flows, using cryptography and authorization algorithms, to provide communications over the public internet.to provide communications over the public internet.

• Provides secured connectivity between a Provides secured connectivity between a corporation’s intranet and the intranets of its corporation’s intranet and the intranets of its business partners, material suppliers, financial business partners, material suppliers, financial services, government, and customer.services, government, and customer.

• Access is mostly limited and highly controlledAccess is mostly limited and highly controlled

Benefits of ExtranetsBenefits of Extranets Szuprowics’s five benefits categories of extranetsSzuprowics’s five benefits categories of extranets

• Enhanced communication: enables improve internal communications, Enhanced communication: enables improve internal communications, improved business partnership channels, effective marketing, sales, improved business partnership channels, effective marketing, sales, and customer support, facilitated collaborative activities supportand customer support, facilitated collaborative activities support

• Productivity enhancements: enables just-in-time information delivery, Productivity enhancements: enables just-in-time information delivery, reduction of information overload, productive collaboration between reduction of information overload, productive collaboration between work groups, and training on demand.work groups, and training on demand.

• Business enhancements: enables faster time to market, potential for Business enhancements: enables faster time to market, potential for simultaneous engineering and collaboration, lower design and simultaneous engineering and collaboration, lower design and production cost, improved client relationships and creation of new production cost, improved client relationships and creation of new business opportunities business opportunities

• Cost reduction: results in fewer errors, improved comparison shopping, Cost reduction: results in fewer errors, improved comparison shopping, reduced travel and meeting time and cost, reduced administrative and reduced travel and meeting time and cost, reduced administrative and operational cost, and elimination of paper-publishing costoperational cost, and elimination of paper-publishing cost

• Information delivery: enables low-cost publishing, leveraging of legacy Information delivery: enables low-cost publishing, leveraging of legacy systems, standard delivery systems, ease of maintenance and systems, standard delivery systems, ease of maintenance and implementation, and elimination of paper-based publishing and mailing implementation, and elimination of paper-based publishing and mailing costs.costs.

Benefits of ExtranetsBenefits of Extranets

Rihao-Ling and Yen, added other benefits Rihao-Ling and Yen, added other benefits such as,such as,• Ready access to information, ease of use, Ready access to information, ease of use,

freedom of choice, moderate setup cost, freedom of choice, moderate setup cost, simplified workflow, lower training cost, and simplified workflow, lower training cost, and better group dynamics.better group dynamics.

• They also listed disadvantages such as, difficult They also listed disadvantages such as, difficult to justified the investment (measuring cost and to justified the investment (measuring cost and benefits), high user expectations, and drain on benefits), high user expectations, and drain on resouces.resouces.

E-MarketingE-Marketing Marketing is an organizational function and a set Marketing is an organizational function and a set

of processes for creating, communicating and of processes for creating, communicating and delivering value to customers and for managing delivering value to customers and for managing customer relationships in ways that benefit the customer relationships in ways that benefit the organization and its stakeholders.organization and its stakeholders.

E-Marketing is E-Marketing is essentiallyessentially a part of marketing a part of marketing

E-marketing=one aspect of an organizational E-marketing=one aspect of an organizational function and a set of processes for creating, function and a set of processes for creating, communicating and delivering value to customers communicating and delivering value to customers and for managing customer relationships in ways and for managing customer relationships in ways that benefit the organization and its stakeholdersthat benefit the organization and its stakeholders

E-MarketingE-Marketing Customer-centric e-marketing=Customer-centric e-marketing=

• Applying, digital technologies which from online Applying, digital technologies which from online channels ( web, e-mail, database, plus mobile/wireless channels ( web, e-mail, database, plus mobile/wireless and digital tv)and digital tv)

• To, contribute to marketing activities aimed at achieving To, contribute to marketing activities aimed at achieving profitable acquisition and retention of customersprofitable acquisition and retention of customers

• Through, improving our customers knowledge ( of their Through, improving our customers knowledge ( of their profiles, behavior, value and loyalty drivers), then profiles, behavior, value and loyalty drivers), then delivering integrated targeted communications and delivering integrated targeted communications and online services that match their individual needs.online services that match their individual needs.

Hence e-marketing=achieving marketing Hence e-marketing=achieving marketing objectives through the use of electronic objectives through the use of electronic communications technologycommunications technology

E-MarketingE-Marketing E-marketing simply put is the application of E-marketing simply put is the application of

marketing principles and techniques through marketing principles and techniques through electronic media and more specifically the electronic media and more specifically the internet.internet.

Can also be looked at as, a way of marketing a Can also be looked at as, a way of marketing a brand using the internet.brand using the internet.

Basically it is all the activities a business Basically it is all the activities a business undertakes using the worldwide web, with the undertakes using the worldwide web, with the sole aim of sole aim of attractingattracting new businesses, new businesses, retainingretaining current business and developing its current business and developing its brand identity.brand identity.

Internet tools for marketersInternet tools for marketers

Distribution: a company can distribute Distribution: a company can distribute through the internetthrough the internet

A company can use the internet to build A company can use the internet to build and maintain a customer relationshipand maintain a customer relationship

Money collection part of a transaction can Money collection part of a transaction can be done onlinebe done online

Leads can be generated by through short Leads can be generated by through short trial periods, before long-term signingtrial periods, before long-term signing

AdvertisingAdvertising Avenue for collecting direct response.Avenue for collecting direct response.

Benefits of e-marketingBenefits of e-marketing If and when properly and effectively implemented, the ROI from e-If and when properly and effectively implemented, the ROI from e-

marketing will far exceed that of traditional marketing.marketing will far exceed that of traditional marketing. It is at the forefront of reengineering or redefining the way businesses It is at the forefront of reengineering or redefining the way businesses

interact with their customers.interact with their customers. Most of the benefit can be derived from the Most of the benefit can be derived from the

• REACH: truly global reach and cost reductionREACH: truly global reach and cost reduction• Scope: wide range of products and servicesScope: wide range of products and services• Interactivity: two way communication pathInteractivity: two way communication path• Immediacy: provide an opportunity for immediate impactImmediacy: provide an opportunity for immediate impact• targeting: savvy marketers can easily have access to the niche markets they targeting: savvy marketers can easily have access to the niche markets they

need for targeted marketingneed for targeted marketing• Adaptivity: real time analysis of customer responses leading to minimal Adaptivity: real time analysis of customer responses leading to minimal

advertising spend wastage.advertising spend wastage. Other benefits include,Other benefits include,

• Access to unlimited information to customers without human interventionAccess to unlimited information to customers without human intervention• personalizationpersonalization• Enables transaction between firms and customers that will typically require Enables transaction between firms and customers that will typically require

human intervention human intervention

Limitations of e-marketingLimitations of e-marketing

Some of the limitations of e-marketing Some of the limitations of e-marketing includesincludes• Lack of personal approachLack of personal approach• Dependability on technologyDependability on technology• Security, privacy issues Security, privacy issues • Maintenance costs due to a constantly evolving Maintenance costs due to a constantly evolving

environmentenvironment• Higher transparency of pricing and increased Higher transparency of pricing and increased

price competitionprice competition• Worldwide competition through globalizationWorldwide competition through globalization

E-Commerce frameworkE-Commerce framework

E-Commerce applicationsDirect marketing, online Banking, E-government, E-purchasing,

job search, M-commerce, auctions, consumer services, etc

Public policyTaxes, legal,

privacy issues,Regulations and Tech. standards

PeopleBuyers, sellers,Intermediaries, IS people, andmanagement

Marketing & Adv.Market’g research,

promotions, & web content

Support servicesLogistics, pay’t,

Content, & security

systems dev.

Business PartnershipsJoint ventures,

Exchanges,E-marketplace

& consortia

PILLARS

Common businessServ. Infrast’ture

(security, smart cards/

Authentication Electronic payment

etc

Massaging & info dist.

Infrast’ture(EDI, e-mail, Hypertext,

Chat rooms)

Multimedia cont’t& networkPublishing

Infrastructure(html, java, xml,

Vrml etc.)

Network infrastructure

(telecom, cable tv

Wireless, Internet)

cell phones

Interfacing Infrastructure

(with database,Business partners

Applications)

INFRASTRUCTURAL SUPPORT

The need for E-Commerce securityThe need for E-Commerce security

There is need for E-Commerce security due to the There is need for E-Commerce security due to the increasing cyber attacks and cyber crimes.increasing cyber attacks and cyber crimes.

A recent survey of security practitioners yielded A recent survey of security practitioners yielded the following results,the following results,• Organizations continue to have cyber attacks from both Organizations continue to have cyber attacks from both

in and outside of the organizationin and outside of the organization• The cyber attacks varied, e.g. computer virus, Net abuse The cyber attacks varied, e.g. computer virus, Net abuse

( unauthorized users of the internet) by employees, ( unauthorized users of the internet) by employees, denial of servicesdenial of services

• The financial losses from cyber attacks can be The financial losses from cyber attacks can be substantialsubstantial

• Takes more then one type of technology to defend Takes more then one type of technology to defend against cyber attacks.against cyber attacks.

Basic security issuesBasic security issues

EC security involves more than just EC security involves more than just preventing and responding to cyber preventing and responding to cyber attacks and intrusion.attacks and intrusion.

e.g. a user connects to a Web server at a e.g. a user connects to a Web server at a market site to obtain some product market site to obtain some product literature (Loshin 1998). literature (Loshin 1998). • To get the literature, he is asked to fill out a To get the literature, he is asked to fill out a

Web form providing some demographic and Web form providing some demographic and other personal information.other personal information.

What are the security concerns that What are the security concerns that can/will arise in a situation like that?can/will arise in a situation like that?


From the user’s perspective,From the user’s perspective,• How can he know, that, the Web server How can he know, that, the Web server

is own and operated by legitimate is own and operated by legitimate company?company?

• How does he know that the Web page How does he know that the Web page and form do not contain some malicious and form do not contain some malicious or dangerous codes or content?or dangerous codes or content?

• How does he know that the Web server How does he know that the Web server will not distribute the information to will not distribute the information to some third party? some third party?


From the company’s perspective,From the company’s perspective,• How does the company know that the How does the company know that the

user will not attempt to break into the user will not attempt to break into the Web server or alter the pages and Web server or alter the pages and content at the site?content at the site?

• How does the company know that the How does the company know that the user will not try to disrupt the server so user will not try to disrupt the server so that it isn’t available to others?that it isn’t available to others?


from both parties perspective,from both parties perspective,• How does the parties know that the How does the parties know that the

network connection is free from network connection is free from eavesdropping by a third party eavesdropping by a third party “listening” on the line?“listening” on the line?

• How do they both know that the How do they both know that the information sent back and forth between information sent back and forth between the server has not been altered the server has not been altered

Basic security issuesBasic security issues With transactions that involves E-payments, additional types of security must be With transactions that involves E-payments, additional types of security must be

confronted.confronted.

• AuthenticationAuthentication: the process by which one entity verifies that another entity is who : the process by which one entity verifies that another entity is who they claim to be.they claim to be.

• Authorization:Authorization: the process that ensures that a person has the right to access the process that ensures that a person has the right to access certain informationcertain information

• Auditing:Auditing: the process of collecting information about attempts to access particular the process of collecting information about attempts to access particular resources, use particular privileges, or perform other security actionsresources, use particular privileges, or perform other security actions

• Confidentiality (privacy)Confidentiality (privacy): keeping a private or sensitive information from being : keeping a private or sensitive information from being disclosed to unauthorized individual, entities, or processes.disclosed to unauthorized individual, entities, or processes.

• IntegrityIntegrity: the ability to protect data from being altered or destroyed in an : the ability to protect data from being altered or destroyed in an unauthorized or accidental manner.unauthorized or accidental manner.

• AvailabilityAvailability: the ability of a person or a program to gain access to the pages, data, : the ability of a person or a program to gain access to the pages, data, or services provided by the site when they need it.or services provided by the site when they need it.

• NonrepudiationNonrepudiation: the ability to limit parties from refuting that a legitimate : the ability to limit parties from refuting that a legitimate transaction took place usually by the means of a signaturetransaction took place usually by the means of a signature

Types of threats and attacksTypes of threats and attacks There are two types of attacks:There are two types of attacks:

• Technical and non-technical.Technical and non-technical. Technical attacks: an attack perpetrated using software Technical attacks: an attack perpetrated using software

and systems knowledge or expertiseand systems knowledge or expertise

Non-technical attacks: an attack that uses deceit to trick Non-technical attacks: an attack that uses deceit to trick people into revealing sensitive information or performing people into revealing sensitive information or performing actions that compromise the security of a network.actions that compromise the security of a network.

• (social engineering): an attack that uses social pressures to (social engineering): an attack that uses social pressures to trick computer users into compromising computer networks to trick computer users into compromising computer networks to which those individuals have access. There are two types: which those individuals have access. There are two types:

Human based: based on traditional mode of Human based: based on traditional mode of communication. ( in person or over the phone)communication. ( in person or over the phone)

Computer based: technical ploys used to get individuals to Computer based: technical ploys used to get individuals to provide sensitive informationprovide sensitive information

Types of threats and attacksTypes of threats and attacks social engineering cont.social engineering cont.

• The key to successful social engineering rest with the victims. combating it The key to successful social engineering rest with the victims. combating it also rest with the victims.also rest with the victims.

Certain positions are more vulnerable than others, ( employees who Certain positions are more vulnerable than others, ( employees who deals with both confidential information and the public. E.g. secretaries, deals with both confidential information and the public. E.g. secretaries, and executive assistants, database and network administrators, and executive assistants, database and network administrators, computer operators and call-center operators.computer operators and call-center operators.

How to deal with it: multi-prong approach should be used to combat it. ( Damle How to deal with it: multi-prong approach should be used to combat it. ( Damle 2002)2002)

• Education and training: all staff ( mostly those in vulnerable positions) must Education and training: all staff ( mostly those in vulnerable positions) must be educated about the risk, techniques used by hackers and how to combat be educated about the risk, techniques used by hackers and how to combat it.it.

• Policies and procedures: for securing confidential information and Policies and procedures: for securing confidential information and measures needed to respond to and report any social engineering measures needed to respond to and report any social engineering breaches.breaches.

• Penetration and testing: on regularly bases by outside expect playing the Penetration and testing: on regularly bases by outside expect playing the role of hackers. Staff must be debriefed after penetration test and any role of hackers. Staff must be debriefed after penetration test and any weaknesses corrected. weaknesses corrected.

Types of threats and attacksTypes of threats and attacks Technical attacks: experts usually use Technical attacks: experts usually use

methodical approach. Many software tools methodical approach. Many software tools are easily and readily available over the are easily and readily available over the internet that enables a hacker to expose a internet that enables a hacker to expose a systems vulnerabilities.systems vulnerabilities.

• In 1999, Mitre corporation (cve.mitre.org) and In 1999, Mitre corporation (cve.mitre.org) and 15 other security-related organizations started 15 other security-related organizations started to count all publicly known CVEs ( common to count all publicly known CVEs ( common (security) vulnerabilities and exposures.(security) vulnerabilities and exposures.

• CVEs: publicly known computer security risks, CVEs: publicly known computer security risks, which are collected, listed, and shared by a which are collected, listed, and shared by a board of security-related organizations.board of security-related organizations.

Types of threats and attacksTypes of threats and attacks The two very well known technical attacks that have The two very well known technical attacks that have

affected the lives of millions are:affected the lives of millions are:

1.1. DDoS ( Distributed Denial of Service) attack: an attack in DDoS ( Distributed Denial of Service) attack: an attack in which the attacker gains illegal administrative access to as which the attacker gains illegal administrative access to as many computers on the Internet as possible and uses these many computers on the Internet as possible and uses these multiple computers to send a flood of data packets to the multiple computers to send a flood of data packets to the users computer.users computer.

• DoS (Denial-of-Services) attack: an attack on the web site in DoS (Denial-of-Services) attack: an attack on the web site in which an attacker uses specialized software to send a flood of which an attacker uses specialized software to send a flood of data packets to the targeted computer with the aim of data packets to the targeted computer with the aim of overloading its resources.overloading its resources.

• DDoS software are loaded on machines known as ZombiesDDoS software are loaded on machines known as Zombies

2.2. Malware (malicious codes): they are mostly classified by the Malware (malicious codes): they are mostly classified by the way they are propagated. They all have the potential to way they are propagated. They all have the potential to damage. damage.

• Malware takes a variety of forms and their names are mostly Malware takes a variety of forms and their names are mostly from the real–world pathogens they look-like, from the real–world pathogens they look-like,

Types of threats and attacksTypes of threats and attacks Viruses: a piece of software code that inserts itself into a host, including the Viruses: a piece of software code that inserts itself into a host, including the

operation system, to propagate. It requires the running of the host program to operation system, to propagate. It requires the running of the host program to activate it. Can’t run independentlyactivate it. Can’t run independently• Viruses have two components:Viruses have two components:

Propagation mechanism by which it spreadsPropagation mechanism by which it spreads A payload refers to the what it does once it is executedA payload refers to the what it does once it is executedSome viruses simply spread and infect, others do substantial damage ( e.g. deleting files Some viruses simply spread and infect, others do substantial damage ( e.g. deleting files

or corrupting the hard ware)or corrupting the hard ware) Worms: a program that can run independently, will consume the resources of its Worms: a program that can run independently, will consume the resources of its

host from within in order to maintain itself, and can propagate a complete working host from within in order to maintain itself, and can propagate a complete working version of itself onto another machine.version of itself onto another machine.Major difference between a worm and a viruses: a worm can propagate between systems Major difference between a worm and a viruses: a worm can propagate between systems

(mostly through a network) whiles viruses propagate locally.(mostly through a network) whiles viruses propagate locally.

Macro viruses or macro worms: executes when the application object that contains Macro viruses or macro worms: executes when the application object that contains the macro is open or a particular procedure is executed.the macro is open or a particular procedure is executed.

Trojan horse: a program that appears to have a useful function but that contains a Trojan horse: a program that appears to have a useful function but that contains a hidden function that presents a security risk.hidden function that presents a security risk.

There are various forms of Trojan horse, but the one of interest is the one that makes it There are various forms of Trojan horse, but the one of interest is the one that makes it possible for someone else to gain access and control a persons computer other the possible for someone else to gain access and control a persons computer other the net.net.

This types of Trojans have two parts: server and clients. The serve is the program that This types of Trojans have two parts: server and clients. The serve is the program that runs on the computer under attack, and the client is used by the person perpetrating runs on the computer under attack, and the client is used by the person perpetrating the attack. the attack.

Managing SecurityManaging Security Some basic mistakes in managing security risk, includesSome basic mistakes in managing security risk, includes

• Undervalued information. Few organizations have a clear Undervalued information. Few organizations have a clear understanding of the value of specific information assetunderstanding of the value of specific information asset

• Reactive security management. Most companies focus on security after Reactive security management. Most companies focus on security after an incidentan incident

• Narrowly defined security boundaries. Most organization are just Narrowly defined security boundaries. Most organization are just interested in securing their internal network and don’t try to interested in securing their internal network and don’t try to understand the security issues of their supply chain partnersunderstand the security issues of their supply chain partners

• Dated security management processes. Some organizations hardly Dated security management processes. Some organizations hardly

update or change their security practices or update the security update or change their security practices or update the security knowledge and skill of their employeesknowledge and skill of their employees

• Lack of communication about security responsibility. Security is often Lack of communication about security responsibility. Security is often view as an IT problem and not a company problem.view as an IT problem and not a company problem.

Security risk managementSecurity risk management Security risk management: is a systematic Security risk management: is a systematic

process for determining the likelihood of various process for determining the likelihood of various security attacks and for identifying the actions security attacks and for identifying the actions needed to prevent or mitigate those attacks. It needed to prevent or mitigate those attacks. It has four stages:has four stages:

• AssessmentAssessment: organization evaluate their security risks : organization evaluate their security risks by determining their assets, the vulnerability of their by determining their assets, the vulnerability of their system and the potential treats to these vulnerabilities. system and the potential treats to these vulnerabilities. This can be done,This can be done,

By relying the knowledge and skill of the IT personnelBy relying the knowledge and skill of the IT personnel By using outside IT consultant or By using outside IT consultant or By using a honeynet to study the types of attack to which By using a honeynet to study the types of attack to which

a site is being actively subjected to.a site is being actively subjected to.

Security risk managementSecurity risk management Honeynet: is a way to evaluate vulnerability of an organization by studying Honeynet: is a way to evaluate vulnerability of an organization by studying

the types of attack to which a site is subjected, using a network of systems the types of attack to which a site is subjected, using a network of systems called honeypots.called honeypots.

Honeypots: production systems ( e.g. firewalls, routers, web servers, Honeypots: production systems ( e.g. firewalls, routers, web servers, database servers) designed to do real work but to be watched and studied database servers) designed to do real work but to be watched and studied as network intrusions occur.as network intrusions occur.

• PlanningPlanning: the aim here is to arrive at a set policies defining which : the aim here is to arrive at a set policies defining which threats are tolerable and which aren’t and what is to be done in both threats are tolerable and which aren’t and what is to be done in both cases.cases.

a tolerable threat is one with a very high cost of safeguarding or the risk too a tolerable threat is one with a very high cost of safeguarding or the risk too low.low.

• Implementation: Implementation: involves the choose and use of particular involves the choose and use of particular

technologies to counter the high-priority threats.technologies to counter the high-priority threats.

• Monitoring:Monitoring: ongoing process to determine successful or unsuccessful ongoing process to determine successful or unsuccessful measures, need for modification, find new threats, find advances in measures, need for modification, find new threats, find advances in technology and locate which new business assets needs securing.technology and locate which new business assets needs securing.

Securing EC communicationsSecuring EC communications

there are two types of technology to there are two types of technology to secure communication on a network.secure communication on a network.• Technologies for securing Technologies for securing

communications communications acrossacross the network the network and for securing communication and for securing communication onon the the network.network.

EC of all sorts rests on the concept of EC of all sorts rests on the concept of trust, and trust, and PAINPAIN is used to represent is used to represent the key issues of trust that arises.the key issues of trust that arises.

Securing EC communicationsSecuring EC communications Information security requiresInformation security requires

• the identification of legitimate parties to a transaction, the identification of legitimate parties to a transaction, • the actions they are allowed to perform determined and the actions they are allowed to perform determined and • limited to only those necessary to initiate and complete limited to only those necessary to initiate and complete

the transaction.the transaction. This can be achieved through an authentication systemThis can be achieved through an authentication system

Authentication system: is a system that identifies Authentication system: is a system that identifies the legitimate parties to a transaction, the legitimate parties to a transaction, determines the actions they are allowed to determines the actions they are allowed to perform, and limits their actions to only those perform, and limits their actions to only those that are necessary to initiate and complete the that are necessary to initiate and complete the transaction transaction

Securing EC communicationsSecuring EC communications Authentication system have five key elements, namely,Authentication system have five key elements, namely,

• A person or group to be authenticatedA person or group to be authenticated

• A distinguishing characteristic that asides the person or the A distinguishing characteristic that asides the person or the group apartgroup apart

• A proprietor responsible for the system being usedA proprietor responsible for the system being used

• An authentication mechanism for verifying the presence of the An authentication mechanism for verifying the presence of the differentiating characteristicdifferentiating characteristic

• An An access control mechanism ( access control mechanism ( a mechanism that limits the a mechanism that limits the actions that can be perform by an authenticated person or actions that can be perform by an authenticated person or group) for limiting the actions performed by the authenticated group) for limiting the actions performed by the authenticated person or groupperson or group

Securing EC communicationsSecuring EC communications Distinguishing characteristic in an authentication system Distinguishing characteristic in an authentication system

can be somethingcan be something• One knows (e.g. password, pass phrase, PIN )One knows (e.g. password, pass phrase, PIN )• One has (e.g. ID card, a security token, software, cell phone )One has (e.g. ID card, a security token, software, cell phone )• One is (e.g. fingerprint, DNA, signature, voice recognition)One is (e.g. fingerprint, DNA, signature, voice recognition)

Traditionally authentication systems has mostly been Traditionally authentication systems has mostly been passwords (which are very insecure) passwords (which are very insecure)

Stronger security can be achieved by combining what Stronger security can be achieved by combining what someone knows with something one has ( technique know someone knows with something one has ( technique know as as two factor authentication T-FAtwo factor authentication T-FA) )


Tokens: there are two types of Tokens: there are two types of • Passive tokens: storage devices used in Passive tokens: storage devices used in

a two-factor authentication system that a two-factor authentication system that contain a secret codecontain a secret code

• Active tokens: small stand-alone Active tokens: small stand-alone electronic devices in a two-way electronic devices in a two-way authentication system that generate authentication system that generate one-time passwords. one-time passwords.

Securing EC communicationsSecuring EC communications Biometric Systems: authentication systems that Biometric Systems: authentication systems that

identifies a person by measuring biological identifies a person by measuring biological characteristic such as fingerprints, iris (eye) characteristic such as fingerprints, iris (eye) pattern, facial features or voicepattern, facial features or voice

There are two forms of biometricsThere are two forms of biometrics• Physiological biometrics: measurements derived directly Physiological biometrics: measurements derived directly

from different parts of the body (e.g. fingerprints, iris, from different parts of the body (e.g. fingerprints, iris, hand, facial characteristics)hand, facial characteristics)

• Behavioral biometrics: measurement derived from Behavioral biometrics: measurement derived from various actions and indirectly from various body parts various actions and indirectly from various body parts (e.g. voice scan or keystroke monitoring) (e.g. voice scan or keystroke monitoring)

Securing EC communicationsSecuring EC communications Fingerprinting scanning: measurement of the Fingerprinting scanning: measurement of the

discontinuities of a person fingerprint, converted to a set of discontinuities of a person fingerprint, converted to a set of numbers that are stored as a template and use to numbers that are stored as a template and use to authenticate identityauthenticate identity

Iris scanning: measurement of the unique spots in the iris Iris scanning: measurement of the unique spots in the iris (colored part of the eye) converted to a set of numbers that (colored part of the eye) converted to a set of numbers that are stored as a template and used to authenticate identityare stored as a template and used to authenticate identity

Voice scanning: measurement of the acoustical patterns in Voice scanning: measurement of the acoustical patterns in speech production, converted to a set of numbers that be speech production, converted to a set of numbers that be stored as a template and used to authenticate identity.stored as a template and used to authenticate identity.

Keystroke monitoring: measurement of the pressure, Keystroke monitoring: measurement of the pressure, speed, and rhythm with which a word is typed, converted to speed, and rhythm with which a word is typed, converted to a set of numbers and stored as a template and used to a set of numbers and stored as a template and used to authenticate identity.authenticate identity.


Public key infrastructure (PKI): a scheme Public key infrastructure (PKI): a scheme for securing e-payments using public key for securing e-payments using public key encryption and various technical encryption and various technical components.components.

Encryption: the process of scrambling Encryption: the process of scrambling (encrypting) a message in such a way that (encrypting) a message in such a way that it is difficult, expensive, or time consuming it is difficult, expensive, or time consuming for an authorized person to unscramble for an authorized person to unscramble (decrypt) it.(decrypt) it.All encryptions has four basic parts.All encryptions has four basic parts.

Securing EC communicationsSecuring EC communications Plaintext: an unencrypted message in human-readable Plaintext: an unencrypted message in human-readable

form.form.

Encryption algorithm: mathematical formula used to Encryption algorithm: mathematical formula used to encrypt the plaintext into the ciphertext, and vice versa encrypt the plaintext into the ciphertext, and vice versa

Key: secret code used to encrypt and decrypt a messageKey: secret code used to encrypt and decrypt a message

Ciphertext: a plaintext message after it has been encrypted Ciphertext: a plaintext message after it has been encrypted into a machine readable forminto a machine readable form

• There are two form of encryption systemsThere are two form of encryption systems Symmetric system and Symmetric system and Asymmetric systemAsymmetric system

Securing EC communicationsSecuring EC communications Symmetric (private) Key system: an encryption Symmetric (private) Key system: an encryption

system that uses the same key to encrypt and to system that uses the same key to encrypt and to decrypt the message.decrypt the message.The key is only know to the sender and the receive (hence The key is only know to the sender and the receive (hence

the name private key)the name private key)

Asymmetric (public) key encryption: encryption Asymmetric (public) key encryption: encryption that uses a pair of matched keys, a public key to that uses a pair of matched keys, a public key to encrypt and a private key to decrypt it or vise encrypt and a private key to decrypt it or vise versa.versa.

• Public key: encryption code that is publicly available to Public key: encryption code that is publicly available to anyoneanyone

• Private key: encryption code that is know only to the Private key: encryption code that is know only to the sender and the receiver (owners).sender and the receiver (owners).

Securing EC NetworksSecuring EC Networks Many technologies exist to ensure that an organization’s Many technologies exist to ensure that an organization’s

networks is secured or detected when intruded.networks is secured or detected when intruded.• FirewallFirewall: a network node consisting of both hardware and : a network node consisting of both hardware and

software that isolates a private network from a public network.software that isolates a private network from a public network.• Personal firewallPersonal firewall: a network node designed to protect an : a network node designed to protect an

individual user’s desktop system from the public network by individual user’s desktop system from the public network by monitoring the traffic that passes through the computers monitoring the traffic that passes through the computers network interface.network interface.

• Virtual private networks (VPN)Virtual private networks (VPN): a network that uses the : a network that uses the public Internet to carry information but remains private by public Internet to carry information but remains private by using encryption to scramble the communications, using encryption to scramble the communications, authentication to ensure that information has not been authentication to ensure that information has not been tampered with, and access control to verify the identity of tampered with, and access control to verify the identity of anyone using the networkanyone using the network

• Intrusion detection systems (IDS)Intrusion detection systems (IDS): a special category of : a special category of software that can monitor activity across a network or on a software that can monitor activity across a network or on a host computer, watch for suspicious activity, and take host computer, watch for suspicious activity, and take automated actions based on what it sees.automated actions based on what it sees.

Business models in E-CommerceBusiness models in E-Commerce

Business model: a method of doing business by which a Business model: a method of doing business by which a company can generate revenue to sustain itself.company can generate revenue to sustain itself.

Structure of business models: structure of business models Structure of business models: structure of business models varies greatly based on the company, and the industry varies greatly based on the company, and the industry environment.environment.• Weill and Vitale (2001) 8 atomic business modelWeill and Vitale (2001) 8 atomic business model

Direct marketing,Direct marketing, intermediary,intermediary, content provider, content provider, full service provider, full service provider, shared infrastructure, shared infrastructure, value net integrator, value net integrator, virtual community, and virtual community, and consolidator of services (for large organizations)consolidator of services (for large organizations)

Business models in E-CommerceBusiness models in E-Commerce

• Each of this models is characterized by Each of this models is characterized by Strategic objectivesStrategic objectives Source of revenue Source of revenue Critical success factorsCritical success factors Core competencies requiredCore competencies required

• These models must specifiedThese models must specified Their revenue modelsTheir revenue models Value propositions Value propositions

Revenue modelRevenue model Revenue model: how an EC project or company will make or earn Revenue model: how an EC project or company will make or earn

money. Major revenue models are,money. Major revenue models are,• Sales: revenue from selling on their web site or providing servicesSales: revenue from selling on their web site or providing services

• Transaction fees: commissions based on the volume of transactions Transaction fees: commissions based on the volume of transactions made. ( fixed or incremental)made. ( fixed or incremental)

• Subscription: payment of fees usually monthly or quarterly to get some Subscription: payment of fees usually monthly or quarterly to get some type of servicetype of service

• Advertising fees: companies charge others for placing ads on their sitesAdvertising fees: companies charge others for placing ads on their sites

• Affiliate fee: companies get paid for referring customers to other sitesAffiliate fee: companies get paid for referring customers to other sites

• Other revenue models: game sites, licensing fees etc.Other revenue models: game sites, licensing fees etc.

Value propositionValue proposition Value proposition: the benefits a company can derive from using Value proposition: the benefits a company can derive from using

EC. (B2C EC e.g. defines how a company’s product or service EC. (B2C EC e.g. defines how a company’s product or service fulfills the needs of customers.fulfills the needs of customers.• Specifically how does for example e-marketplaces create value?Specifically how does for example e-marketplaces create value?• Amit & Zott (2001) identified 4 sets of valuesAmit & Zott (2001) identified 4 sets of values

Search & transaction cost efficiency: Search & transaction cost efficiency: • Enables faster and more informed decision making, Enables faster and more informed decision making,

wider product and service selection etcwider product and service selection etc Complementarities: bundling some goods and services Complementarities: bundling some goods and services

together to provide more value than when offered together to provide more value than when offered separatelyseparately

Lock-in: high switching cost that ties customers to certain Lock-in: high switching cost that ties customers to certain supplierssuppliers

Novelty: developing innovative ways for structuring Novelty: developing innovative ways for structuring transactions, connecting partners, and fostering new transactions, connecting partners, and fostering new markets markets

Value propositionValue proposition• Bakos (1991) values,Bakos (1991) values,

Reduced search costReduced search cost Significant switching costSignificant switching cost Economics of scale and scopeEconomics of scale and scope Network externalityNetwork externality

• Other value propositions, Other value propositions, Demand (and/ supply) aggregation: affords suppliers Demand (and/ supply) aggregation: affords suppliers

with wider market access and buyers with more with wider market access and buyers with more choices and both with competitive prices andchoices and both with competitive prices and

Interfirm collaborations: enables business Interfirm collaborations: enables business participants to deepen their business relationships participants to deepen their business relationships leading to improvement in individual business leading to improvement in individual business processes and overall supply chain performanceprocesses and overall supply chain performance

Types of business models in ECTypes of business models in EC Online direct marketing: selling online from a manufacturer to a Online direct marketing: selling online from a manufacturer to a

customer (e-tailing)customer (e-tailing)

Electronic tendering system: (tendering, reverse auction) buyers Electronic tendering system: (tendering, reverse auction) buyers request would be sellers to submit bids for an item/service/project request would be sellers to submit bids for an item/service/project and the lowest bidder winsand the lowest bidder wins

Name-your-own price: a buyer sets the price he wants to pay for a Name-your-own price: a buyer sets the price he wants to pay for a product/serviceproduct/service

Find the best price: a buyer submits its needs and an intermediate Find the best price: a buyer submits its needs and an intermediate matches it against a database of sellers, locates the lowest price matches it against a database of sellers, locates the lowest price and submit it to the buyer to accept or reject.and submit it to the buyer to accept or reject.

Affiliate marketing: marketing partner refers consumers to a Affiliate marketing: marketing partner refers consumers to a selling company’s web site for a commission (virtual selling company’s web site for a commission (virtual commissioned sales force)commissioned sales force)

Types of business models in ECTypes of business models in EC Viral marketing: Web-based word-of-mouth marketing in which a Viral marketing: Web-based word-of-mouth marketing in which a

customers promotes a product or service to friends or other customers promotes a product or service to friends or other peoplepeople

Group purchasing: quantity purchasing that enables groups of Group purchasing: quantity purchasing that enables groups of purchasers to obtain a discount price on the products purchased purchasers to obtain a discount price on the products purchased (demand aggregation)(demand aggregation)

Online auctions: bidding for products and services with the highest Online auctions: bidding for products and services with the highest bidder getting the item.bidder getting the item.

Product and service customization: creation of a product or service Product and service customization: creation of a product or service to meet the buyers specifications.to meet the buyers specifications.

Electronic marketplaces and exchangers: a space in which sellers Electronic marketplaces and exchangers: a space in which sellers and buyers exchange goods and services for money (or for other and buyers exchange goods and services for money (or for other goods and services) goods and services) electronically.electronically.

Electronic payments (e-payment)Electronic payments (e-payment)

E-payments: payments made E-payments: payments made electronically rather than by paper (cash, electronically rather than by paper (cash, checks, vouchers, etc)checks, vouchers, etc)

Electronic payments methods expedite Electronic payments methods expedite payments online and reduces processing payments online and reduces processing costs, but must it must be safe and trusted costs, but must it must be safe and trusted by users.by users.

The major methods of e-payments in use The major methods of e-payments in use includes,includes,

Electronic payments (e-payment)Electronic payments (e-payment) Electronic payment cards (credit, debit, charge)Electronic payment cards (credit, debit, charge) Virtual credit cardsVirtual credit cards E-wallets (or e-purses)E-wallets (or e-purses) Smart cardsSmart cards Electronic cash (several variations)Electronic cash (several variations)

• Wireless paymentsWireless payments• Stored-valued cards paymentStored-valued cards payment• Loyalty cardsLoyalty cards• Person-to person payment cardsPerson-to person payment cards

Payments made electronically at kioskPayments made electronically at kiosk• Other methods used mostly for B2B paymentsOther methods used mostly for B2B payments

Electronic checksElectronic checks Purchasing cardsPurchasing cards Electronic letters of creditElectronic letters of credit Electronic funds transfer (ETF)Electronic funds transfer (ETF) Electronic benefit transfer (EBT)Electronic benefit transfer (EBT) EtcEtc

The underling similarity is the ability to transfer or make a payment from one person The underling similarity is the ability to transfer or make a payment from one person or party to another person or party over a network without face-to-face interaction.or party to another person or party over a network without face-to-face interaction.


Whatever the payment method is, five parties may be involved, Whatever the payment method is, five parties may be involved, • Customer/payer/buyer: the party making the e-payment in exchange Customer/payer/buyer: the party making the e-payment in exchange

for goods or servicesfor goods or services• Merchant/payee/seller: the party receiving the e-payment in exchange Merchant/payee/seller: the party receiving the e-payment in exchange

for goods or servicesfor goods or services• Issuer: the banks or the non-banking institutions that issued the e-Issuer: the banks or the non-banking institutions that issued the e-

payment instrument used to make the purchasepayment instrument used to make the purchase• Regulator: usually a government agency whose regulations control the Regulator: usually a government agency whose regulations control the

e-payment processe-payment process• Automated Clearing House (ACH): an electronic network that transfers Automated Clearing House (ACH): an electronic network that transfers

money between bank accounts.money between bank accounts.

• Issuers play a key role in online purchases for 2 reasons, Issuers play a key role in online purchases for 2 reasons, Customers must obtain their e-payment accounts from an issuerCustomers must obtain their e-payment accounts from an issuer Issuers are mostly involved in authenticating a transaction and approving Issuers are mostly involved in authenticating a transaction and approving

the amount involved.the amount involved.

Because buyers and seller are not at the same place to exchange their Because buyers and seller are not at the same place to exchange their goods and services, issues of trust arise, and PAIN has been devised to goods and services, issues of trust arise, and PAIN has been devised to address such issues.address such issues.

Electronic payments (e-payment)Electronic payments (e-payment) Characteristic of successful e-payment methodsCharacteristic of successful e-payment methods

• How do u get buyers to adopt a method when there are few sellers using it?How do u get buyers to adopt a method when there are few sellers using it?• And how do you get sellers to adopt a method when very few buyers are using And how do you get sellers to adopt a method when very few buyers are using

it? (chicken and egg problem)it? (chicken and egg problem)

Some factors or characteristics or successful e-payment are, Some factors or characteristics or successful e-payment are,

• independence: e-payment that require the payer to install specialized independence: e-payment that require the payer to install specialized components are less likely to succeedcomponents are less likely to succeed

• Interoperability and portability: an e-payment system must mesh with existing Interoperability and portability: an e-payment system must mesh with existing interlinked systems and applications and must be supported by standard interlinked systems and applications and must be supported by standard computing platforms computing platforms

• Security: the risk for the payee must be higher the payer (must be very safe)Security: the risk for the payee must be higher the payer (must be very safe)• Anonymity: e-payment systems must be anonymous to hide the identity of those Anonymity: e-payment systems must be anonymous to hide the identity of those

who wants to remain sowho wants to remain so• Divisibility: must be usable for both high and low purchasesDivisibility: must be usable for both high and low purchases• Ease of use: must be pretty easy to useEase of use: must be pretty easy to use• Critical mass: a critical mass of vendors must be willing to accept the payment, Critical mass: a critical mass of vendors must be willing to accept the payment,

conversely a critical mass of places to acquire the payment methods must existconversely a critical mass of places to acquire the payment methods must exist


Using e-payment reduces transaction cost by 30 Using e-payment reduces transaction cost by 30 to 50 percent compared to off-line paymentsto 50 percent compared to off-line payments

It is fasterIt is faster Makes it possible to conduct business across Makes it possible to conduct business across

geographical and political boundaries (greatly geographical and political boundaries (greatly enhancing the possibility of international deals enhancing the possibility of international deals and transactionsand transactions

E-payment is very important in EC because,E-payment is very important in EC because,• There is no trade without a payment systemThere is no trade without a payment system• A good and secured payment system increases the trust A good and secured payment system increases the trust

and confidence of buyersand confidence of buyers

Electronic payments (e-Electronic payments (e-payment)payment)

Electronic cards: are plastic cards that contain digitized Electronic cards: are plastic cards that contain digitized information, that can be used for payment and for other information, that can be used for payment and for other purposes such as identification and access to secure purposes such as identification and access to secure locations.locations.

• Payment cards: electronic cards that contains information that Payment cards: electronic cards that contains information that can be used for payment purposes.can be used for payment purposes.there three types of payment cardsthere three types of payment cards

Credit cards: providers the holder with a credit to make purchases Credit cards: providers the holder with a credit to make purchases up to a limit fixed by the issuers. (users normally don’t pay any fee up to a limit fixed by the issuers. (users normally don’t pay any fee for using it, just a high interest on their unpaid balance)for using it, just a high interest on their unpaid balance)

Charge cards: are like monthly loans given to the user, that he/she Charge cards: are like monthly loans given to the user, that he/she is required to pay back in full at the end of the month or upon is required to pay back in full at the end of the month or upon receipt of monthly statement. (usually no interest is paid on such receipt of monthly statement. (usually no interest is paid on such cards, just an annual fee and or severe penalty for failure to pay cards, just an annual fee and or severe penalty for failure to pay balance in full)balance in full)

Debit cards: with a card the money for a transact comes directly Debit cards: with a card the money for a transact comes directly from the users account from the users account


Virtual credit cards: a payment system in Virtual credit cards: a payment system in which the issuer gives a special which the issuer gives a special transaction number that can be used transaction number that can be used online in place of a regularly credit card online in place of a regularly credit card number.number.

E-wallets: is a software component in E-wallets: is a software component in which a user stores credit card numbers which a user stores credit card numbers and other information; when shopping and other information; when shopping online, the user simply clicks the e-wallet online, the user simply clicks the e-wallet to automatically fill in information needed to automatically fill in information needed to make a purchase.to make a purchase.


Smart Cards: an electronic card contains an Smart Cards: an electronic card contains an embedded microchip that enables predefined embedded microchip that enables predefined operations or the addition, deletion, or operations or the addition, deletion, or manipulation of information on the card.manipulation of information on the card.

• Some applications of smart cards:Some applications of smart cards:

Loyalty cards; retailers are using loyalty cards to identify Loyalty cards; retailers are using loyalty cards to identify their loyal customers and reward themtheir loyal customers and reward them

Financial application; financial institutions, payment Financial application; financial institutions, payment associations, credit cards, debit cards, charge card issuers associations, credit cards, debit cards, charge card issuers are all using smart cards to extend the traditional card are all using smart cards to extend the traditional card payment servicespayment services

TransportationTransportation Identification; smart cards fits perfectly in the identification Identification; smart cards fits perfectly in the identification

marketmarket


Electronic cash: the digital equivalent of paper Electronic cash: the digital equivalent of paper currency and coins, which enables secure and currency and coins, which enables secure and anonymous purchase of low-priced items.anonymous purchase of low-priced items.• E-cash has various variations;E-cash has various variations;

Wireless paymentsWireless payments Stored-value cardsStored-value cards E-loyaltyE-loyalty P2P payment: e-payment schemes that allows the transfer P2P payment: e-payment schemes that allows the transfer

of funds between two individualsof funds between two individuals

Payment made electronically at kiosk; customers Payment made electronically at kiosk; customers acting as cashiers and checking themselves out.acting as cashiers and checking themselves out.


Documents

E-commerce And Its Business Model