Components of E-Commerce

The technology and infrastructure used to develop the E-commerce application is the key to its
success.
The hardware and software must be selected in such a way that they can fulfill the needs of the
E-commerce application.
The following figure shows the components involved in E-commerce infrastructure.

1. Hardware:
 
A Web server hardware platform is one of the major components of the Ecommerce
infrastructure on which the performance of the whole E-commerce application depends.
While selecting Web server hardware, the software that will run on the server of the E-commerce
transactions to be processed must be considered.
The amount of the storage capacity and the computing power required depend on the volume of
the E-commerce transaction to be processed.
If the exact requirements are not known in advance, then the hardware configuration should be
highly scalable so that they can be upgraded to meet the requirements.
 
 2. E - Commerce Software
Software is the main component that implements the E-commerce services and functionality.
Software for E-commerce can be categorized in the following two types
Web server software:
Web server software is required in addition to the Web server operating system software.
It is used to implement some extra functionality such as security and identification and retrieval
and sending of Web pages.
Web server software creates a Web log file that identifies things such as the URL of the visitor,
the length of the visit and the search engine and the key words used to find the site.
Web server software includes website development tools such as HTML editor and Web page
upload support.
E-commerce software:
With the growth of E-commerce, many applications have emerged— for example, the electronic
shopping cart that tracks the items selected for purchase and their costs.
 A typical E-commerce software must support the following processes:
 Catalog management:
It is required to deliver the customized content to the screen or the GUI used by the customer.
The software used for catalog management combines the different product data formats into a
standard format for viewing, aggregating and interacting catalog data into a central store.
 Product configuration:
The Web-based product configuration software allows the user to build the product to their
specifications without the intervention of the salespeople.
For example, Dell Computers and CISCO systems use configuration software to sell build-to-
order and network processes to their customers over the Internet.
 Shopping cart
A model known as shopping cart is used by Ecommerce sites to track the items that are selected
for purchase; the shopping cart allows customers to view all the items selected by them.
The customers can add new items and remove the previously selected items from the shopping
cart.
 Transaction processing:
E-commerce transaction processing is used to process the data received from the. Shopping cart
and to calculate the total cost of the purchase.

E-Commerce - Payment Systems

E-commerce sites use electronic payment, where electronic payment refers to paperless monetary
transactions. Electronic payment has revolutionized the business processing by reducing the
paperwork, transaction costs, and labor cost. Being user friendly and less time-consuming than
manual processing, it helps business organization to expand its market reach/expansion. Listed
below are some of the modes of electronic payments: −
 Credit Card
 Debit Card
 Smart Card
 E-Money
 Electronic Fund Transfer (EFT)
a) Credit Card
Payment using credit card is one of most common mode of electronic payment. Credit card is
small plastic card with a unique number attached with an account. It has also a magnetic strip
embedded in it which is used to read credit card via card readers. When a customer purchases a
product via credit card, credit card issuer bank pays on behalf of the customer and customer has a
certain time period after which he/she can pay the credit card bill. It is usually credit card
monthly payment cycle. Following are the actors in the credit card system.
 The card holder − Customer
 The merchant − seller of product who can accept credit card payments.
 The card issuer bank − card holder's bank
 The acquirer bank − the merchant's bank
 The card brand − for example, visa or Mastercard.
Credit Card Payment Process
Step Description
Step 1 Bank issues and activates a credit card to the customer on his/her request.
The customer presents the credit card information to the merchant site or to
Step 2
the merchant from whom he/she wants to purchase a product/service.
Merchant validates the customer's identity by asking for approval from the
Step 3
card brand company.
Step 4 Card brand company authenticates the credit card and pays the transaction by
 credit. Merchant keeps the sales slip.
Merchant submits the sales slip to acquirer banks and gets the service charges
Step 5
paid to him/her.
Acquirer bank requests the card brand company to clear the credit amount and
Step 6
gets the payment.
Now the card brand company asks to clear the amount from the issuer bank
Step 6
and the amount gets transferred to the card brand company.
b) Debit Card
Debit card, like credit card, is a small plastic card with a unique number mapped with the bank
account number. It is required to have a bank account before getting a debit card from the bank.
The major difference between a debit card and a credit card is that in case of payment through
debit card, the amount gets deducted from the card's bank account immediately and there should
be sufficient balance in the bank account for the transaction to get completed; whereas in case of
a credit card transaction, there is no such compulsion.
Debit cards free the customer to carry cash and cheques. Even merchants accept a debit card
readily. Having a restriction on the amount that can be withdrawn in a day using a debit card
helps the customer to keep a check on his/her spending.
c) Smart Card
Smart card is again similar to a credit card or a debit card in appearance, but it has a small
microprocessor chip embedded in it. It has the capacity to store a customer’s work-related and/or
personal information. Smart cards are also used to store money and the amount gets deducted
after every transaction.
Smart cards can only be accessed using a PIN that every customer is assigned with. Smart cards
are secure, as they store information in encrypted format and are less expensive/provides faster
processing. Mondex and Visa Cash cards are examples of smart cards.
d) E-Money
E-Money transactions refer to situation where payment is done over the network and the amount
gets transferred from one financial body to another financial body without any involvement of a
middleman. E-money transactions are faster, convenient, and saves a lot of time.
Online payments done via credit cards, debit cards, or smart cards are examples of emoney
transactions. Another popular example is e-cash. In case of e-cash, both customer and merchant
have to sign up with the bank or company issuing e-cash.
e) Electronic Fund Transfer
It is a very popular electronic payment method to transfer money from one bank account to
another bank account. Accounts can be in the same bank or different banks. Fund transfer can be
done using ATM (Automated Teller Machine) or using a computer.
Nowadays, internet-based EFT is getting popular. In this case, a customer uses the website
provided by the bank, logs in to the bank's website and registers another bank account. He/she
then places a request to transfer certain amount to that account. Customer's bank transfers the
amount to other account if it is in the same bank, otherwise the transfer request is forwarded to
an ACH (Automated Clearing House) to transfer the amount to other account and the amount is
deducted from the customer's account. Once the amount is transferred to other account, the
customer is notified of the fund transfer by the bank.

E-Commerce - Security Systems

Security is an essential part of any transaction that takes place over the internet. Customers will
lose his/her faith in e-business if its security is compromised. Following are the essential
requirements for safe e-payments/transactions −
 Confidentiality − Information should not be accessible to an unauthorized person. It
should not be intercepted during the transmission.
 Integrity − Information should not be altered during its transmission over the network.
 Availability − Information should be available wherever and whenever required within a
time limit specified.
 Authenticity − There should be a mechanism to authenticate a user before giving
him/her an access to the required information.
 Non-Repudiability − It is the protection against the denial of order or denial of payment.
Once a sender sends a message, the sender should not be able to deny sending the
message. Similarly, the recipient of message should not be able to deny the receipt.
 Encryption − Information should be encrypted and decrypted only by an authorized user.
  Auditability − Data should be recorded in such a way that it can be audited for integrity
requirements.

Measures to ensure Security

Major security measures are following −
 Encryption − It is a very effective and practical way to safeguard the data being
transmitted over the network. Sender of the information encrypts the data using a secret
code and only the specified receiver can decrypt the data using the same or a different
secret code.
 Digital Signature − Digital signature ensures the authenticity of the information. A
digital signature is an e-signature authenticated through encryption and password.
 Security Certificates − Security certificate is a unique digital id used to verify the
identity of an individual website or user.
Security Protocols in Internet
We will discuss here some of the popular protocols used over the internet to ensure secured
online transactions.
Secure Socket Layer (SSL)
It is the most commonly used protocol and is widely used across the industry. It meets following
security requirements −
 Authentication
 Encryption
 Integrity
 Non-reputability
"https://" is to be used for HTTP urls with SSL, where as "http:/" is to be used for HTTP urls
without SSL.
Secure Hypertext Transfer Protocol (SHTTP)
SHTTP extends the HTTP internet protocol with public key encryption, authentication, and
digital signature over the internet. Secure HTTP supports multiple security mechanism,
providing security to the end-users. SHTTP works by negotiating encryption scheme types used
between the client and the server.
Secure Electronic Transaction
It is a secure protocol developed by MasterCard and Visa in collaboration. Theoretically, it is the
best security protocol. It has the following components −
 Card Holder's Digital Wallet Software − Digital Wallet allows the card holder to make
secure purchases online via point and click interface.
 Merchant Software − This software helps merchants to communicate with potential
customers and financial institutions in a secure manner.
 Payment Gateway Server Software − Payment gateway provides automatic and
standard payment process. It supports the process for merchant's certificate request.
 Certificate Authority Software − This software is used by financial institutions to issue
digital certificates to card holders and merchants, and to enable them to register their
account agreements for secure electronic commerce.

E-Commerce - EDI
EDI stands for Electronic Data Interchange. EDI is an electronic way of transferring business
documents in an organization internally, between its various departments or externally with
suppliers, customers, or any subsidiaries. In EDI, paper documents are replaced with electronic
documents such as word documents, spreadsheets, etc.
EDI Documents
Following are the few important documents used in EDI −
 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters
Steps in an EDI System
Following are the steps in an EDI System.
 A program generates a file that contains the processed document.
 The document is converted into an agreed standard format.
 The file containing the document is sent electronically on the network.
 The trading partner receives the file.
 An acknowledgement document is generated and sent to the originating organization.
Advantages of an EDI System
Following are the advantages of having an EDI system.
 Reduction in data entry errors. − Chances of errors are much less while using a
computer for data entry.
 Shorter processing life cycle − Orders can be processed as soon as they are entered into
the system. It reduces the processing time of the transfer documents.
 Electronic form of data − It is quite easy to transfer or share the data, as it is present in
electronic format.
 Reduction in paperwork − As a lot of paper documents are replaced with electronic
documents, there is a huge reduction in paperwork.
 Cost Effective − As time is saved and orders are processed very effectively, EDI proves
to be highly cost effective.
 Standard Means of communication − EDI enforces standards on the content of data
and its format which leads to clearer communication.