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E-COMMERCE LECTURE BOOK

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Chapter-1

1.1 Electronic Commerce:

Electronic commerce, commonly known as E-commerce is trading in products or services using
computer networks, such as the Internet.
Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply
chain management, Internet marketing, online transaction processing, electronic data interchange
(EDI), inventory management systems, and automated data collection systems.
Modern electronic commerce typically uses the World Wide Web for at least one part of the
transaction's life cycle, although it may also use other technologies such as e-mail.

Definition of E-commerce:

Sharing business information, maintaining business relationships and conducting business transactions
using computers connected to telecommunication network is called E-Commerce.

1.2 E-Commerce Categories:

1. Electronic Markets
Present a range of offerings available in a market segment so that the purchaser can compare
the prices of the offerings and make a purchase decision.
Example: Airline Booking System
2. Electronic Data Interchange (EDI)
• It provides a standardized system
• Coding trade transactions
• Communicated from one computer to another without the need for printed orders and invoices
& delays & errors in paper handling
• It is used by organizations that a make a large no. of regular transactions
Example: EDI is used in the large market chains for transactions with their suppliers
3. Internet Commerce
• It is use to advertise & make sales of wide range of goods & services.
• This application is for both business to business & business to consumer transactions.
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Example: The purchase of goods that are then delivered by post or the booking of tickets
that can be picked up by the clients when they arrive at the event.

1.3 Advantages Of E-commerce:

 Buying/selling a variety of goods and services from one's home or business
 Anywhere, anytime transaction
 Can look for lowest cost for specific goods or service
 Businesses can reach out to worldwide clients - can establish business partnerships
 Order processing cost reduced
 Electronic funds transfer faster
 Supply chain management is simpler, faster, and cheaper using ecommerce
- Can order from several vendors and monitor supplies.
- Production schedule and inventory of an organization can be inspected by
cooperating supplier who can in-turn schedule their work

1.4 Disadvantages Of E-commerce:

 Electronic data interchange using EDI is expensive for small businesses
 Security of internet is not very good - viruses, hacker attacks can paralise
e-commerce
 Privacy of e-transactions is not guaranteed
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 E-commerce de-personalises shopping

1.5 Threats of E-commerce:

Hackers attempting to steal customer information or disrupt the site

A server containing customer information is stolen.
Imposters can mirror your ecommerce site to steal customer money
Authorised administrators/users of an ecommerce website downloading hidden active content
that attacks the ecommerce system.
A disaffected employee disrupting the ecommerce system.
It is also worth considering where potential threats to your ecommerce site might come from,
as identifying potential threats will help you to protect your site. Consider:
Who may want to access your ecommerce site to cause disruption or steal data; for example
competitors, ex-employees, etc.
What level of expertise a potential hacker may possess; if you are a small company that would
not be likely to be considered a target for hackers then expensive, complex security may not
be needed.

1.6 Features of E-Commerce:

 Ubiquity
Internet/Web technology is The marketplace is extended beyond traditional available
everywhere: at work, at home, and boundaries and is removed from a temporal and elsewhere
via mobile devices, anytime. geographic location. ―Marketspaceǁ is created; shopping can
take place anywhere. Customer convenience is enhanced, and shopping costs are reduced.

 Global reach
The technology reaches Commerce is enabled across cultural and across national
boundaries, around the earth. national boundaries seamlessly and without modification.
―Marketspaceǁ includes potentially billions of consumers and millions of businesses
worldwide.
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 Universal standards
There is one set of There is one set of technical media standards technology standards,
namely Internet across the globe.
 Richness
Video, audio, and text messages Video, audio, and text marketing messages are are possible.
integrated into a single marketing message and consuming experience.
 Interactivity
The technology works Consumers are engaged in a dialog that through interaction with the
user. dynamically adjusts the experience to the individual, and makes the consumer a co-
participant in the process of delivering goods to the market.
 Information density
The technology Information processing, storage, and reduces information costs and raises
quality. communication costs drop dramatically, while currency, accuracy, and timeliness
improve greatly. Information becomes plentiful, cheap, and accurate.
 Personalization/Customization
The Personalization of marketing messages and technology allows personalized messages to
customization of products and services are be delivered to individuals as well as groups.
based on individual characteristics.
1.7 Business models of e-commerce:
There are mainly 4 types of business models based on transaction party.

Business-to-Consumer (B2C)

In a Business-to-Consumer E-commerce environment, companies sell their online goods to

consumers who are the end users of their products or services. Usually, B2C E-commerce web
shops have an open access for any visitor, meaning that there is no need for a person to login in
order to make any product related inquiry.
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Business-to-Business (B2B)

In a Business-to-Business E-commerce environment, companies sell their online goods to other

companies without being engaged in sales to consumers. In most B2B E-commerce environments
entering the web shop will require a log in. B2B web shop usually contains customer-specific
pricing, customer-specific assortments and customer-specific discounts.

Consumer-to-Business (C2B)

In a Consumer-to-Business E-commerce environment, consumers usually post their products or

services online on which companies can post their bids. A consumer reviews the bids and selects
the company that meets his price expectations.
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Consumer-to-Consumer (C2C)

In a Consumer-to-Consumer E-commerce environment consumers sell their online goods to

other consumers. A well-known example is eBay.

1.8 E-Governance:
E-governance is the application of information and communication technology (ICT) for
delivering government services, exchange of information communication transactions, integration
of various stand-alone systems and services between government-to-customer (G2C),
government-to-business (G2B), government-to-government (G2G) as well as back office
processes and interactions within the entire government framework.

Through e-governance, government services will be made available to citizens in a convenient,

efficient and transparent manner. The three main target groups that can be distinguished in
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governance concepts are government, citizens and businesses/interest groups. In e-governance

there are no distinct boundaries.

Business - to - Government (B2G)

B2G model is a variant of B2B model. Such websites are used by government to trade and
exchange information with various business organizations. Such websites are accredited by the
government and provide a medium to businesses to submit application forms to the government.

Government - to - Business (G2B)

Government uses B2G model website to approach business organizations. Such websites support
auctions, tenders and application submission functionalities.

Government - to - Citizen (G2C)

Government uses G2C model website to approach citizen in general. Such websites support
auctions of vehicles, machinery or any other material. Such website also provides services like
registration for birth, marriage or death certificates. Main objectives of G2C website are to
reduce average time for fulfilling people requests for various government services.
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1.9 Different Types of Networking For E-Commerce:

Internet:
The Internet is a global network of computers that allows people to send email, view web sites,
download files such as mp3 and images, chat, post messages on newsgroups and forums and much
more.

The Internet was created by the Advanced Research Projects Agency (ARPA) of the U.S.
government in 1960's and was first known as the ARPANet. At this stage the Internet's first
computers were at academic and government institutions and were mainly used for accessing files
and to send emails. From 1983 onwards the Internet as we know it today started to form with the
introduction of the communication protocol TCP/IP to ARPANet. Since 1983 the Internet has
accommodated a lot of changes and continues to keep developing.

The last two decades has seen the Internet accommodate such things as network LANs and ATM
and frame switched services. The Internet continues to evolve with it becoming available on
mobile phones and pagers and possibly on televisions in the future.

Advantages of internet:
There many advantages to using the internet such as:
E-mail
Email is now an essential communication tool in business. It is also excellent for keeping in touch with
family and friends. The advantage to email is that it is free ( no charge per use) when compared to
telephone, fax and postal services.
Information
There is a huge amount of information available on the internet for just about every subject known
to man, ranging from government law and services, trade fairs and conferences, market
information, new ideas and technical support.
Services
Many services are now provided on the internet such as online banking, job seeking and
applications, and hotel reservations. Often these services are not available off-line or cost more.
Buy or sell products.
The internet is a very effective way to buy and sell products all over the world.
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Communities communities of all types have sprung up on the internet. Its a great way to meet up
with people of similar interest and discuss common issues.
A Leading-Edge Image
Presenting your company or organization as leading-edge shows your customers and prospective
customers that you are financially strong, technologically savvy, and ready for the 21st century.
And that you care enough about your customers to take advantage of new technologies for their
benefit. And finally that you have the resources to support your clients in the most beneficial
manner possible.
More and more advertisers on television, radio, magazines, and newspapers are including a Web
address. Now is the time to avoid playing catch-up later.
Improved Customer Service
The companies are available to their customers 24 hours a day, 7 days a week. The Internet never
sleeps. Whenever customer needs information about any company, products or services, they can
access the company‘s Web Page.
Market Expansion
The Internet is a global system. Latest estimates are that there are about 40 million people with
access to the Internet, and this number is growing every day. By simply posting a Web Page you
are also addressing International markets.
Low Cost Marketing
Imagine developing a full color brochure without having to incur the costs of proofs, printers,
wasted paper, long lead times between revisions, and more. Then imagine a full color product or
services brochure that is interactive and which incorporates text, graphics, audio, and/or video.
One that can be immediately updated without incurring the usual costs of product material updates.
Low Cost Selling
Without the cost of direct selling potential customers can get detailed information about your
products or services at any time. And they can easily order your products over the Internet, or
request additional information be sent to them via a request form on your Web page.
Lower Communication Costs
Your time, and your employees time, is valuable. Most businesses and organizations spend time
answering the same questions over and over again. With a Web page you can make the answers
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available to everyone immediately. You can also update your Wed page with new information quickly
and easily.
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CHAPTER2: DESIGNING WEBSITES

Structure

5.0 Objectives
5.1 Web site design strategy
5.2 The life cycle of site building from page to stage
5.3 Summary
5.4 Keywords
5.5 Review questions
5.6 References / suggested readings

OBJECTIVES

After studying this unit we will be able

 To understand the web design strategies.

 To understand the life cycle of life building with different stages.

WEBSITE DESIGN STRATEGY

Web design has evolved from static hypertext publishing in the early days to dynamic
multimedia, Web database application servers. More importantly, new business models that
bring savings, revenues, and customer relationships are being incorporated into commercial Web
site design. There are two generic Web site design strategies:
 informational/communicational strategy
 on-line/transactional strategy

Informational/communicational design:
Definition
This approach is for companies to use the Web as a supplement to traditional marketing,
delivering additional benefits to customers and building relationships with them.
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Promotion measures and ways

1. Putting companies‘ catalog on-line
2. Building broad awareness and image
3. Using the Web as a cost-effective way to augment their core products with related information
and service function.
4. Obtaining cost savings from automating routine customer services.

Advantages:
1. Providing large quantities of information to customers
2. Giving a company an instant global presence and attracting people toone‘s ad, some of them
are not the company‘s target market, but potentially will be.
3. Opening a new communication channel allowing a company to develop further relationships
with customers.
4. All at a reasonable cost.

On-line/transactional design
Definition
This approach is for companies to use the Web to construct ``virtual business‘‘ ± independent,
profitable ventures that exist only on the Internet.
Promotion measures and ways
1. Creating a retail presence larger than any physical store could
2. Creating a virtual business providing extra information in a form competitors cannot imitate
3. Creating a virtual business that takes a specialty product or collectible and sell site worldwide
4. Creating a virtual business that uses the Internet to produce superior economic benefits to
customers that competitors cannot imitate
5. Creating a virtual business providing convenience to customers that competitors cannot match.
Advantages:
1. Providing a larger or more specialized selection of products than competitors can offer
2. Providing higher quality and higher quantity information, more economic benefits, and more
convenience than competitors can offer.
3. Providing a sense of community for customers.
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THE LIFE CYCLE OF SITE BUILDING FROM PAGE TO STAGE

A system development process can follow a number of standard or company specific frameworks,
methodologies, modeling tools and languages. Software development life cycle normally comes
with some standards which can fulfill the needs of any development team. Like software, web sites
can also be developed with certain methods with some changes and additions with the existing
software development process. Let us see the steps involve in any web site development.

1. Analysis

Once a customer is started discussing his requirements, the team gets into it, towards the
preliminary requirement analysis. As the web site is going to be a part of a system, It needs a
complete analysis as, how the web site or the web based application is going to help the present
system and how the site is going to help the business. Moreover the analysis should cover all the
aspects especially on how the web site is going to join the existing system. The first important
thing is finding the targeted audience. Then, All the present hardware, software, people and data
should be considered during the time of analysis. For example, if a company XYZ corp is in need
of a web site to have its human resource details online, the analysis team may try to utilize the
existing data about the employees from the present database. The analysis should be done in the
way, that it may not be too time consuming or with very less informative. The team should beable
to come up with the complete cost- benefit analysis and as the plan for the project will be anoutput
of analysis, it should be realistic. To achieve this analyst should consult the designers, developers
and testers to come up with a realistic plan.

Input: Interviews with the clients, Mails and supporting docs by the client, Discussions Notes,
Online chat, recorded telephone conversations, Model sites/applications etc.,

Output: 1. Work plan, 2. Cost involved, 3. Team requirements, 4. Hardware-software

requirements, 5. Supporting documents and 6. the approval.

2. Specification Building:

Preliminary specifications are drawn up by covering up each and every element of the requirement.
For example if the product is a web site then the modules of the site including
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general layout, site navigation and dynamic parts of the site should be included in the spec. Larger
projects will require further levels of consultation to assess additional business andtechnical
requirements. After reviewing and approving the preliminary document, a written proposal is
prepared, outlining the scope of the project including responsibilities, timelines and costs.

Input: Reports from the analysis team.

Output: Complete requirement specifications to the individuals and the customer/customer's
representative.

3. Design and development:

After building the specification, work on the web site is scheduled upon receipt of the signed
proposal, a deposit, and any written content materials and graphics you wish to include. Here
normally the layouts and navigation will be designed as a prototype.

Some customers may be interested only in a full functional prototype. In this case we may need
to show them the interactivity of the application or site. But in most of the cases customer may
be interested in viewing two or three design with all images and navigation.

There can be a lot of suggestions and changes from the customer side, and all the changes should
be freezed before moving into the next phase. The revisions could be redisplayed via the web for
the customer to view.

As needed, customer comments, feedback and approvals can be communicated by e-mail,

fax and telephone.

Throughout the design phase the team should develop test plans and procedures for quality
assurance. It is necessary to obtain client approval on design and project plans.

In parallel the Database team will sit and understand the requirements and develop the database
with all the data structures and sample data will also be prepared.
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Input: Requirement specification.

Output: Site design with templates, Images and prototype.

4. Content writing:

This phase is necessary mainly for the web sites. There are professional content developers who
can write industry specific and relevant content for the site. Content writers to add their text can
utilize the design templates. The grammatical and spelling check should be over in this phase.

Input: Designed template.

Output: Site with formatted content.

5. Coding:

Now its programmers turn to add his code without disturbing the design. Unlike traditional design
the developer must know the interface and the code should not disturb the look and feel ofthe site
or application. So the developer should understand the design and navigation. If the site is
dynamic then the code should utilize the template. The developer may need to interact with the
designer, in order to understand the design. The designer may need to develop some graphic
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buttons when ever the developer is in need, especially while using some form buttons. If a team of
developers is working they should use a CVSto control their sources. Coding team should generate
necessary testing plans as well as technical documentation. For example Java users can use
JavaDoc to develop their documents to understand their code flow. The end-user documentation
can also be prepared by the coding team, which can be used by a technical writer who can
understand them, writes helps and manuals later.

Input: The site with forms and the requirement specification.

Output : Database driven functions with the site, Coding documents.

6. Testing:
Unlike software, web based applications need intensive testing, as the applications will always
function as a multi-user system with bandwidth limitations. Some of the testing which should be
done are, Integration testing, Stress testing, Scalability testing, load testing, resolution testing and
cross-browser compatibility testing. Both automated testing and manual testing should be done
without fail. For example its needed to test fast loading graphics and to calculate their loading
time, as they are very important for any web site. There are certain testing tools as well as some
online testing tools which can help the testers to test their applications. For example ASP
developers can use Microsoft's Web Application Test Tool to test the ASP applications, which is
a free tool available from the Microsoft site to download.

After doing all the testing a live testing is necessary for web sites and web based applications.
After uploading the site there should be a complete testing(E.g.. Links test)

Input: The site, Requirement specifications, supporting documents, technical specifications and
technical documents.
Output: Completed application/site, testing reports, error logs, frequent interaction with the
developers and designers.

7. Promotion:
This phase is applicable only for web sites. Promotion needs preparation of meta tags, constant
analysis and submitting the URL to the search engines and directories. There is a details article
in this site on site promotion. The site promotion is normally an ongoing process as the strategies
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of search engine may change quite often. Submitting a site URLs once in 2 months can be an ideal
submission policy. If the customer is willing, then paid click and paid submissions can also be
done with additional cost.

Input: Site with content, Client mails mentioning the competitors.

Output: Site submission with necessary meta tag preparation.

8. Maintenance and Updating:

Web sites will need quite frequent updations to keep them very fresh. In that case we need to do
analysis again, and all the other life cycle steps will repeat. Bug fixes can be done during the
time of maintenance. Once your web site is operational, ongoing promotion, technical
maintenance, content management & updating, site visit activity reports, staff training and
mentoring is needed on a regular basis depend on the complexity of your web site and the needs
within your organization.

Input: Site/Application, content/functions to be updated, re-Analysis reports.

Output: Updated application, supporting documents to other life cycle steps and teams.

SUMMARY

This unit introduces various design strategies namely, on-line/transactional design and
Informational/communicational. A detailed explanation of lifecycle of site building has been given
in this unit.

KEYWORDS

Life Cycle, Web Design, Design Strategies

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5.1 REVIEW QUESTIONS

1. Explain the life cycle of Site building from Page to Stage with neat diagram.

2. Elaborate on-line/transactional design with its advantages.

3. Explain in Informational/communicational design.

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CHAPTER 3 LAUNCHING A E-BUISNESS ON THE INTERNET

INTRODUCTION

For starters, you need a domain name, a web page, and a way to take your orders. It can be quite
a daunting experience to take these first steps into eCommerce. Here are some tips to help you get
started on your way.
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Your domain name will identify your particular business on the internet. When registering and
deciding on a domain name for your business there are a number of things you need to consider.

ourproductsarethebestontheweb.com - Avoid using excessively long and tedious domain

names. Choose something simple and easy to remember. Also try to use popular keywords that
people would use to search for products or services such as yours. This can help you get ranked
higher in search engines as well as help consumers remember your site.

.com vs .biz - Always use .com instead of .biz or .info. Your company will be taken more seriously.
If necessary you can use .net, but more people are familiar with .com and willremember it
more easily.

Shop Around - There are a number of sites that offer domain registration. Prices vary, but expect
to pay a yearly registration fee. Some popular domain registration web sites include
GoDaddy.com, Web.com, and Register.com. Many domain registrars also offer web design, web
hosting and email.

A web site is like having a store front in every corner of the world. What do you want people to
see when they look in your window? Consumers today are more intelligent and wary than when
the web was in its infancy. You need your web page to project a professional image, draw your
customers in, and keep them interested long enough to see the value of doing business with you
instead of your competitors. Easier said than done right? Successful web design is crucial to
converting your web visitors into web sales. Here are a few avenues you can take to achieve a
successful web site.

Hire Someone Who Knows - There are countless companies out there that you can pay to develop
a professional web site for your business. Ask around. With so many to choose from, referrals are
usually the best way to find a reliable and affordable company, or even person, with the expertise
to create a professional web site for your needs.

The Fruits of Others Labors - Web page templates are a less expensive alternative to having a
site custom made. On average templates range in price from $13 to $300 dollars depending on
how original you want your site to be as well as how large. Some come with only an index, or
front page, while still others include the index as well as supporting content pages. Some
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templates will require you to have some basic knowledge of html editing and working with a
graphics program such as Adobe Photoshop to tweak the site to fit your business. Other templates
allow you to simply enter in your text in the pre-designated boxes and youre ready to go. A good
place to start looking is TemplateMonster.com.

Head Long and Feet First - For the ambitious or those on an extremely tight budget, there is a
third solution. Do it yourself. There are many web page editing programs available and you may
even have one on your computer already and dont even know it. A few of the most popular are
Macromedia Dreamweaver, Microsoft Front page, and Adobe GoLive. All come with tutorials and
if the help you need is not found there, it is not far away. Type your question into your favorite
search engine and you are sure to find the information you need. Surf the web and lookat other
web pages. See what you like about them and what you dont. Does it look professional? Why?
Does it inspire confidence and reliability? How? Most importantly, be patient with yourself. This
is a big project you are undertaking and a lot of the learning will happen by trial and error.

No store, online or offline, can be successful without a way to make sales and take orders. With
an online store you have a couple of options. Some businesses will want to encourage their
customers to place their orders online, others will want them to call to place their orders, and some
will want to offer both options.

Virtual Shopping Carts - If you are selling a number of different products online, a shopping cart
will be necessary. This will allow your customers to add things to their cart as they shop your
online store. Unless you are a programmer or having your site professional designed, you will need
to find a shopping cart that you can add onto your site. You can choose to buy your software or
take advantage of a free one such as that found at osCommerce.com. There are advantages to both
paid software and free. Your exact needs will determine the best course for you.
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Phone Orders - Because of the high rate of fraud on the Internet, many consumers feel more
comfortable placing their orders over the phone with a live person. They like knowing there is a
person behind the page. You will want a professional sounding phone system. Something more
than your cell phone with voicemail. One of the best solutions for web based businesses is a virtual
phone system, or virtual PBX. They allow you to forward your calls to any location - home phone,
cell phone, VOIP phone - give you a professional sounding main greeting, multiple extensions and
voicemail. Many will also allow you to have automated order taking over the phone, send and
receive faxes, and receive messages to your email. You want to make sure that the professional
business image you are presenting with your web page is continued when your customers call you.
Freedom800.com is a good place to start looking at what virtual PBX systems have to offer.

Starting an online business is an exciting time. It can also be a confusing time if you are unfamiliar
with what it takes to establish yourself on the web. Getting your domain name, a professional
website and setting up an order taking process are some of the first things that you will need to do
to get started.

MARKETING AN E-BUISNESS

Marketing your online store involves more than just registering your Web site with a couple
of search engines and waiting for the world to beat a path to your door.

As the number of shoppers on the Internet has grown, so too has the number of Web sites and land-
based businesses clamoring for a piece of the multi-trillion-dollar e-commerce pie. As many
Internet companies have discovered, even with a multi-million dollar marketing campaign, its
difficult to get the attention of Internet users even for just a split second. After all, Internet users
are bombarded with so many advertisements every day and see so many Web sites, its hard for any
one firm to stand out.

One of the most difficult jobs youll have as an e-commerce merchant is figuring out what blend of
offline and online marketing techniques to use to promote your Web site. If youre a small business,
that challenge is even greater on a tight budget. The right marketing mix depends on
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many factors, including the types of products you are selling, the types of people you are trying
to target, and, of course, your marketing budget.

Attracting shoppers to your Web site. Marketing your Web site is not an easy task, nor is it ashort
one youll need to work hard and work continuously to make sure that your online store doesnt get
lost among the billions of pages of information on the Web.

(1) Know Your Audience!

The key to successful marketing is very simple: know your audience. Before you spend any time
or money on marketing, you need to know who your target market is. What types of customers are
most likely to buy the types of products you are selling? For example, males or females? What age
bracket? What income bracket? Are you trying to reach people with certain interests orskills? Once
you know the profile of your typical customer, you need to find ways of reaching customers with
that demographic profile. This may involve online advertising, offline advertising, or a
combination of the two. But dont even begin to think about spending money on marketing until
youve spent time thinking about who you are trying to reach. You may even need to do some
market research to uncover this information. We cant emphasize this step enough. Your marketing
efforts wont be successful unless you are spending your marketing dollars in the right places.

(2) Your Brand Name

One of the most important marketing assets that you have is the name of your online store. Give
it careful consideration. You should pick a name thats easy to remember yet distinct from other
similar names on the Internet. Closely related to the issue of picking a name is choosing a
suitable domain name. The domain name is the part of your Web site address that appears after
www. For example, the domain name for the Office Depot is officedepot.com and the domain
name for Eddie Bauer is eddiebauer.com. Office Depots Web site is at www.officedepot.com
and Eddie Bauers Web site can be found at www.eddiebauer.com.

To avoid confusing your customers, you will want to have a domain name that is as close as
possible to your organizations name. This will also make it easier for customers to find your Web
site. For example, customers looking for Eddie Bauers Web site would probably start by
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typing www.eddiebauer.com into their Web browsers. In addition to being close to your business
name, your chosen domain name should be short, easy for your customers to remember, and
intuitive.

Finally, keep in mind that you don‘t have to have www in your Web address. Some organizations
have chosen to drop it entirely, e.g. CBS promotes itself simply as CBS.com.

In addition, you can, with the help of the technical folks who support your site, sometimes use
words or characters in front of your actual domain name, and get an extra identity hook that might
be unique enough to draw attention to your site. One such example of this is the Web site Beer.com,
which gained some attention during the 2000 Olympics. It ran an ad that used the address
mmm.beer.com indeed, during the commercial, the graphic showed the www flipping over to
become mmm, as the announcer mimicked the mmmm or tastes good sound. There was ahuge
increase in traffic to the site.

Issues to Consider When Choosing a Name for Your Online Store

 Can you get a Web site address (i.e., domain name) for that name?
 Is the name too long?
 Is the name easy to pronounce?
 Are there other Web sites or online stores with similar-sounding
or similar-looking brand names or domain names?

 Is your name unique or distinctive enough?

 Is your name memorable and does it make an impression?
 Is the name consistent with the image you want to project?
How to Get a Domain Name

To get a domain name, you can go to any one of the accredited domain name registers on the
Internet, including Register.com (www.register.com). You can get a complete list of accredited
domain name registrars on the InterNIC Web site at www.internic.com. The list can be viewed
alphabetically or by geographical location.
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You dont need to have a Web site in order to register a domain name and most registrars will
hold your domain name for you until you are ready to activate it on your online store. Many
browser based storefront solutions allow you to set up a domain name for your online store when
you are setting up your account. This removes the need for you to go directly to a domain name
registrar.

(3) Offline Marketing

Perhaps the most important piece of advice we can give you in this guide is this: Dont restrict your
advertising and promotional efforts to the Web. Online stores often rely too heavily on online
advertising at the expense of more traditional advertising vehicles that may actually produce better
results.

Think about the types of customers you are trying to attract and what the best methods would be
to reach those customers. Rather than spending your money advertising on the Web, you may find
that a more effective strategy would be to place advertisements in a couple of well-targeted
magazines.

For example, Noggintops (www.noggintops.com), an online hat retailer, has spent very little on
Internet advertising. Instead, the company did some marketing research and identified a number
of magazines that appealed to the companys target market: outdoorsmen.

It is important to use your imagination when looking for ways to raise awareness of your Web site.

Dont limit yourself to radio, television, and print media. Why not advertise your Web address in
buses or subways, or on the transfers handed out by your local transit authority?

(4) Your Retail Store

If your business has a brick-and-mortar retail presence, use it to promote your online store
aggressively. Include your Web site on your receipts, invoices, and shopping bags, and print it on
 27

your catalogs and sales literature. Make sure that your Web address is advertised prominently both
within your store and outside if you can. Many retailers, unfortunately, dont leverage their retail
presence in this way.

(5) Gift Certificates

Brick-and-mortar stores give out gift certificates, so why not online stores too? Consider offering
an online gift certificate that your customers can give to a family member or a friend. Gift
certificates purchased online make great last-minute gifts because they can be sent by e-mail to
arrive almost instantly. The recipient can then visit the stores Web site and apply the gift certificate
toward the purchase of any products offered by the store. How does it work? Online stores that
offer this service let you pay with your credit card and the gift certificate is delivered to the
recipient by e-mail as soon as the payment is authorized. The gift certificate is essentially an e-
mail message with a number attached to it. The recipient can redeem the certificate on their next
purchase at that online store. When the recipient proceeds to check out of the store, they will be
asked to provide their certificate number. The value of the gift certificate will then be deducted
from the total amount of the purchase. Electronic gift certificates not only make great gifts theyre
a great way to drive new customers into your online store!

(6) Cross-Selling

You should get in the habit of cross-selling products in your online store to increase sales. This
means that where possible, product pages on your online store should feature accessories or
complementary products that your customers may be interested in. For example,.
Whenever a customer views a product, complementary products are displayed on the right-hand
side of the page.

For example, a customer may select a bench. You realize that customers who are interested in
purchasing a bench may also be interested in purchasing a matching chair or table.

That‘s why there is a section called Also Look At: where complementary products are displayed,
including an armchair and table. As you might expect, if you look at the Web page advertising for
the armchair, the bench is recommended as a complementary product.
 28

(7) Product Referral Services

Many people find out about Web sites through word of mouth. So make it easy for your customers
to tell other shoppers about your online store.

For example, as customers are browsing through your Web site, they may come across products
that their friends, co-workers, or family members may be interested in. Or they may want to tell a
friend or family member about a product they would like to receive as a gift. That is why you
should make it easy for customers to refer friends and relatives directly to specific product pages
on your site. For an excellent example of how this can be done, visit RadioShacks online store
(www.radioshack.com). At the bottom of every product page on the site is a graphic that says, e-
mail this page to a friend. Customers who click on that icon will be taken to another Web page
where they are asked to provide the name and e-mail address of a friend. The recipient will receive
an e-mail message that invites them to visit RadioShacks online store. A referral mechanism like
this is an effective way to bring more people into your Web site.

(8) Affiliate Programs

Many online merchants have built successful affiliate programs for their online stores.An affiliate
program involves paying owners of other Web sites a commission for referring customers to your
online store. In other words, you reward other Web sites for sending new customers to you. The
idea is to find Web sites with visitors who are likely to be interested in your products. To this end,
Web site owners usually try to find merchants who sell products or services related to their own
Web sites. A Web site with movie reviews may try to affiliate witha merchant who sells movies,
and a Web site devoted to golf may align itself with a Web site thatsells sporting goods or athletic
apparel. Its in a Web site owners best interests to identify merchants with compatible products
because it will increase the likelihood of making lots of sales. For example, suppose you sell
travel guidebooks. You could sign up travel agencies toyour affiliate program and invite them
to create links from their Web sites to yours. You would then pay the travel agencies a commission
on any book sales and/or leads you get from their customers.

Online retailers with affiliate programs compensate customers in different ways. Some merchants
pay affiliates strictly for sales (pay-for-sale), while other merchants compensate
 29

affiliates simply for sending a potential customer their way (pay-per-lead). Other programs may
compensate affiliates if a person clicks on an advertisement, regardless of whether that person
turns into a lead or ends up purchasing a product. This is called a pay-per-click program.

Affiliate programs can be extremely powerful because they allow you to increase your revenues
by having your brand name displayed on dozens if not hundreds of complementary Web sites.
There are literally thousands of affiliate programs on the Web. For an example, visit the online
store for Staples (www.staples.com) and read about their affiliate program. Web sites that sign up
can earn a percentage of every sale for referring customers to Staples.com.

(9) Permission Marketing

You may have heard the term permission marketing before. It refers to a method of online
marketing where the merchant asks permission from online shoppers to market to them directly by
e-mail. Permission marketing is also known as opt-in e-mail.

Permission marketing follows two main principles. First, you only market to those customers who
have specifically told you that they are interested in receiving e-mail messages from you. Second,
you must give away something in order to get a customers e-mail address. In other words, shoppers
are more likely to give you their e-mail address if you give them an incentive or reward for doing
so. This incentive could be a discount on a future purchase, entry in a sweepstakes or contest, or
just the promise of relevant advice by e-mail. The easiest way to undertake permission marketing
is by establishing a mailing list that customers can join. You canthen use the mailing list to send
out promotional messages to your customers. The trick is to give your customers an incentive to
join your mailing list. For an example of how a permission-based e-mail marketing program can
be implemented, consider what Payless ShoeSource (www.payless.com) did on their online store.
They ran a contest on their home page for a dream trip to Tahiti. Customers were invited to enter
their e-mail address into a box on the screen. Once a customer entered his/her e-mail address, a
new page appeared inviting the customer to join Payless ShoeSource's mailing list. The contest
was the hook to get customers to spend a few minutes filling out the form that is required to join
the mailing list. Once customers joined the Payless mailing list, they were automatically entered
into the vacation contest. Keep in mind that
 30

if you are going to set up a mailing list for your customers, you should clearly tell your potential
customers how they can leave the list, and about any other conditions that might apply to the list.

(10) Online Advertising and Sponsorships

One of the most popular online marketing strategies is to advertise on or sponsor other Web sites
that attract the types of people who may be interested in buying your products and services.
Suppose, for example, you sell luggage products. Why not advertise your online store on Web
sites that attract travelers? For example, you might want to approach a travel Web site, such as one
of the popular travel-booking services like Travelocity.com, about sponsoring a section of their
site. In addition, many of the popular travel magazines like Cond Nast Traveler have their own
Web sites, and accept advertising. Most Web sites that accept advertising have a section
somewhere on the site that provides contact information for advertising inquiries as well as a
general overview of advertising and sponsorship opportunities.

Before choosing to advertise on or sponsor any Web site, make sure that the site is reputable. You
dont want to advertise on any Web site with a doubtful reputation or poor credibility. You should
also obtain audited statistics that tell you how many visitors the site receives on a daily, weekly,
and monthly basis. Also try to obtain as much demographic information as you can data that will
tell you what types of people the site attracts, including average age, income, and spending habits.

Banner Advertisements

Online advertisements come in all different sizes and shapes, just like newspaper ads. However,
online advertising often appears in the form of a banner ad. A banner ad is a small rectangular
graphic that can either be animated or static. You can design it yourself, or have someone design
it on your behalf its basically a small Web page or graphic. People can click on a banner ad to be
immediately connected to the advertisers Web site.

Banner advertisements are usually sold on the basis of page views (every time a person accesses
the Web page, that is considered a page view), and page views are usually purchased on a cost per
thousand (CPM) basis. For example, if you are told by a Web site that the cost of banner advertising
is $60 per CPM, this means that you pay $60 for every thousand page views. This might represent
a thousand people looking at that page or it might mean five hundred people looking at that page
two times each. There are hundreds of thousands of Web sites on the Internet that accept banner.
 31

Creating Your Own Banner Ad Campaign

Larger Web sites may require a minimum advertising buy of several thousand dollars. For a
small business, this can be prohibitive. An alternative to purchasing banner ads through one of
the big search engines and directories is to use a service like Microsofts Small Business Center
(https://www.postermywall.com/index.php/posterbuilder) where small businesses can create
their own banner advertising campaigns and place them on select Web sites for a smaller up-front
investment.

(11) Keyword-Based Advertising

Many Web sites, including many of the major search engines and Web directories, offer keyword
based advertising. Here‘s how it works. You purchase one or more words and/or phrases related
to your business. When a customer searches for any of those words, an advertisement for your
Web site will appear. The advertisement may be a banner ad or another type of online
advertisement that you create. For example, suppose your own a business that sells pools and spas.
You could purchase the word pools on Yahoo! so that whenever someone searches for that word,
a banner ad for your company will appear on the search results screen. Keyword-based advertising
doesn‘t necessarily involve banner ads. For example, Google (www.google.com), one of the
Internet most popular search engines, allows you to create text ads for your company that will be
displayed whenever an Internet user searches for a keyword that you‘ve selected. Googles
program, called AdWords (adwords.google.com), is affordable for small businesses because there
is no monthly minimum spending limit and it costs just $5 to set up your account.

Keyword Research

Part of the challenge in using keyword-based marketing on the Internet is to pick the keywords
that your customers are most likely to be using when they are doing searches on search engines
and Web directories. This will likely require a bit of brainstorming on the part of yourself and your
staff.Thats your job. To help you brainstorm, you might want to check out a few of the search
engines that reveal what Internet users are searching for. For example, Lycos has a service
 32

called The Lycos 50 Daily Report (50.lycos.com) that shows you what people are searching for
on the Lycos search engine. Every week, Lycos publishes the 50 most popular searches from the
past week.

(12) Links from Other Web Sites

One of the least expensive online marketing techniques, but perhaps one of the most effective, is
getting links from other Web sites. Contact suppliers and manufacturers you work with to see if
they will link from their Web sites to yours. Why is this important? Customers often visit the Web
sites of manufacturers or suppliers when they are researching a purchase. If the manufacturer
provides a link from their Web site to yours, the customer may end up making the purchase online
from you. This manufacturer benefits from the sale as well, given that you are selling more product,
so its in the manufacturers best interest to link to you. You should also contact any industry
associations you belong to and ask if they will link to you. The idea is to try and get as many Web
sites to link to you as possible. As noted earlier, this can even help youwith your placement on
search engines since many search engines take a sites links into account when they decide where
to rank it.

(13) Monitor Activity on Your Web Site

Once you invest in an online store, you owe it to yourself to monitor how well your investment is
paying off. The number of sales you receive is only part of the picture.

You also want to be able to track the number of people who visit your online store, where they
come from, and which search engines and directories they use to find you. This information is vital
to your business because it will help you assess whether your marketing activities both online and
offline are succeeding or failing. If you dont already receive daily traffic statistics from your
Internet service provider, Web hosting service, or online store service, or if the reports you receive
dont provide enough detail, consider signing up for one of many the third-party Web site analysis
services. In the box below, we have listed some of the more popular programs that will allow you
to monitor how your customers are using your Web site.
 33

Two thirds of all online shoppers abandon their shopping carts before making a purchase. A
software program like the ones listed above can help you analyze what path customers are taking
through your site and what the most popular exit pages are so that you can minimize customer
abandonment (the exit page is the last page visited by the customer before the customer leaves
your site). One powerful Web site tracking program is WebTrends (www.webtrends.com).
Webtrends has a number of different versions of its program that will allow you to track sales
activity on your Web site. WebTrends is capable of generating very detailed sales reports for your
Web site. For example,

DISASTER RECOVERY PLAN

The terrorist attacks of September 11, 2001 have taught many businesses one thing: prepare for
the unexpected. Companies must take steps to make their businesses less dependent on a single
office or data infrastructure. Consider implementing technologies that can quickly duplicate
company data at a remote location. Gartner Research predicts that two out of five enterprises that
experience a disaster the magnitude of the World Trade Center attack will go out of business within
five years. Therefore, it is more important than ever to either build a redundant IT facility,or select
an IT outsourcing service provider for disaster recovery.

Traditional implementation of Disaster Recovery and Business Continuity Planning are rather
complex and extremely expensive. That is why many small to medium size companies do not have
a Disaster Recovery and Business Continuity Plan in place. Fortunately, new Internet technologies
are reducing the cost and complexity of implementing the Disaster Recovery and Business
Continuity Plans. For a few hundred dollars a month, your mission critical data can be replicated
to a secure, remote data center in real time. None of your data will be lost when a disaster hits your
primary IT facility. For a few thousand dollars a month, you can mirror your mission-critical IT
systems at a remote data center (a hot-site). When your primary IT facility goes down, you can
switch your IT systems to the mirrored site in a few minutes or less. With Internet DNS technology,
you can even make the fail over to the mirror site transparent to end- users. End users will not need
to make any changes or feel any impact on their productivity when a disaster hits. Internet VPN
technology makes data transfer to a remote site secure and is HIPPA compliant.
 34

Virtual Servers: Vitual server images based on VMWare, XEN and Microsoft Hyper-V
virtualization technology can be hosted at Cybercon data center. These virtual servers can be
uploaded, activated, updated 24 hours a day 7 days a week. There are firms to handle virtual server
farms from a few virtual servers to thousands of virtual servers.

Hot-Site: A mirror's system of customer production eBusiness or IT system will be located at

Cybercon's data center. System hardware is provided by either the customer or Cybercon and data
is frequently synchronized via a network using a choice of industry leading data

4.0 REVIEW QUESTIONS

1. What are the essential steps required to start an e-Business?
2. Explain why offline advertisement is important
3. Discuss gift certificate
4. How do you understand Keyword-Based Advertising
5. How will you monitor activity on your website and why
6. What are the fundamental steps for Disaster recovery planning process?
7. Write a short note on keyword based advertising?
 35

CHAPTER 4 Electronic Payment Media:

Electronic media:
Electronic media are media that use electronics or electromechanical energy for the end-
user (audience) to access the content. This is in contrast to static media (mainly print media), which
today are most often created electronically, but don't require electronics to be accessed by the end-
user in the printed form. The primary electronic media sources familiar to the general
 36

public are better known as video recordings, audio recordings, multimedia presentations, slide
presentations, CD-ROM and online content. Most new media are in the form of digital media. However,
electronic media may be in either analog electronic data or digital electronic data format.
Although the term is usually associated with content recorded on a storage medium,
recordings are not required for live broadcasting and online networking. Any equipment used in
the electronic communication process (e.g. television, radio, telephone, desktop computer, game
console, handheld device) may also be considered electronic media.

What are the Types of Electronic Payment Systems?

Electronic payment systems have become more popular thanks to increased use of Internet
shopping. These systems do not just involve Internet transactions, as there are more and more ways
being developed to facilitate electronic money transfers. With increasing technology, the range of
devices and processes used to transact electronically continues to increase while the use of cash
and cheque transactions is decreasing. This is mainly because it is much easier to carry cards or
use cell phones to pay for purchases compared to cash.

Cards:
These are the most common form of electronic payments. There are three types of cards:
credit, debit and prepaid cards. They typically are made of plastic and have a magnetic stripe on
the back of the card. This process typically takes only a few seconds to complete. Credit cards
are an extremely popular form of electronic payment because you can use them almost anywhere
for almost any kind of purchase, and you do not have to have cash on hand to pay for things.

Internet Payments:
Internet payments involve a person transferring money or making a purchase online.
Consumers have a choice of either transferring the money directly from their bank account, which
can easily be accessed online or they can use a credit, debit or prepaid card. Most people prefer to
use the second option, especially when making online purchases. This form of payment continues
to increase in popularity with the ever-growing e-commerce industry.
 37

Mobile Payments:
Although the number of transactions that can be carried out via a cell phone are limited,
they still can be used to facilitate some electronic transactions. Mobile phone manufacturers have
enabled their phones' software to allow users to access electronic commerce. In some countries,
mobile service providers allow their customers to have a bank account on their cell phone numbers
and can use the funds in their accounts to carry out transactions.

Person-to-Person Payments:
These payments enable a person to pay another using an online account, a prepaid card or
another mechanism that stores value. Various companies facilitating such payments are PayPal,
Alert pay and Money bookers. These services can easily be accessed over the Internet via
computers, phones and other devices. They provide an easy and secure means of making
transactions online.

CREDIT Card:

Introduction:

A credit card is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for them. The issuer
of the card creates a revolving account and grants a line of credit to the consumer (or the user)
from which the user can borrow money for payment to a merchant or as a cash advance to the user.
A credit card is different from a charge card: a charge card requires the balance to be paid
in full each month. In contrast, credit cards allow the consumers a continuing balance of debt,
subject to interest being charged. A credit card also differs from a cash card, which can be used
like currency by the owner of the card. A credit card differs from a charge card also in that a credit
card typically involves a third-party entity that pays the seller and is reimbursed by the buyer,
whereas a charge card simply defers payment by the buyer until a later date. The size of most credit
cards is 3 ⅜ × 2 ⅛ in (85.60 × 53.98 mm).
 38

Parties involved in Credit Card:

Cardholder: The holder of the card used to make a purchase.
Card-issuing bank: The financial institution or other organization that issued the credit card to
the cardholder. This bank bills the consumer for repayment and bears the risk that the card is
used fraudulently.
Merchant: The individual or business accepting credit card payments for products or services sold
to the cardholder.

Benefits and Demerits of the Credit Card:

Benefits to customers:
The main benefit to each customer is convenience. Compared to debit cards and checks, a
credit card allows small short-term loans to be quickly made to a customer who need not calculate
a balance remaining before every transaction, provided the total charges do not exceed the
maximum credit line for the card.
Different countries offer different levels of protection. In the UK, for example, the bank
is jointly liable with the merchant for purchases of defective products over £100.
Many credit cards offer rewards and benefits packages, such as enhanced product
warranties at no cost, free loss/damage coverage on new purchases, various insurance protections,
for example, rental car insurance, common carrier accident protection, and travel medical
insurance. Credit cards can also offer reward points which may be redeemed for cash, products, or
airline tickets.

Demerits to customers:
Following are the major demerits to the customers:
 High interest and bankruptcy:
Low introductory credit card rates are limited to a fixed term, usually between 6 and 12
months, after which a higher rate is charged. As all credit cards charge fees and interest, some
customers become so indebted to their credit card provider that they are driven to bankruptcy.
Some credit cards often levy a rate of 20 to 30 percent after a payment is missed. In other cases a
fixed charge is levied without change to the interest rate. In some cases universal default may
apply: the high default rate is applied to a card in good standing by missing a payment on an
 39

unrelated account from the same provider. Complex fee structures in the credit card industry
limit customers' ability to comparison shop, help ensure that the industry is not price-competitive
and help maximize industry profits.
 Inflated pricing for all consumers:
Merchants that accept credit cards must pay interchange fees and discount fees on all credit-
card transactions. In some cases merchants are barred by their credit agreements from passing
these fees directly to credit card customers, or from setting a minimum transaction amount.
 40

 Weakens self-regulation:
Several studies have shown that consumers are likely to spend more money when they pay
by credit card. Researchers suggest that when people pay using credit cards, they do not experience
the abstract pain of payment.
 Grace period:
A credit card's grace period is the time the customer has to pay the balance before interest
is assessed on the outstanding balance. Grace periods may vary, but usually range from 20 to 55
days depending on the type of credit card and the issuing bank. Some policies allow for
reinstatement after certain conditions are met. Usually, if a customer is late paying the balance,
finance charges will be calculated and the grace period does not apply. Finance charges incurred
depend on the grace period and balance.

Benefits and Demerits to merchants:

Benefits to merchants:
For merchants, a credit card transaction is often more secure than other forms of payment,
such as cheques, because the issuing bank commits to pay the merchant the moment the
transaction is authorized, regardless of whether the consumer defaults on the credit card payment.
In most cases, cards are even more secure than cash, because they discourage theft by the
merchant's employees and reduce the amount of cash on the premises. Finally, credit cards reduce
the back office expense of processing cheques/cash and transporting them to the bank.
Prior to credit cards, each merchant had to evaluate each customer's credit history before
extending credit. That task is now performed by the banks which assume the credit risk. Credit
cards can also aid in securing a sale, especially if the customer does not have enough cash on his
or her person or checking account. Extra turnover is generated by the fact that the customer can
purchase goods and/or services immediately and is less inhibited by the amount of cash in his or
her pocket and the immediate state of his or her bank balance. Much of merchants' marketing is
based on this immediacy.
For each purchase, the bank charges the merchant a commission (discount fee) for this
service and there may be a certain delay before the agreed payment is received by the merchant.
The commission is often a percentage of the transaction amount, plus a fixed fee (interchange rate).
 41

Demerits to merchants:
Merchants are charged several fees for accepting credit cards. The merchant is usually
charged a commission of around 1 to 4 percent of the value of each transaction paid for by credit
card. The merchant may also pay a variable charge, called an Interchange rate, for each transaction.
In some instances of very low-value transactions, use of credit cards will significantly reduce the
profit margin or cause the merchant to lose money on the transaction.
Merchants with very low average transaction prices or very high average transaction prices
are more averse to accepting credit cards. In some cases merchants may charge users a "credit card
supplement", either a fixed amount or a percentage, for payment by credit card.
Merchants are also required to lease processing terminals, meaning merchants with low
sales volumes may have to commit to long lease terms. For some terminals, merchants may also
need to subscribe to a separate telephone line. Merchants must also satisfy data security
compliance standards which are highly technical and complicated. In many cases, there is a delay
of several days before funds are deposited into a merchant's bank account. Because credit card
fee structures are very complicated, smaller merchants are at a disadvantage to analyze and predict
fees. Finally, merchants assume the risk of charge backs by consumers.

Reasons to use Credit Card:

Personal finance experts spend a lot of energy trying to prevent us from using credit cards
and with good reason.

1. Signup Bonuses: The standard debit card offers zero rewards or very small rewards. Many
credit cards, however, offer significant rewards when used responsibly.

2. Cash Back: If we sign up for the right credit card, we can earn anywhere from 1-5% back on
our purchases.

3. Investment Rewards: Some cards, like the Fidelity Investment Rewards card, offer a higher
rate of cash back; in exchange we must deposit our cash back directly into an investment account.

4. Frequent-Flyer Miles: It seems like every airline these days has at least one credit card
 42

available. Cardholders rack up miles at a rate of one mile per dollar spent, or sometimes one mile
per two dollars spent.

5. Points: Many card rewards work on a point system where you earn up to five points per dollar
spent. When we reach a certain point threshold, we can redeem our points for gift cards at some
stores.

6. Safety: Paying with a credit card makes it easier to avoid losses from fraud. When our debit
card is used fraudulently, the money is missing from our account instantly
By contrast, when our credit card is used fraudulently, we aren't out any money - we just
notify our credit card company of the fraud and don't pay for the transactions we didn't make while
the credit card company resolves the matter.

7. Grace Period: When we make a debit card purchase, our money is gone instantly. When we
make a credit card purchase, our money remains in our checking account until a couple of weeks
later when we pay our credit card bill. Hanging on to our money for this extra time can be helpful
in two ways. First, if we pay our credit card from a high-interest checking account and earn interest
on our money during the grace period, the extra interest will eventually add up to a meaningful
amount. Second, when we always pay with a credit card, we don't have to watch our bank account
balance like crazy to make sure we stay in the black.

8. Universal Acceptance: Certain purchases are difficult to make with a debit card. When we
want to rent a car or stay in a hotel room, we'll almost certainly have an easier time if we have a
credit card.

9. Building Credit: If we have no credit or are trying to improve our credit score, using a credit
card responsibly will help our credit score because credit card companies will report our payment
activity to the credit bureaus. Debit card use doesn't appear anywhere on our credit report,
however, so it can't help we build or improve our credit.
 43

DEBIT CARDS:

Introduction:
A debit card (also known as a bank card or check card) is a plastic payment card that
provides the cardholder electronic access to his or her bank account(s) at a financial institution.
Some cards have a stored value with which a payment is made, while most relay a message to
the cardholder's bank to withdraw funds from a payer's designated bank account. The card,
where accepted, can be used instead of cash when making purchases. In some cases, the primary
account number is assigned exclusively for use on the Internet and there is no physical card. Debit
cards usually also allow for instant withdrawal of cash, acting as the ATM card for withdrawing
cash.
In many countries, the use of debit cards has become so widespread that their volume has
overtaken or entirely replaced cheques and, in some instances, cash transactions. The development
of debit cards, unlike credit cards and charge cards, has generally been country specific resulting
in a number of different systems around the world, which were often incompatible.
 44

SMART CARD:
Introduction:
A smart card, chip card, or integrated circuit card (ICC) is any pocket-sized card with
embedded integrated circuits. Smart cards are made of plastic, generally polyvinyl chloride, but
sometimes polyethylene terephthalate based polyesters, acrylonitrile butadiene styrene or
polycarbonate. Since April 2009, a Japanese company has manufactured reusable financial smart
cards made from paper. Smart cards can provide identification, authentication, data storage and
 45

application processing. Smart cards greatly the convenience and security of any transaction. They
provide tamper-proof storage of user and account identity. Smart card systems have provento be
more reliable than other machine-readable cards, such as magnetic-stripe and bar-code,with
many studies showing card read life and reader life improvements demonstrating much lower cost
of system maintenance. Smart cards also provide vital components of system security for the
exchange of data throughout virtually any type of network. They protect against a full range of
security threats, from careless storage of user passwords to sophisticated system hacks.
Multifunction cards can also serve as network system access and store value and other data.
Worldwide, people are now using smart cards for a wide variety of daily tasks.

Applications:
 Financial:
Smart cards may also be used as electronic wallets. The smart card chip can be "loaded"
with funds to pay parking meters, vending machines or merchants. Cryptographic protocols protect
the exchange of money between the smart card and the machine. No connection to a bankis needed.
The holder of the card may use it even if not the owner.

 Public transit:
Smart cards and integrated ticketing are used by many public transit operators. Card users
may also make small purchases using the cards. Some operators offer points for usage, exchanged
at retailers or for other benefits.

 Schools:
Smart cards are being provided to students at schools and colleges. Uses include:
 Tracking student attendance
 As an electronic purse, to pay for items at canteens, vending machines, laundry
facilities, etc...
 Tracking and monitoring food choices at the canteen, to help the student maintain
a healthy diet
 Tracking loans from the school library
 Access control for admittance to restricted buildings, dormitories, and other
 46

facilities.
 Access to transportation services

 Healthcare:
Smart health cards can improve the security and privacy of patient information, provide a
secure carrier for portable medical records, reduce health care fraud, support new processes for
portable medical records, provide secure access to emergency medical information, enable
compliance with government initiatives (e.g., organ donation) and mandates, and provide the
platform to implement other applications as needed by the health care organization.
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Benefits:
The benefits of smart cards are directly related to the volume of information and
applications that are programmed for use on a card. A single contact/contactless smart card can
be programmed with multiple banking credentials, medical entitlement, driver‘s license/public
transport entitlement, loyalty programs and club memberships to name just a few. Multi-factor and
proximity authentication can and has been embedded into smart cards to increase the security of
all services on the card. Governments and regional authorities save money because of improved
security, better data and reduced processing costs. These savings help reduce public budgets or
enhance public services.
Individuals have better security and more convenience with using smart cards that perform
multiple services. For example, they only need to replace one card if their wallet is lost or stolen.
The data storage on a card can reduce duplication, and even provide emergencymedical
information.
Smart cards are widely used to protect digital television streams. Video Guard is a specific
example of how smart card security worked.

Problems:
The plastic card in which the chip is embedded is fairly flexible. The larger the chip, the
higher the probability that normal use could damage it. Cards are often carried in wallets or
pockets, a harsh environment for a chip. However, for large banking systems, failure- management
costs can be more than offset by fraud reduction.
Smart cards have also been the targets of security attacks. These attacks range from
physical invasion of the card's electronics, to non-invasive attacks that exploit weaknesses in the
card's software or hardware. The usual goal is to expose private encryption keys and then read and
manipulate secure data such as funds. Once an attacker develops a non-invasive attack for a
particular smart card model, he is typically able to perform the attack on other cards of that model
in seconds, often using equipment that can be disguised as a normal smart card reader. While
manufacturers may develop new card models with additional security, it may be costly or
inconvenient for users to upgrade vulnerable systems.
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Another problem is the lack of standards for functionality and security. To address this
problem, The Berlin Group launched the ERIDANE Project to propose "a new functional and
security framework for smart-card based Point of Interaction (POI) equipment".

DIGITAL SIGNATURE:
Introduction:
A digital signature is practically impossible to forge and cannot be sent by itself but only
as a part of an electronic document or message. Signatures are commonly used to authenticate
documents. When you sign a physical document, you are authenticating its contents. Similarly,
digital signatures are used to authenticate the contents of electronic documents. They can be used
with PDF, e-mail messages, and word processing documents.
To digitally sign a document, you must have a digital ID. This unique identifier can
obtained from various certification authorities on the Web, such as VeriSign and EchoSign. Once
we have a digital ID, we can add register it with programs that support digital signatures, such as
Adobe Acrobat and Microsoft Outlook. Then you can use the program's "Sign" feature to add our
digital signature to documents.
The digital signature is simply a small block of data that is attached to documents we sign.
It is generated from our digital ID, which includes both a private and public key. The private key
is used to apply the signature to the document, while the public key is sent with the file. The public
key contains encrypted code, also called a "hash," that verifies your identity.
A digital signature is a mathematical scheme for demonstrating the authenticity of a
digital message or document. A valid digital signature gives a recipient reason to believe that the
message was created by a known sender, such that the sender cannot deny having sent the message
(authentication and non-repudiation) and that the message was not altered in transit (integrity).
Digital signatures are commonly used for software distribution, financial transactions, and in other
cases where it is important to detect forgery or tampering.
Digital signatures are especially important for electronic commerce and are a key
component of most authentication schemes. To be effective, digital signatures must be
unforgeable. There are a number of different encryption techniques to guarantee this level of
security.
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Uses of Digital Signature:

As organizations move away from paper documents with ink signatures or authenticity
stamps, digital signatures can provide added assurances of the evidence to provenance, identity,
and status of an electronic document as well as acknowledging informed consent and approval by
a signatory. Below are some common reasons for applying a digital signature to communications:
 Authentication:
Although messages may often include information about the entity sending a message, that
information may not be accurate. Digital signatures can be used to authenticate the source of
messages. When ownership of a digital signature secret key is bound to a specific user, a valid
signature shows that the message was sent by that user. The importance of high confidence in
sender authenticity is especially obvious in a financial context.
 Integrity:
In many scenarios, the sender and receiver of a message may have a need for confidence
that the message has not been altered during transmission. Although encryption hides the contents
of a message, it may be possible to change an encrypted message without understanding it.
However, if a message is digitally signed, any change in the message after signature invalidates
the signature.
 Non-repudiation:
Non-repudiation, or more specifically non-repudiation of origin, is an important aspect of
digital signatures. By this property, an entity that has signed some information cannot at a later
time deny having signed it. Similarly, access to the public key only does not enable a fraudulent
party to fake a valid signature.

Other Uses for Digital Signature:

Sometimes we need proof that the document came from we and no one has tampered with
it since we sent it. Digital Signature with our SSL Certificate fills the bill.
On the other hand, sometimes we need to prove that a document came from someone else and has
not been altered along the way. In legal matters, for example, we may need to prove that a contract
has not been altered since someone sent it as an email.
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SUMMARY:
This unit introduces the
 Electronic Payment Media: are media that use electronics or electromechanical energy
for the end-user (audience) to access the content.
 Credit Card: is a payment card issued to users as a system of payment. It allows the
cardholder to pay for goods and services based on the holder's promise to pay for them
 Debit Card: is a plastic payment card that provides the cardholder electronic access to
his or her bank account at a financial institution.
 Smart Card : is any pocket-sized card with embedded integrated circuits
 A digital signature : is practically impossible to forge and cannot be sent by itself but
only as a part of an electronic document or message

KEYWORDS:
Electronic Payment Media, Debit Card, Credit Card, Smart Card, Digital Signature
EXERCISES:
1) What is Electronic Payment Media? Explain different Methods of Payment Media.
2) Explain advantage and disadvantages of Credit Card?
3) Explain the parties involved in Credit Card.
4) Give the reasons to using Credit Cards.
5) Difference between Credit Card and Debit Card?
6) What is Debit Card and How to use it?
7) Describe types of Debit Cards?
8) What is Smart Card and its uses?
9) Explain the applications of the Smart Card?
10) Explain the uses of Digital Signature.
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CHAPTER 5 LEGAL ISSUES RELATED TO E-COMMERCE

Approximately 100 countries now enjoy Internet access, and a recent survey reported that there
are approximately 20 million Internet hosts worldwide. The number of Internet users is currently
estimated to be in the region of 4.9B people.

The exponential growth of the Internet and online activity raise a number of new regulatory issues
and legal questions. How does copyright apply to digital content? How can national laws apply to
activities in cyberspace? Can privacy and data protection exist on the Web? Can electronic
commerce really be secure? Should governments tax cyber trade? Can cyberspace be regulated by
one, or by many authorities? In seeking to apply the law to the Internet, problems arise owing to
the fact that most laws largely apply to the pre-cyberspace world.

In the modern era of electronic technology, many people want to get their work done quickly
with little effort. At times, people forget or do not consider the legal and ethical values of their
procedures. In traditional commerce, it's not easy to start a business. You must implement
strategies that follow rules and regulations enforced by government. Electronic commerce makes
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it possible to do almost any kind of business in a very simple way. What makes it simple? The reason
is that existing legal frameworks and enforcement mechanisms are not strong.

E-commerce presents a world of opportunity for doing businesses, reaching global markets and
purchasing without leaving the home or office. E-commerce can provide opportunities to improve
business processes, just as phones, faxes and mobile communications have in the past. However,
just as any new business tool has associated issues and risks so does e-commerce. It's important to
understand the legal issues and potential risks to ensure a safe, secure environment for trading with
customers and other businesses.
Some of the legal issues related to website and e-commerce transactions are discussed here :

Incorporation

Why Incorporate? Incorporation means that your company is a separate legal and financial entity
from yourself. It even has its own social security number for tax purposes, called a Federal Tax
ID. Most people incorporate to limit their personal liability so that their personal assets are not at
risk for debts of the corporation. For example, if your incorporated company was sued and lost the
suit, the winner could not take your personal car or home.

Plus, of course, incorporating makes you look more professional, and often helps with yourtaxes.
Also, if you plan to receive investment in your company, have employees, and grow to be more
than a one-person show, incorporation is an important step that helps promote these future goals.
While incorporation protects you in many regards, it does not protect you from any criminal
charges by you or the corporation, which can come into play if, for instance, you run an adult or
gambling business on the Internet.

Trademark

The trademark act etc. is meant to ensure that consumers can correctly identify the sources of
goods or services. A trademark is a word, phrase, symbol or design, or combination of words,
phrases, symbols or designs, which identifies and distinguishes the source of particular goods. A
service mark is the same as a trademark, except that it identifies and distinguishes the source of a
service rather than a product.
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Normally, a mark for goods appears on the product or its packaging, while a service mark
appears in advertising for the services. A "tm" on a product indicates unregistered (common law)
trademark rights, and an "" indicates a registered mark. It is illegal to place an "" on a mark that
does not have national registration.

As your domain name and your branding is valuable, you should think in terms of trademark
registration. This can be done later in the business process once you have more revenue available,
but it is important to consider it upfront in choosing your domain name, company name, product
and/or service name.

When trying to determine whether you've picked a good name in relation to others' marks,
remember that the point of trademark law is to prevent consumer confusion about the source of
goods or services. Ask yourself whether a consumer would confuse your name with that of another
product, service or company.

Copyright

Copyright can be important when you obtain content for your site, and in the protection of your
site's content.

The owner of a copyright has the exclusive right:

to copy the work

to modify the work (create "derivative works")

to distribute the work

to perform the work publicly

to display the work publicly

Copyright arises upon the creation of a copyrightable works (typically substantial text, images,
music, etc.). Facts, titles, recipes, form designs, alphabetical lists and other items do not have the
required "originality" to merit copyright protection. Your are not required to register works to have
copyright protection, however if you do register your materials, you preserve the fact that
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they are yours as of the date of registration, and you gain more rights under Copyright law, such
as being able to win attorneys' fees and, sometimes, higher damages.

The term "Public Domain" does not mean that everything in public or on the Internet is freely
usable. It refers to items that either do not qualify for copyright protection under the law, or for
which the protection has expired.

When you buy content for your Website or business, the best approach is to obtain a warranty from
the seller or licensor stating that the seller owns all the rights in it and agrees to indemnify you (i.e.
pay you for the costs) if someone else sues you for using the content. Large content providers
should be willing to do this, and many small ones will be also. If not, you'll have to hope for the
best and take the risk.

Clickwrap Agreement for Users:An agreement with your users as part of the purchase process
gives you a legal remedy (for breach of contract) to ensure:

that you will be paid,

that you waive legal warranties that are implied by law into sales of products of
goods,
that you may disclose users' identities to government authorities upon request (there
have been law suits to prevent this, or as a result of this),
that the user is over 18 and a US citizen,
that the site may only be used as permitted,
that venue and jurisdiction for disputes are in whatever state you prefer,
that there are limits to your civil (anything other than criminal) liability,
Historically, if the steps outlined in case law have been followed, these agreements have been
upheld as binding. This can be very important as your merchant bank will issue credits for any
disputed Internet transactions unless you have hand signed documents from your purchaser.

Federal Trade Commission (FTC):the FTC regulates trade and commerce with regard to
consumers. The FTC monitors businesses to ensure:
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truthful advertising, that mail-order, catalog and Web product purchase guidelines are followed,
that sweepstakes and contest are conduct in compliance with the law, and that collection of
consumer data and privacy policy guidelines are followed.

Information Technology Act

New communication systems and digital technology have made dramatic changes in way of
transacting business. Use of computers to create, transmit and store information is increasing.
Computer has many advantages in e-commerce. It is difficult to shift business from paper to
electronic form due to two legal hurdles - (a) Requirements as to writing and (b) Signature for
legal recognition. Many legal provisions assume paper based records and documents and signature
on paper.

The General Assembly of the United Nations by resolution dated the 30th January, 1997 adopted
the Model Law on Electronic Commerce and recommended that all States should give favourable
consideration to the Model Law when they enact or revise their laws.
The Information Technology Act has been passed to give effect to the UN resolution and to
promote efficient delivery of Government services by means of reliable electronic records.

As per preamble to the Act, the purpose of Act is (a) to provide legal recognition for transactions
carried out by means of electronic data interchange and other means of electronic communication,
commonly referred to as "electronic commerce", which involve the use ofalternatives to paper-
based methods of communication and storage of information and (b) to facilitate electronic filing
of documents with the Government agencies. - - The Act came into effect on 17.10.2000.

The Act does not apply to (a) a negotiable instrument as defined in section 13 of the Negotiable
Instruments Act, except cheque (b) a power-of-attorney as defined in section 1A of the Powers-
of-Attorney Act (c) a trust as defined in section 3 of the Indian Trusts Act(d) a will as defined in
section 2(h) of the Indian Succession Act, including any other testamentary disposition by
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whatever name called (e) any contract for the sale or conveyance of immovable property or any
interest in such property (f) any such class of documents or transactions as may be notified by the
Central Government in the Official Gazette. - - Broadly, documents which are required to be
stamped are kept out of the provisions of the Act.

Overview of the Act- The Act provides for - * Electronic contracts will be legally valid * Legal
recognition of digital signatures * Digital signature to be effected by use of asymmetric crypto
system and hash function * Security procedure for electronic records and digital signature *
Appointment of Certifying Authorities and Controller of Certifying Authorities, including
recognition of foreign Certifying Authorities * Controller to act as repository of all digital
signature certificates * Certifying authorities to get License to issue digital signature certificates
* Various types of computer crimes defined and stringent penalties provided under the Act *
Appointment of Adjudicating Officer for holding inquiries under the Act * Establishment of Cyber
Appellate Tribunal under the Act * Appeal from order of Adjudicating Officer to Cyber Appellate
Tribunal and not to any Civil Court * Appeal from order of Cyber Appellate Tribunal to High
Court * Act to apply for offences or contraventions committed outside India * Network service
providers not to be liable in certain cases * Power of police officers and other officers to enter into
any public place and search and arrest without warrant * Constitution of Cyber Regulations
Advisory Committee who will advice the Central Government and Controller.

What does IT Act enable? - The Information Technology Act enables:* Legal recognition to
Electronic Transaction / Record * Facilitate Electronic Communication by means of reliable
electronic record * Acceptance of contract expressed by electronic means * Facilitate Electronic
Commerce and Electronic Data interchange * Electronic Governance * Facilitate electronic filing
of documents * Retention of documents in electronic form * Where the law requires the signature,
digital signature satisfy the requirement * Uniformity of rules, regulations and standards regarding
the authentication and integrity of electronic records or documents * Publication of official gazette
in the electronic form * Interception of any message transmitted inthe electronic or encrypted form
* Prevent Computer Crime, forged electronic records, international alteration of electronic records
fraud, forgery or falsification in Electronic Commerce and electronic transaction.
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DIGITAL SIGNATURE - Any subscriber may authenticate an electronic record by affixing his
digital signature. [section 3(1)]. ?Subscriber" means a person in whose name the Digital Signature
Certificate is issued. [section 2(1)(zg)]. "Digital Signature Certificate" means a Digital Signature
Certificate issued under section 35(4) [section 2(1)(q)].
"Digital signature" means authentication of any electronic record by a subscriber by means of an
electronic method or procedure in accordance with the provisions of section 3. [section 2(1)(p)].
"Affixing digital signature" with its grammatical variations and cognate expressions means
adoption of any methodology or procedure by a person for the purpose of authenticating an
electronic record by means of digital signature. [section 2(1)(d)].

Authentication of records- The authentication of the electronic record shall be effected by the
use of asymmetric crypto system and hash function which envelop and transform the initial
electronic record into another electronic record. [section 3(2)].

Verification of digital signature- Any person by the use of a public key of the subscriber can
verify the electronic record. [section 3(3)]. The private key and the public key are unique to the
subscriber and constitute a functioning key pair. [section 3(4)].
The idea is similar to locker key in a bank. You have your =private key while bank manager has
=public key. The locker does not open unless both the keys come together match.
Electronic records acceptable unless specific provision to contrary - Where any law provides
that information or any other matter shall be in writing or in the typewritten or printed form,
then, notwithstanding anything contained in such law, such requirement shall be deemed to have
been satisfied if such information or matter is - (a) rendered or made available in an electronic
form; and (b) accessible so as to be usable for a subsequent reference. [section 4]. - - Unless there
is specific provision in law to contrary, electric record or electronic return is acceptable. - - Soon,
it will be possible to submit applications, income tax returns and other returns through internet.
DEPARTMENT OR MINISTRY CANNOT BE COMPELLED TO ACCEPT ELECTRONIC
RECORD - Section 8 makes it clear that no department or ministry can be compelled to accept
application, return or any communication in electronic form.
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Legal recognition of digital signatures -Where any law provides that information or any other
matter shall be authenticated by affixing the signature or any document shall be signed or bear
the signature of any person then, notwithstanding anything contained in such law, such
requirement shall be deemed to have been satisfied, if such information or matter is authenticated
by means of digital signature affixed in such manner as may be prescribed by the Central
Government. - - "Signed", with its grammatical variations and cognate expressions, shall, with
reference to a person, mean affixing of his hand written signature or any mark on any document
and the expression "signature" shall be construed accordingly. [section 5].

Secure digital signature -If, by application of a security procedure agreed to by the parties
concerned, it can be verified that a digital signature, at the time it was affixed, was - (a) unique to
the subscriber affixing it (b) capable of identifying such subscriber (c) created in a manner or using
a means under the exclusive control of the subscriber and is linked to the electronic record to which
it relates in such a manner that if the electronic record was altered the digital signature would be
invalidated, - - then such digital signature shall be deemed to be a secure digital signature. [section
15].
Certifying digital signature-The digital signature will be certified by =Certifying Authority. The
=certified authority will be licensed, supervised and controlled by =Controller of Certifying Authorities.

6.0 SUMMARY

This Unit covers the basic steps involved in launching an effective corporate website. Some
issues regarding the cyber-crimes are also addressed and the required preparedness for curbing the
cyber- crimes has been covered in this unit.
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6.1 KEYWORDS

Corporate website, information technology Act

6.2 REVIEW QUESTIONS

1. What are the basic steps to launch an effective corporate website?

2. Prepare a survey on cyber-crimes related to e-commerce in India and the preparedness of agencies to
deal with it.

3. What are the major legal issues for an online firm?

4. Write a short note on Information Technology Act.

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