MBA

INFORMATION SYSTEMS
ELECTRONIC COMMERCE

Assignment
Enrolment number: MBISMCT13727119

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

Q.1 Draw and explain general model of credit card based EPS? What
are online credit card processors? Discuss the flow of information
which takes place among components of EPS.
Answer:
Credit card based EPS is the most popular payment method used in Internet
shopping. The idea of credit card payment is to buy first and pay later. The
cardholder can pay at the end of the statement cycle or they can pay
interest on the outstanding balance. Therefore, there are many credit cardbased electronic payment systems (EPSs) that have been developed to
facilitate the purchase of goods and services over the Internet such as Cyber
Cash (VeriSign), iKP (Bellare, Garary, Hauser, et al, 1995), SET (Visa and
MasterCard, 1997), CCT (Li & Zhange, 2004), and so forth.
Usually a credit card-based EPS involves five parties:
Cardholder
Merchant
Acquirer bank
Issuer bank
Financial institution
Accepting credit cards helps the business owners in raising the revenue level
and speeding up the cash flows in their businesses. Almost all banks provide
the option of merchant accounts which is an indispensable part of the process.

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

For accepting credit cards on the website, we need to procure the

following things first:
A credit card processor
A payment gateway service
An electronic shopping cart system
An Internet merchant account issued by a bank or other financial
institution or service bureau.

Now we must be wondering on the terms like Credit Card Processor, Internet
Merchant Account, Payment Gateway Service, Shopping Cart System, so here
is an detailed note on the terms: -

Credit Card Processor: It is an electronic data center that processes the

credit card transactions coming from the gateway company. It ensures the
validity of charge and then settles the funds in your merchant account.

Internet Merchant Account: It is an account in which funds from online

sales are deposited by the processor. These accounts are usually issued by
banks that are associated with the major credit card services like Visa and
MasterCard.

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

Payment Gateway Service: It is an e-commerce service that authorizes

payments for e-businesses and online retailers and is linked with a huge
network of credit card issuing banks. The payment gateway service acts like
a middleman who comes in act when a customer submits his/her credit card
information to the web page form. Then the websites shopping cart
checkout system electronically submits the credit card to the gateway
service. It further routes the information for approval to the processor.
Shopping Cart System: A shopping cart system allows the customer to
select and purchase products from the website. It consists of mainly three
components:

the

product

catalog,

the

shopping

cart,

and

the

checkout/payment system.

The product catalog exhibits the items that are on sale on the website. The
shopping cart system component let the customers selects products by
clicking on add items to cart, and the checkout/payment system helps the
customer in completing the check-out process and pay for their purchase
with a credit card.
Internet is an open system and the communication path between each other
is insecure. All communications are potentially open for an eavesdropper to
read and modify as they pass between the communicating endpoints.
Therefore, the payment information transmitted between the cardholder and
the merchant through Internet is dangerous without a secure path. SSL (Zeus
Technology, 2000) is a good example to secure the communication channel.
Besides the issue of insecure communication, there are a number of factors
that each participant must consider. For example, merchant concerns about
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MBA

ELECTRONIC COMMERCE

INFORMATION SYSTEMS

Enrolment number:
MBISMCT13727119

whether the credit card or the cardholder is genuine. There is no way to

know the consumer is a genuine cardholder. As a result, the merchant is
incurring the increase in losses due to cardholder disputes and frauds.
On the other hand, cardholders are worried about the theft of the privacy or
sensitive information such as the credit card number. They dont want any
unauthorized usage of their credit cards and any modification to the
transaction amount by a third party.
These security issues have deterred many potential consumers from
purchasing online. Existing credit card-based EPSs solve the problems in
many different ways. Some of them use cryptography mechanisms to protect
private information. However, they are very complicated, expensive, and
tedious (Xianhau, Yuen, Ling, & Lim, 2001).
Some

EPSs

use

the

Certificate

Authority

(CA)

model

to

fulfill

the

authentication, integrity, and non repudiation security schemes. However,

each participant requires a digital certificate during the payment cycle.
These certificates are issued by independent CAs but the implementation
and maintenance cost of this model is very high. In addition, the validation
steps of Certificate-based systems are very time-consuming processes. It
requires access to an online certificate server during the payment process.
Moreover, the certificate revocation list is a major disadvantage of the PKIbased certification model (The Internet Engineering Task Force). The
cardholders certificate also includes some private information such as the
cardholders name. The requirement of a cardholders certificate means
software such as e-Wallet is required to be installed on the cardholders

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

computer. It is the barrier for the cardholder to use Certificate based

payment systems.
To solve this problem, Visa Company has developed a new payment system
called

Verified

by

Visa

(VbV)

ap/sea/merchants/productstech/vbv_implementvbv.

(http:www/visa-asia.com/
shtml).

However,

sensitive information such as credit card number is still passed to the

merchant. Therefore, the cardholder is not protected by the system.
Online credit card processor

It is an electronic data center that processes the credit card transactions

coming from the gateway company. It ensures the validity of charge and
then settles the funds in your merchant account.
Third-party merchant services provider who handles the work associated
with processing of credit card transactions between merchants, credit card
issuers, and merchant account providers.

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MBA

ELECTRONIC COMMERCE

INFORMATION SYSTEMS

Enrolment number:
MBISMCT13727119

Online credit card processing

Components of EPS:
Basically EPS has five components namely:

Cardholder (Consumer)

Merchant

Acquirer Bank

Issuer Bank

Financial institution.

The flow of information among the components can be summarized

as in the following figure.

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MBA
INFORMATION SYSTEMS

May 2015

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

Benefits of online credit card processing:

Basic requirement if the company does online business

Cost-Effective Solutions
Expert Tech Support
Boost Sales
Convenient for shoppers and improve the cash flow
Easy to Maintain
Expand the Business
Reliable Payouts
Helps to compete with the competitor
Encourage buying in general and impulse buying in particular
Eliminates the risk of accepting a bad check
Set up to accept credit cards is quick and easy

Disadvantages of online credit card processing:

Cost of credit
Interchange fee
Exposure to Fraud
Chargeback merchant
Agreement with charge - card company
Train the staff: Technical and administrative issues, as well as in fraud

prevention measures
Face legal issues if necessary

Conclusion: With the above discussions even though there are certain initial
hick-ups with the online credit card processing the recent years most of the
businesses are moving towards the online credit card processing considering
the major benefits.

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MBA

ELECTRONIC COMMERCE

INFORMATION SYSTEMS

Q.3

Explain

in

detail:

Strategy

formulation,

Enrolment number:
MBISMCT13727119

Implementation

Planning, implementation and Evaluation of E - Commerce.

Answer:
Strategy Formulation:
Strategy is the pattern of major objectives, purpose or goals and essential policies
or plans for achieving those goals, stated in such a way as to define what business
the company is in or is to be in and the kind of company it is or is to be. The
implementation of a constructed strategy is the biggest challenge.

One of the famous philosophies says: Build a business, not a website.

An Ecommerce website is a business first. An effective ecommerce site
begins by understanding and defining the business strategy, goals and
metrics for the site and then crafting a website that is tailored to meet those
site objectives.
To reduce costs and maintain a competitive edge, companies are mandating
that their suppliers receive their purchase orders and send back invoices
electronically. The beauty of a B2B (Business to Business) initiative can be
seen in the following simple example:
A Purchase Order (PO) can be automatically generated from
customers system
It is transmitted via the internet within minutes to vendor system
An internal sales order is automatically created
Vendor system generates a pick-list and it is printed on the
manufacturing floor
The product is picked, boxed and shipped
Vendor account receivable system automatically generates an invoice.
This invoice is transmitted back to customer where it automatically
updates the accounts payable system.
Humans only need to pick and pack the product from inventory -- and,
in some cases, even this is performed by robots.

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

The cost savings from an ecommerce implementation can be quite

impressive. Transaction intense programs such as Just-in-Time (JIT) are
augmented by and often necessitate B2B programs.
AMD's Vice-President of Distributor Operations, Al Frugaletti, credited AMD's
program with:
Developing stronger ties with their distributors
Improving business processes
Shrinking their cycle-time from 8 weeks to 5 days.

Therefore the properly defined strategy ends and means is step for successful
implementation. What we should bear in mind about strategy that people use it in
four common ways highlighted by Henry Mintzberg:
Strategy is a plan, a "how to get from here to there,"
Strategy is a pattern in actions over time; for example, a company that
regularly markets very expensive products is using a "high end" strategy.
Strategy is position; that is, it reflects decisions to offer particular products or
services in particular markets.
Strategy is perspective, that is, vision and direction.
Finally, competitive advantage over rivals is the central point passing throughout
all others components of strategy.
E-business companies persistently review strategy if better trade-offs can appear
in changing reality. Managing strategy is a value adding activity. Strategy should
constantly sustain a company competitive advantage and growth. In fact,
American business mantra for success is growth. No growth no successful
company.
The following are the roadmap that contains six steps concerning decisions about:
Vision
Quantifiable objectives
Type of customer value
Target markets
Organization structure
Business model
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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

As it is agreed the Internet has changed the way of doing business. Nowadays, the
rise of Internet-based start-up companies, such as revolutionary Amazon.com and
Ebay.com is still possible. Yet, it is unlikely as the technology matures and ebusiness applications become established and standardized.
Strategic importance of Internet applications for e-business opportunities has been
proved by many successful e-brand started by IT people or software engineers
(Google, Amazon, Ebay, Yahoo and many others). Being there first often gives a
great competitive edge in e-business.
From the discussion above the following can be derived:
Stages of Strategy Formulation
Consideration of environmental changes that bring about new opportunities
and pose new threats.
Assessment of the internal strengths and weaknesses of the institution and
in particular its ability to respond to those opportunities and threats.
A decision-making process influenced by the values, preferences and power
of interested parties.
A strategy generating process concerned with generating options and
evaluating them.

The Strategy Formulation is based on the inputs:

Technology
Business Environment
Business Capability
Existing Business Strategy
Strategy Formulation then involves discussion and negotiation
stages can include:
Identifying Options
Evaluating Options
Selecting Strategy
The outputs are:
The New Business Strategy
An e-Commerce Strategy

Implementation Planning:
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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

1 Contact the Strategic Customers and Suppliers: The customers or

suppliers may be a great source of knowledge and can help to understand
the requirements of an eCommerce program in any industry. Develop a
simple questionnaire with transactions such as PO, Invoices, etc. Ask them
which transactions they use or would like to implement.
2 Determine what the industry is doing: The trading partners may be
participating in industry focused groups. Gather the best information
informally speaking to the peers over lunch or at the networking events. The
peer-to-peer sessions are often informative.
3 Evaluate and Purchase the Proper Tools: Prepare a list of
requirements and interview a series of solution providers. There are many
low cost solutions on the market. However, ensure scalability if the company
dramatically increases in size or the number of transactions.
4 Start simple: Prioritize the transactions the business wish to implement.
In most order management projects the PO must be the first implementation
in order to capture information required for the outbound transactions.
Evaluate the ERP system and analyze the integration of eCommerce
applications. Do not reinvent the wheel. Minimize customization.
5 Create a Project Team: Perform a Staffing Analysis and create a
Communications Plan. The project team consists of Project manager, Core
business user, ERP consultant and an external project team.
6 Document the requirements: Intelligent, well developed specifications
or guidelines can dramatically reduce testing times and avoid
misunderstandings. It gives the appearance to the partners that the business
has a professional eCommerce program. Conduct a GAP analysis and
specifically discuss and document what the business can or cannot do in
relationship to the requirements.
7 Hire a consultant: To jumpstart the process hire a consultant that
specializes in this area. Even if the business is implementing a complete ERP
system with a large consulting company, ensure to interview the consultants
and if necessary reject -- the consultant assigned to the eCommerce
implementation.
Implementation:

Project Methodology
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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

The project methodology aims to progress project through series of phases.

Each phase may be of 2 weeks long schedule.
The benefits of working with short iteration are communication and flexibility.
Communication and constant follow up is a key to meet project
expectations. Project stakeholders get the flexibility to analyze and
reorganize the project based on completed work instead of speculation and
predictions.
Project Phases
The secret of successful project implementation is taking a simple approach
to a complex problem.
Phase 1 Scope review: The scope review includes the initial conversation
from the kick off meeting. The project team reviews the objectives, goals
and addresses various development and technological options.
The ultimate result of the scope review session is a comprehensive
understanding of the expected work, functionality and business processes.
This ensures that the full scope of the project is covered and helps with the
development of the project timeline.
Phase 2 Project Planning: The team members are allocated to the project,
together with the project manager put together a plan of action by creating a
project plan and a project activity plan. These documents outline the
process, timeline, schedule, budget, potential risks and a detailed set of
tasks. Before we move on to the next phase, the project plan and project
activity plan is to be signed off.
Phase 3: Pilot Project: The implementation team sets up pilot store that will
form the basis for the rest of the project delivery. Upon completion of the
pilot project, the client will receive full login details to the back office of the
site where they can start administrating the site. At this stage the client will
also receive login details to Insider where the users can find step by step
guides on how to get started quickly, manuals and online video tutorials.
Phase 4 Education & Training: Knowledge is information in action. Various
factors could have a significant impact on the success (time and budget).
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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

The project team encourages the participation of client to perform the

project related tasks. These tasks can include design, setting up categories,
defining attributes, entering products etc.
During the education phase the project team covers the basics. The goal is
to give the knowledge to the client to administrate the eCommerce platform
independently in the shortest possible timeframe.
Phase 5 External Setup: After receiving the training, the client will start the
setup process and to get going as early on in the process as possible.
Phase 6 Front End Design: The design stage entails conceptualizing the
layout and creating the interface of the new site. When the strategy team
hands over the blue prints to the design team, the design team creates a
design based on all the elements in the design phase. The project team
continues with revisions through the design phase until a final design
concept is approved.
Phase 7 Front End Implementation: With the design in place, the project
team implements the general architecture of the new site. Depending on the
implementation package, the start page, product listing, product, checkout,
account, cascading style sheets (CSS) are all created during this stage. This
phase reveals how the website will look and feel and function once it is
complete.
Phase 8 Back End Implementation: This stage involves custom application
development for any of the dynamic (functional, customizable) elements that
are required for the project. Much of the programming and database
development happens simultaneously with the Front End Design and Front
End Implementation.
Phase 9 Quality Testing: The project team complies with the most rigorous
standards for QA (Quality Assurance). The team tests the development, the
forms, the links, the order process, the payment gateway, the account login
and the navigation. All are tested from development to submission. Once all
the components and features are ready to go, the team performs a final set
of rigorous QA testing. After the team verified the site is functioning as

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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

intended and conforms to design, development, and accessibility standards,

the team hand it over to the client for approval and sign off.
Phase 10 Acceptance Testing: When the site has passed the internal QA
testing, it's ready for the client to do Acceptance testing and sign off. Before
launching the store, the team recommends that the client go through the
basic checklist. The client should test that everything works as it should and
should therefore make different types of test purchases prior to sign off.
Once signed off, the project team prepares the site for the launch.
Phase 11 Go-live & Support: When the site has passed the Acceptance
Testing, it is ready to go-live. The project team will check on the success of
the launch. Since success means different things to different companies, the
team may use a variety of gauges and tools. If the client report or the project
team find anything that could use a tweak- like content updates or minor
changes to graphics or the architecture, the project team will get it revised
quickly.

Evaluation of E - Commerce:
Technical Considerations for Evaluating E-Commerce Platforms:
Scalability: Will the site perform efficiently through traffic peaks and
valleys?
The Product Catalog: Will todays catalog schema meet tomorrows
demands?
Business User Control: Will my application directly empower my
merchandisers, marketing managers, and other business owners?
Search: How easily can customers find what they want, and how
easily can I promote the products I want to push based on customer
searches?
Agility: How easily can I implement business requests to monitor and
respond to an individual Web visitors behavior?
Reporting and Analytics: Do I have all the features I need to
understand my online business?
Standards: Is the application built on a standards-based platform?
Integration: How easily can the application integrate with my other
systems?
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MBA
INFORMATION SYSTEMS

ELECTRONIC COMMERCE

Enrolment number:
MBISMCT13727119

Interoperability: Does the application function within a serviceoriented architecture?

Synergy: Will the application support business models beyond B2C ecommerce?
Usage Considerations for Evaluating E-Commerce Platforms:
Ask friends, clients or colleagues to evaluate the same website based
on the same criteria.
Decide on the criteria (Rating scale 1 to 5) for evaluating a website and
create a spreadsheet on a computer program or piece of paper.
Navigate the website for 5 to 10 minutes before completing the
evaluation.
Review and mark score for the e-commerce website's content.
Review the website's functionality.
Review the authenticity or authority of the website.
Rate the attractiveness of the site.
Evaluate the marketing for the site.
Gather the evaluations and determine an average score.
Evaluate the website for duplicate content, especially duplicate
content accessible via multiple URLs.
Check for shipping details.
Check whether the site gives suggestions based on customer
preferences.
Check for credibility and legal terms.
Gain knowledge of the maintenance information.
Information about the owner of the site and location

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