1. Electronic Commerce (continue …)
Introduction to Information Technology 2nd Edition Turban, Rainer & Potter © 2003 John Wiley & Sons, Inc.
Electronic Commerce (continue …)
Prepared by:
Roberta M. Roth, Ph.D.
University of Northern Iowa

2. Electronic Commerce Innovations
E-Government – deliver information and public services to citizens and members of the public sector
M-Commerce – use of wireless devices to deliver mobile e-commerce
Consumer-to-consumer EC – direct interaction facilitated by auctions, classifieds, and bartering
Intrabusiness EC – business units interact or employees interact with employers
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

3. Electronic Commerce Requirements
Infrastructure – hardware, software, and networks needed to conduct transactions, communicate, and collaborate
Electronic Payment Mechanisms
Electronic checks
Customer opens account with a bank
the customer s an encrypted electronic check signed with a digital signature
the merchant deposits the check in his or her account; money is debited in the buyer’s account and credited to the seller’s account
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

4. Electronic Commerce Requirements
Electronic Payment Mechanisms (continued)
Electronic credit cards
Unencrypted payments - the buyer s her or his credit card number to the seller on the Internet
Encrypted payments - credit card details encrypted for security
Electronic cash in PC
bank provides special software to consumer
customer buys “electronic money” from the bank through software
the bank sends electronic money note to this customer, endorsing it with a digital signature
the money is stored on the buyer’s PC and can be spent in any electronic store that accepts e-cash
the software is also used to transfer the e-cash from the buyer’s computer to the seller’s computer
the seller either deposits the e-cash in a bank or uses the e-cash to make purchases elsewhere
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

5. Electronic Commerce Requirements
Electronic Payment Mechanisms (continued)
Electronic payment cards with e-cash
Credit cards using magnetic strips
Card holds information about prepaid cash which can be used to make payments
Smart cards
Cards with microprocessors can hold much more information
Person-to-person payment systems
Transfer of funds between individuals (PayPal)
EFT
Electronic wallets
Purchasing cards
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

6. Electronic Commerce Requirements
Security
Authentication - assurance regarding the identity of the parties who are involved in the deal
Integrity - assurance that data and information (orders, reply to queries, and payment authorization) are not accidentally or maliciously altered or destroyed during transmission
Non-repudiation - Protection against the customer’s unjustifiable denial of placing an order; buyer needs protection against the vendor denial of shipment, or sending wrong order
Privacy - many customers want their identity to be undisclosed
Safety - assurance that it is safe to provide a credit card number on the Internet
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

7. Electronic Commerce Requirements
Security (continued)
Encryption - a process of making messages indecipherable except by those who have an authorized decryption key
Single-key encryption
Public/private key encryption
Public key infrastructure
Electronic Certificates
Secure Socket Layer (SSL)
Secure Electronic Transaction Protocol (SET)
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

8. Electronic Commerce Requirements
Order Fulfillment
Find, assemble, and pack product
Ship product to customer
Collect customer payment
Arrange for returns if needed
Provide on-going support (e.g., animated assembly instructions)
EC is a ‘pull’ operation – hard to forecast demand and prepare to fulfill orders
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

9. Electronic Commerce Issues
Buyer Protection
look for reliable brand names at sites like Wal-Mart Online, Disney Online, and Amazon.com
search any unfamiliar selling site for company’s address and phone and fax number
check out the seller with the local Chamber of Commerce and/or Better Business Bureau
investigate how secure the seller’s site is by reading the posted privacy notice, and evaluate how well the site is organized
examine the money-back guarantees, warranties, and service agreements
compare prices to those in regular stores (suspect the too cheap sites)
ask friends what they know about the vendor
find out what your rights are in case of a dispute
consult the National Fraud Information Center
check for a listing of useful resources
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

10. Electronic Commerce Issues
Seller Protection
Need protection against consumers who refuse to pay or pay with bad checks and buyers’ claims that the merchandise did not arrive
Need protection against the use of their name by others as well as use of their unique words and phrases, slogans and Web address
Need legal recourse against customers who download copyrighted software and/or knowledge and sell it to others
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

11. Electronic Commerce Issues
Ethics
Privacy
most electronic payment systems know who the buyers are; therefore, it may be necessary to protect the buyers’ identity
Web Tracking
by using sophisticated software it is possible to track individual movements on the internet
Disintermediation
the use of EC may result in the elimination of some of a company’s employees as well as brokers and agents
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

12. Electronic Commerce Issues
Legal Concerns
Domain Names
several companies that have similar or same names (in different countries) compete over a domain name that is not a registered trademark
Taxes and Other Fees
Federal, state, and local taxing authorities are trying to figure out how to impose taxes on Internet sales
Copyright
intellectual property is protected by copyright laws and cannot be used freely
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

13. Chapter Summary
B2C EC encompasses e-tailing, auctions, and online services
B2C EC provides numerous marketing and advertising opportunities and challenges
B2B EC has the highest volume, and provides several business models
Payment mechanisms and security are critical EC issues
EC introduces many legal and ethical concerns
Global systems – systems connecting two or more companies in two or more countries
Electronic data interchange (EDI) – electronic movement of business documents between business partners
Electronic funds transfer (EFT) – transfer of money using telecommunications
Extranets – extended Intranets that link business partners
Shared databases – databases that business partners both have access to
Integrated messaging – delivery of and fax messages through a single communication system.

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