HBT 2306: Electronic Commerce

Course description
Internet and WWW, database, various types of electronic commerce
applications, virtual value chain, business models, electronic payment methods,
mobile com-merce and processes pertaining to electronic commerce,
introduction to the elec-tronic commerce framework. Strategic frameworks,
marketing and channel strate-gies, legal, ethical, cultural and social issues of E-
Commerce and the impact of the Internet and the Web on businesses. Security
controls tosecure e-commerce web sites and protect electronic transactions.
Identify the risks, threats and vulnera-bilities of the Internet and how to defend
against security breaches by identifying effective countermeasures to be taken
against identified vulnerabilities. Develop an ecommerce application.

Prerequisite: None

Course aims
The course Electronic Commerce is to enable the student effectively
conceptualize, design, plan and implement e commerce projects in
Information and Communica-tion Technology. The course imparts knowledge,
skills and ethics for systematic execution of electronic commerce.

Course Purpose

To introduce all the principles, processes, techniques and requirements in

respect of the focused and integrated management of substantial tasks
(i.e. projects) by a specific team against planned targets of time and cost,
as opposed to functional management.

Course Objectives
Upon completing this course the students should be able to:

1. Illustrate an understanding of the fundamental business concepts

and pro-cesses.

2. Integrate business and managerial concepts with E-technologies.

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 3. Employ the skills necessary for developing and managing an e-
business or e-commerce department of a larger business.

4. Impart a functional understanding of computer and internet

technologies and their application in the business environment.

5. Provide the skills and knowledge in web design, database and

business-focused websites.

Instruction methodology
Lectures and tutorials, Case studies, Review of projects, theses and Journal articles

Course Text Books

1. Paul Allen: “Realizing eBusiness with Components” (2009), Addison-
Wesley, ISBN:

2. Mark Norris and Steve West: “eBusiness Essentials, 2nd Edition”

John Wiley & Sons 2010 ISBN:

3. Janice Reynolds “The Complete E-Commerce Book: Design, Build,

and Maintain a Successful Web-Based Business” CMP Books

Course Journals
1. E-Commerce and Tax Law Journal

2. E-Commerce-journal

3. Journal for electronic commerce research

4. E-Commerce Business journal

Assessment information
The module will be assessed as follows;

• 20% of marks from two (2) assignments

• 20% of marks from one written CAT to be administered at JKUAT

main cam-pus or one of the approved centres

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• 60% of marks from written Examination to be administered at JKUAT main
campus or one of the approved centres

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Contents

1 Electronic Commerce 1
1.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1.1 Merits of E Commerce . . . . . . . . . . . . . . . . . . . . 3
• To the Buyer . . . . . . . . . . . . . . . . . . . . 3
• The seller . . . . . . . . . . . . . . . . . . . . . . 3
1.1.2 Demerits of E Commerce . . . . . . . . . . . . . . . . . . . 3
• The Buyer . . . . . . . . . . . . . . . . . . . . . 3
• The seller . . . . . . . . . . . . . . . . . . . . . 4
1.1.3 Why Electronic Commerce . . . . . . . . . . . . . . . . . . 4
1.1.4 Challenges to EC . . . . . . . . . . . . . . . . . . . . . . . 5

2 The Internet and EC 9

2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.1.1 The Intranet . . . . . . . . . . . . . . . . . . . . . . . . . . 10
• General Functions of an Intranet . . . . . . . . . . 10
• Typical Application for Intranets . . . . . . . . . . 10
2.1.2 Extranets . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.1.3 Value Added Networks (VAN) . . . . . . . . . . . . . . . . 11
2.1.4 The Value System . . . . . . . . . . . . . . . . . . . . . . . 11

3 Building E-commerce Applications And Infrastructure 1

3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3.1.1 MAJOR E-COMMERCE APPLICATIONS AND THEIR
FUNCTIONALITY...................... 1
3.1.2 E commerce classification . . . . . . . . . . . . . . . . . . 1
• By phase of web presence . . . . . . . . . . . . . 2
• By Sector Interaction . . . . . . . . . . . . . . . 2

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 CONTENTS CONTENTS

3.1.3 DIFFERENT TYPES

OF STORE FRONTS . . . . . . . . . 3
• B2CSTOREFRONTS............... 3 3.1.4
SUPPLIER SELL-SIDE B2B SITES . . . . . . . . . . . . . 4
3.1.5 E-PROCUREMENT ..................... 5
• Aggregating Catalogs . . . . . . . . . . . . . . . 5
3.1.6 Reverse Auctions and Tendering Systems . . . . . . . . . . 5
3.1.7 Forward Auctions . . . . . . . . . . . . . . . . . . . . . . . 7
3.1.8 Exchanges . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1.9 Portals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.10 Other EC Systems . . . . . . . . . . . . . . . . . . . . . . 9
3.1.11 REVIEWQUESTIONS ................... 10

4 DEVELOPMENT OPTIONS FOR E-COMMERCE APPLICATIONS 1

4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
4.1.1 IN-HOUSE DEVELOPMENT: IN SOURCING . . . . . . 2
• Development Options . . . . . . . . . . . . . . . 2
4.2 BUYTHEAPPLICATIONS ..................... 3
4.2.1 OUTSOURCING/LEASING EC APPLICATIONS . . . . . 4
4.2.2 APPLICATION SERVICE PROVIDERS (ASP) . . . . . . 4
4.2.3 ECSUITES.......................... 5

5 Introduction 1
5.0.4 Microsoft Commerce sever. . . . . . . . . . . . . . . . . . 1
5.0.5 What is a shopping Cart? . . . . . . . . . . . . . . . . . . . 1
5.0.6 Server-Side Cart . . . . . . . . . . . . . . . . . . . . . . . 2
5.0.7 Client-Side Cart . . . . . . . . . . . . . . . . . . . . . . . 3
• Object Persistence in JavaScript . . . . . . . . . . 4
5.0.8 Storing Data in the Parent Frame . . . . . . . . . . . . . . . 4
5.0.9 User-Defined Objects . . . . . . . . . . . . . . . . . . . . 5

6 The e Commerce Architecture 1

6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
6.1.1 Some benefits of the Client server Model . . . . . . . . . . 2
6.1.2 The Distributed Enterprise Architecture. . . . . . . . . . . . 3
6.1.3 Web Services . . . . . . . . . . . . . . . . . . . . . . . . . 3

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CONTENTS CONTENTS

6.1.4 Components of Web Services . . . . . . . . . . ....... 3

7 What is EDI? 1
7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . ....... 1
• ANSI x12 . . . . . . . . . . . . . . . ....... 2
• EDIFACT...................... 3
7.1.1 Characteristics of EDI . . . . . . . . . . . . . . . . . . . . 3
7.1.2 Serial communications . . . . . . . . . . . . . . . . . . . . 4
7.1.3 Internet . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.1.4 Peer-to-Peer . . . . . . . . . . . . . . . . . . . . . . . . . 4
7.1.5 Value-added networks . . . . . . . . . . . . . . . . . . . . 4
7.1.6 Benefits of EDI . . . . . . . . . . . . . . . . . . . . . . . . 5
7.1.7 Disadvantages of EDI . . . . . . . . . . . . . . . . . . . . . 5

8 Electronic Payment System 1

8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
8.1.1 Requirements for an electronic payment system . . . . . . . 1
8.1.2 Types of electronic payments . . . . . . . . . . . . . . . . . 2
• Digital Cash . . . . . . . . . . . . . . . . . . . . 2
• How E cash Works . . . . . . . . . . . . . . . . . 3
•.1 The E cash concept . . . . . . . . . . . 3
•.2 Note : Consumer now has (invalid) e-
cash . . . . . . . . . . . . . . . . . . . 4
8.1.3 Required Characteristics of E Cash . . . . . . . . . . . . . 4
8.1.4 Merits and Demerits of E Cash . . . . . . . . . . . . . . . . 5
• Advantages . . . . . . . . . . . . . . . . . . . . . 5
• Disadvantages . . . . . . . . . . . . . . . . . . . 5
• Past and Present E cash systems . . . . . . . . . . 5
8.1.5 Electronic Wallets . . . . . . . . . . . . . . . . . . . . . . 6
• Microsoft Wallet . . . . . . . . . . . . . . . . . . 6
• Agile Wallet . . . . . . . . . . . . . . . . . . . . 6
• eWallet . . . . . . . . . . . . . . . . . . . . . . . 7
8.1.6 Smart Cards . . . . . . . . . . . . . . . . . . . . . . . . . . 7
• Smarts card areas of application . . . . . . . . . . 8
8.1.7 Merits and demerits of Smart cards . . . . . . . . . . . . . . 9

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CONTENTS CONTENTS

8.1.8 Credit Cards . . . . . . . . . . . . . . . . . . . . . . . . . . 9

9 Security of Electronic Payments 1

9.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
9.1.1 Payment Acceptance and Processing . . . . . . . . . . . . . 2
9.1.2 The Open loop and closed loop system . . . . . . . . . . . 2
• Closed loop systems . . . . . . . . . . . . . . . . 2
• Open loop systems . . . . . . . . . . . . . . . . . 3
• A merchant account . . . . . . . . . . . . . . . . 3
• Processing cards online . . . . . . . . . . . . . . 3
9.2 SOURCE: PAYMENT PROCESSING INC. . . . . . . . . . . . . . 4
9.2.1 Payment processing services . . . . . . . . . . . . . . . . . 4
• Internetsecure . . . . . . . . . . . . . . . . . . . 4
• Tellan . . . . . . . . . . . . . . . . . . . . . . . 4
• IC Verify . . . . . . . . . . . . . . . . . . . . . . 4
• A CyberCash company . . . . . . . . . . . . . . . 4
9.2.2 Secure Electronic transaction (SET) . . . . . . . . . . . . . 4
•.1 SET specification . . . . . . . . . . . . 4
• SET-protected payments work like this: . . . . . 5
• Secure Socket Layer (SSL) . . . . . . . . . . . . 6
• IMPLEMENTATION OF SSL . . . . . . . . . . 6

10 Legal and Ethical Issues 1

10.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
10.1.1 The Data Protection Act . . . . . . . . . . . . . . . . . . . 1
• Opt In and Opt Out . . . . . . . . . . . . . . . . . 2
• Opt-in . . . . . . . . . . . . . . . . . . . . . . . 2
• Opt-out . . . . . . . . . . . . . . . . . . . . . . . 3
• Cookies . . . . . . . . . . . . . . . . . . . . . . 3
Solutions to Exercises . . . . . . . . . . . . . . . . . . . . . . . . . 6

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HBT 2306 Electronic Commerce

LESSON 1
Electronic Commerce

Prerequisite:
1. Web development

2. Object orientation

Learning outcomes
Upon completing this topic, you should be able to:
1. Differentiate between e commerce and e business.

2. List down sample e commerce websites.

3. List the merits and demerits of E-commerce to client and the merchant.

1.1. Introduction
The term electronic commerce or simply EC is been one of the major
milestones in technological advancements made in the information age. The
ability to trans-act and do business online has been welcome with mixed
feelings of intrigue and suspicion, its benefits outweighing the negativity
around this topic. To start us off let us define the following terms:

• e-Commerce

• e-Business

‘E-commerce covers outward-facing processes that touch customers,

suppliers and external partners, including sales, marketing, order taking,
delivery, customer ser-vice, purchasing of raw materials and supplies for
production and procurement of indirect operating-expense items, such as
office supplies. It involves new business models and the potential to gain new
revenue or lose some existing revenue to new competitors.’ [Bartels 00]
According to Bartels all processes that are deemed for interacting with the exter-nal
environment from the perspective of the organization may be referred to as e
commerce. Kami in the same year adds his voice to this by defining e commerce as

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HBT 2306 Electronic Commerce

. . . . . . . . . . . . . . . . . . . enabling or achieving your business objectives by

using infor-mation technology to enhance or transform your business
processes. , , (Kami, 2000)
In these two definitions we can see the aspect of processes or the business activity
taking place in an environment of technology where the technology is used to enable
these processes. Having these two views is important in appreciating the service
oriented nature e commerce sites in their design. This will be seen much later on.
These two definitions however cannot be complete without looking at the other side
of the organization. According to Bartels E-business-
“..............includes e-commerce but also covers internal processes such as produc-
tion, inventory management, product development, risk management, finance,
knowl-edge management and human resources. E-business strategy is more
complex, more focused on internal processes, and aimed at cost savings and
improvements in effi-ciency, productivity and cost savings.’ [Bartels 00]
This is a wider view of looking at Electronic Commerce. IBM also looks at
E-Business from the same angle.
E-Business is what happens when you combine the broad reach of the Internet
with the vast resources of traditional information technology systems. [IBM]
In View of the above definitions however the points of convergence for
these two are

• E-commerce and e-business existed long before the Internet.

• The ubiquitous nature of the Internet and its global reach gives it
much of its power.

• The Internet technology is affordable technology hence is almost everywhere.

• The Internet opens up new opportunities for both small and large firm

It is important to note that ec follows the principle of commerce where by the con-
cerned parties (that is the buyer and seller) somehow come together to trade or
do business. In ec however these two parties take advantage of technological
advance-ments in networks and the internet to achieve this same goal.

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HBT 2306 Electronic Commerce

1.1.1. Merits of E Commerce

To the Buyer
1. The Buyer has a wide range of products to choose from.

2. The buyer can do comparisons of prices and read customer reviews

of a prod-uct before making a decision

3. Buyer may make purchases in the comfort of their homes

4. Decisions by the buyer are usually informed

5. Buyer saves other costs related to traveling and time

The seller
1. Maintaining an online store is cheaper than an actual store

2. Due to reduced overhead costs of running a store the seller may

offer much more competitive pricing

3. The seller can now reach a much larger market. (Global reach)

4. Technology provides the seller more efficient way to conduct

business pro-cesses

5. More efficient process and a larger market reach will bring profitability

6. The technological platform supports cheaper advertising

1.1.2. Demerits of E Commerce

The Buyer

1. Because of geographical challenges in some cases the buyer get

conned by unscrupulous dealers

2. The shopping experience is lost due to virtuality of EC processes

3. Products may get damaged on transit or fail to meet quality requirements of

country they are imported to at the expense of the buyer

4. Requires some one who is knowledgeable in the use of technology

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HBT 2306 Electronic Commerce

5. Requires to be supported by online banks and in most cases the

buyer has to open an account for these transaction

The seller
1. The seller is exposed to risks of fraudulent dealings

2. Requires linking with a number of financial intuitions for processing

of pay-ments. These may be a number of banks hence a slightly
more complex business model.

3. Requires knowledge in technology to effectively administer the

business Other synonyms for EC include Internet commerce

1.1.3. Why Electronic Commerce

Electronic commerce may be seen as a strategic move by a business in a competitive
environment to remain relevant and competitive. Electronic commerce has been known
to present new opportunities and giving rise to new business models.

Let us define strategy to elaborate more on this

According to Stoner and Freeman strategy is
"The broad program for defining and achieving an organization’s objectives:
the organization’s response to its environment over time." [Stoner et al]
It is important for any organization to be sensitive to changes in its environment
with time. These changes may brought about by a number of varying factors
some of which are within what the organization can change others are beyond.
Strategy is all about choosing where and how to compete, how to
structure and organize the company and the means by which resources
may be allocated in order to compete effectively. [Holden 90]
The Internet presents new Strategic Options for firms to compete and
remain rele-vant in a fast passed environment. We can evaluate these
using the Porters five force model.
Porters five force model

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HBT 2306 Electronic Commerce

Traditional Rivals: these are known competitors to organizations products. They most
likely will exist within the same regional boundary. Threat of new Entrants has been
known to cause uneasiness to organizations in the same trade. In Kenya when there
was talk of a third mobile provide After Safaricom and the former Celtel there were
price wars and speculations of the impact a third provider would have each company
trying to formulate structures to retain their market share. Threat of substitute product
or services is also a substantial force that in the past has caused large organizations
to make huge decisions i.e. the Kenya breweries and castle larger came to an
agreement that Kenya breweries to retain the Kenyan market while Castle moved to
Tanzania to take over the Breweries plant there. Bargaining Power of suppliers is
mostly seen in cases where we have groups of organized suppliers such as oil
cartels. These are known to influence the markets considerable and in so doing is a
force for the organization to consider Bargaining power of Customers may also
present considerable forces to the organization especially if the customers band
together as one they may determine the cost of products or services.

1.1.4. Challenges to EC
• Transactional challenges: challenges associated with payments,
money, ac-ceptability issues, taxation issues,

• Legal challenges: legal frameworks, grievance handling, ownership ,

rights, liability issues, harmonization of cross cultural and country laws

• Geographical challenges: challenges associated with transportation

of physi-cal goods , liability etc

• Types of products: what can be bought, product standardization etc

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HBT 2306 Electronic Commerce

Example . The internet is a System of Systems. Discuss

Solution: Points Network of networks (MAN s, WANs, LANs etc), Different plat-forms
of computers, Different mediums, Many standards of communication, Many
resources to be shared, Dynamic uncontrolled growth

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HBT 2306 Electronic Commerce

Revision Questions

EXERCISE 1. Differentiate between E commerce and E business

EXERCISE 2. List down the advantages of e-commerce to:

1. The buyer

2. The seller

EXERCISE 3. Describe the impact of Ecommerce on an organization’s:

1. Structure

2. Information Technology

EXERCISE 4. Define the term commercial website.

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HBT 2306 Electronic Commerce

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

LESSON 2
The Internet and EC

Learning outcomes
Upon completing this topic, you should be able to:
1. Differentiate between e commerce and e business.

2. List down sample e commerce websites.

3. List the merits and demerits of E commerce to client and the merchant.

2.1. Introduction

The Internet is an inter-connected group of many thousands of individual

digital intercommunication networks and links working together for the
purpose of infor-mation exchange and communication.
The WWW is principle user of the internet.The WWW is composed of vast col-
lections of digital information that is linked through the use of hyperlinks. Nav-igation
between the pages is achieved via Uniform Resource Locator (URL) and the
hyperlinks URLs use a look-up system to translate web addresses into numbers (ip
addresses) known as the Domain Name System (DNS) The web operates on a
client/server model (the client browser sends requests to a server, which locates and
sends the information to the client) The internet is a packet switching type of a
network which employs the TCP/IP protocol stack TCP is the process which breaks
down the packets for transmission and reassembles them at the receiving computer.
Each packet is enclosed in an IP envelope containing addressing and other informa-
tion. This ensures that the packets are sent to the correct destination
The Internet is NOT owned by anyone. The technologies employed over it
however are designed and overseen by a number of bodies that control its
operation. Some of these bodies are The Internet Society which supports:
The Internet Activities Board (IAB) which handles architectural issues.
IAB’s Internet Engineering Task Force oversees technologies such as the:
Transmission Control Protocol / Internet Protocol (TCP/IP)

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HBT 2306 Electronic Commerce

2.1.1. The Intranet

This is a private network that exists within the boundaries of an

organization. It may be LAN or WAN that uses Internet technology and is
normally just for the use of a single organisation. A firewall isolates the
intranet providing limited access onto the web for authorised employees.
Intranets provide an infrastructure for Intra-business ecommerce

General Functions of an Intranet

• Provides an infrastructure for Integration with e-Commerce applications

• May be used to hold Internal departmental web pages

• Document management system are implemented on the intranet

• Intranets facilitate Database systems within organizations

• Intranets facilitate Communication / groupware systems

Typical Application for Intranets

• Intranets are applied in the delivery Product catalogues and Manuals

• Intranets are useful in Purchase orders processing/order entry

• Intranets support Document management/shared document storage

• Intranets also support internal policies and procedures, Legacy

systems ac-cess and other internal business processes.

2.1.2. Extranets
This is a semi private network using internet technologies. It is also known
as an eextended intranet, providing secure links to the intranets of
associated companies such as:

• Suppliers

• Customers

• Financial services

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HBT 2306 Electronic Commerce

This platform is commonly used for Supply Chain Management (SCM) and Cus-
tomer Relations Management (CRM) systems. For example an institution such
as JKUAT wanting to make fee collection easier would link its finance system
with the banks where student make the payment. When a student makes a
payment the statement is automatically reflected in the JKUAT finance system.
Extranets form part of infrastructure for e-commerce whose benefits include:-

• Enhanced communications

• Enhanced productivity

• Business enhancement

• Cost Reduction and

• Information delivery

2.1.3. Value Added Networks (VAN)

A value-added network (VAN) is a private network provider (sometimes called a
turnkey communications line) that is hired by a company to facilitate electronic
data interchanges (EDI) or provides other network services. Consider a bank
leasing a Telkom line (ken stream) to provide its customers with 24 hour ATM
services. Other banks such as family bank make use of ken switch.

2.1.4. The Value System

This is a collection of a number of processes and business function that concern a
given organization, its suppliers and distributors or customers. There are processes

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HBT 2306 Electronic Commerce

that take place only within the organization while other processes take
place across the organizations boundary to either the suppliers or the
distributors. The figure below describes the value system.

The value system may be supported by the internet technologies we have

looked at so far in the processes involved either by exchange of
information or data in supporting the business functions.
The figure below shows the application of these networks to specific functions.

Example . Describe a Virtual Private Network

Solution: This is a type of network that allows intranets to extend their access to
specific individuals outside institutional boundaries i.e. administering an intranet
server from a remote location

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HBT 2306 Electronic Commerce

Revision Questions

EXERCISE 5. Discuss the role of the value system with regard to the
Intranet and extranets

EXERCISE 6. Give two examples of Value Added network providers you know.

EXERCISE 7. Differentiate between a VAN and a VPN

EXERCISE 8. Of what relevance are the VANS to supply chains.

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

LESSON 3
Building E-commerce Applications And Infrastructure

Learning outcomes
Upon completing this topic, you should be able to:
• Discuss the major steps in developing an EC application.

• Describe the major EC applications and list their major functionality.

• List the major EC application development options along with their

benefits and limitations.

3.1. Introduction
3.1.1. MAJOR E-COMMERCE APPLICATIONS AND THEIR FUNCTION-
ALITY
Once it has been determined that a business can benefit from an online
presence, the business type, the product line, the business’s organization, and
the budget dic-tate what functionality the Web site should have and how the Web
site should be developed. Companies can choose from a number of different
types of Web sites, including B2C, B2B, exchanges, and the like. Sites of a
particular type (e.g., re-tailer, provider of business services, manufacturer,
distributor/wholesaler, media, travel/entertainment) usually use the same
underlying applications and provide sim-ilar sorts of functionality. Although this
simplifies the task of creating the underly-ing application architecture, the site
requirements must still be considered carefully. Before discussing the best
approach to developing the site, it is useful to consider the major characteristics,
functionality, and requirements of an EC system. The fol-lowing discussion
focuses on these considerations for some of the more common EC applications.

3.1.2. E commerce classification

We may classify e commerce applications based on the following two criteria

1. By phase of web presence: -The extent of development of web

presence – how does the business use web technologies?

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HBT 2306 Electronic Commerce

2. By classification of sector interaction:- What are the different sectors

that are able to trade – which types of organization?

By phase of web presence

The rules of thumb that may be applied include

1. “Hello, I’m online too”: this represents introductory part of web

presence where an organization may simply have information such
as contacts and products being part of their website. The site may
not have additional func-tionalities.

2. “Structured web site”: this is characterized by additional capabilities

of the site. Information is more structured in a sense that a visitor to
the site will get what they were looking for. The site may have a
search facility, frequently asked questions and a form for feedback.

3. “Trying E-Commerce”: this site is characterized by e commerce

features that are geared not only to provide information but also to
make a sale either by advertising and other outward facing functions

4. “Doing E-Business”: This is characterized by in cooperation of an intranet,

extranet in the organizations operations besides the outward facing processes.

5. “Pervasive E-Business”: It is a step further from simply in-cooperating

these technologies to integrating them in key organizational functions.

6. “One World - one computer” : this is the Ideal state of electronic

trading where the networks involved and geographical disparity are
transparent to the users.

By Sector Interaction
The different sectors in the business environment include:

1. B2A - business to administration

2. C2A - consumer to administration

3. B2B - business to business

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4. B2C - business to consumer

5. C2C - consumer to consumer

6. C2B - consumer to business

7. Non-business EC

8. Intra-business EC

3.1.3. DIFFERENT TYPES OF STORE FRONTS

B2C STOREFRONTS
An electronic storefront must support the same tasks that a physical store supports.
In particular, an electronic storefront (a seller’s Web site where purchases can be
made) needs to offer certain capabilities to buyers and to the merchant. These are
shown in the table below In order to provide these capabilities; an electronic
storefront should have the following functions (Nickerson 2002):

• A product presentation function provides the customer with information

about the product through the user interface (browser). The information
presented can include product advertisements, detailed product
specifications, product views, and sample product presentations. This
function can include addi-tional features such as language selection,
product search, and customization for customer preferences.

Discover, search for, evaluate, and compare product offerings, allowing prospective buyers Select pro

• An order entry function allows a customer to place an order for

selected prod-ucts. Information about each product ordered is added
to the electronic shop-ping cart, which is a database of orders in
process. This function is linked to the enterprise’s inventory system
in order to check product availability. It also requires access to the
enterprise’s customer database to update and use customer data.

• An electronic payment function enables the customer to pay for the order and,
thus, complete the transaction. Payment options may include credit card,

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debit card, COD, check (before delivery), and invoice (after delivery).
Secu-rity is very important in the electronic payment function. The
function should provide the necessary security through Secure Socket
Layer (SSL), Secure Electronic Transactions (SET), or some other
protocol, and customers should be apprised of the security provisions.

• An order fulfillment function provides for the delivery of the product to the
customer. The delivery can be digital for products such as music, software,
and information. This function is linked to the enterprise’s inventory system
so that the inventory database can be updated when the order is fulfilled.

• A customer service function provides assistance to customers who

have prob-lems or questions related to the purchasing process.
Options for providing customer service include FAQs, toll-free
telephone numbers, e-mail, and chat rooms.

• The product support function provides assistance to the customer after the
product has been received. This support may include initial setup and
installa-tion, regular operation, troubleshooting, return policy, ongoing
maintenance, and warranty or non warranty repair or replacement.

3.1.4. SUPPLIER SELL-SIDE B2B SITES

A sell-side B2B site is similar to a B2C storefront, enabling one business
to pur-chase goods and services from another. However, a B2B site also
has additional features, including:

1. Personalized catalogs and Web pages for all major buyers

2. A B2B payment gate

3. Electronic contract negotiation features

4. Product configuration by customers (e.g., Cisco or Dell)

5. Affiliate program capabilities

6. Business alerts (e.g., to special sales, to news)

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3.1.5. E-PROCUREMENT
An e-procurement site is an online intermediary that offers businesses access
to hundreds of parts and services provided by suppliers .E-procurement
systems come in several variations, each with its own specialized capabilities.

Aggregating Catalogs
In large organizations, multiple buyers are involved in making purchases from a large
number of suppliers. One way to reduce costs and other inefficiencies in the
purchase process is to aggregate the items from approved suppliers into a single
online catalog. Some of the specialized requirements for this type of site include:

1. Search engine for locating items with particular characteristics

2. Comparison engine for alternative vendors

3. Ordering mechanism

4. Budget and authorization feature

5. Usage comparison (among various departments)

6. Payment mechanism (e.g., use of a purchasing card)

Aggregated catalogs are used by many large companies and government

agencies i..e. the worldCat.org site.

3.1.6. Reverse Auctions and Tendering Systems

In a reverse auction, buyers list the items they wish to purchase, and
sellers bid to provide those items at the lowest price .Sites of this sort
provide the following capabilities:

1. Catalog of items to be tendered and their content management

2. Search engine (if the site has many items)

3. Personalized pages for potential large bidders

4. Reverse auction mechanisms, sometimes in real time

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5. Facilitytohelpprepare,issue,manage,andrespondtoabuyer’srequestforquotes (RFQs)

6. Ability to bid dynamically

7. Automatic vendor approval and workflow (e.g., Smart Match’s

supplier iden-tification technology)

8. Electronic collaboration with trading partners

9. Standardization of RFQ writing

10. Site map

11. Mechanism for selecting suppliers

12. Automatic matching of suppliers with RFQs

13. Automatic business process workflow

14. Ability for bidders to use m-commerce for bidding

15. Automated language translation

3.1.7. Forward Auctions

Forward auctions enable selling companies to post items they want to sell, and
buying companies to compete for the best prices acceptable to the selling
companies for those items. In forward auctions, winning bidders (buyers) are
obligated to buy items. A typical forward auction consists of the following steps:

1. Both the seller and the buyer complete the online registration process, includ-
ing providing shipping points and regulatory and banking information.

2. The seller starts an auction by listing the product, the asking price,
and the quantity on a form.

3. The buyer chooses a bid product and indicates a bid price and quantity.
The buyer may also set the maximum price and bid increments.

4. Sophisticated software determines the auction winner, based on

price, vol-ume, and timing.

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5. A funds transfer from the bidder takes place immediately.

6. Upon successful funds transfer, a freight company is dispatched to the

seller’s location; the product is loaded and delivered to buyer’s location.

7. The buyer inspects and accepts the product.

8. Funds are released to the seller. The capabilities of forward auctions

can be best viewed at ebay.com.

3.1.8. Exchanges
An exchange is an e-marketplace that connects many buyers with many
suppliers. In addition to combining the functionalities of buy-side, e-
procurement, and auction sites, they also have a number of other capabilities:

1. Collaboration services (including multichannel services)

2. Community services

3. Web-automated workflow

4. Integrated business process solutions

5. Central coordination of global logistics for members, including

warehousing and shipping services

6. Integration services (systems/process integration into e-marketplace,

trading partners, and service providers)

7. Data mining, customized analysis and reporting, real-time

transactions, trend and customer behavior tracking

8. Transaction-flow managers

9. Negotiation mechanisms

10. Language translation

11. Comprehensive links to related resources

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These lists of major characteristics and functionalities can be used by

application developers as outlines or checklists from which to develop
plans for specific EC applications. For a listing of software packages that
support the various capabilities of B2B sites, see Business.com (2007).

3.1.9. Portals
A portal is a single Web interface that provides personalized access to
information, applications, business processes, and much more. With portal
technology, an or-ganization can lower development and deployment costs and
significantly increase productivity. Using a portal, information can be aggregated
and integrated within a particular working environment, application, or service, or
a single interface can be used to target an individual user’s needs and interests.
Portals help to harmonize content, commerce, and collaboration with business
goals. A list of different types of portals and their capabilities follows

1. Line-of-business portals provide easy access to applications that

serve a spe-cific area, such as procurement or human resources. A
corporate intranet portal often acts as a gateway to other portals and
Web sites operated by an organization.

2. Extranet portals act as an interface between companies, customers,

and sup-pliers, revealing subsets of information to specific audiences.
Customer ser-vice and portals are often seen as subsets of a corporate
extranet. Team or divisional portals are used by groups or communities
that want to share spe-cific content or business functions.

3. A personal portal is geared to assist individuals who access

information and resources.

4. An enterprise portal is the central portal for an entire organization. It

com-prises all other portals deployed.

3.1.10. Other EC Systems

Several EC systems exist, each with its own set of required capabilities. For ex-
ample e-learning sites may have a student part and an instructor part, each with

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its own set of requirements. Collaboration EC sites require several

collaboration capabilities and tools.

3.1.11. REVIEW QUESTIONS

1. Examine 15 different Web sites and choose your 5 favorites. Are
these the kinds of Web sites that you would choose to visit or use as
a template if you had a business? Explain why or why not.

2. List the major functions of an electronic storefront.

3. Describe some of the major functions required by an aggregating catalog.

4. Describe some of the major functions needed to build a reverse auction.

5. Describe the basic steps of a forward auction.

Example . The internet is a System of Systems. Discuss

Solution: Points Network of networks (MAN s, WANs, LANs etc), Different plat-forms
of computers, Different mediums, Many standards of communication, Many
resources to be shared, Dynamic uncontrolled growth

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Revision Questions

EXERCISE 9. Describe the following modes of e-commerce:

1. B2B

2. B2C

EXERCISE 10. Briefly explain two types of E-commerce sites where the
models can be used.

EXERCISE 11. Differentiate between the following

Forward Auction, Exchange and a portal

EXERCISE 12. Briefly explain the following terms:

1. Electronic catalog

2. Shopping cart

3. Business process re engineering

4. Value chain

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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LESSON 4
DEVELOPMENT OPTIONS FOR E-COMMERCE
APPLICATIONS

Learning outcomes
Upon completing this topic, you should be able to:
1. Discuss various EC application outsourcing options, including application
service providers (ASPs), software as a service (SaaS), and utility computing.

2. Discuss the major EC software packages and EC application suites.

3. Describe various methods for connecting an EC application to back-

end sys-tems and databases.

4.1. Introduction
If the desired Web site is relatively simple, a firm may decide to build the
Web site itself. However, the firm must ask a few questions:

• Are we capable of developing the site?

• Do we have access to the proper tools to create the pages?

If the firm does not have these capabilities, it is usually best to turn over the task to a
professional developer. The ideal developer is one who can design a site with the
correct look and feel, who has an in-depth knowledge of search engine optimization,
and who is able to correctly handle any complex coding that may be required.
Regardless of the complexity of the site, three basic options for developing
an EC Web site are available:

1. develop the site in-house,either from scratch or with off-the-shelf

compo-nents;

2. buy a packaged application designed for a particular type of EC site; or

3. lease the application from a third party.

Each of these approaches has its benefits and limitations.

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4.1.1. IN-HOUSE DEVELOPMENT: IN SOURCING

The first generation of EC development was accomplished largely through propri-
etary programming and in-house development (see Zhao et al.1998).Using this ap-
proach, the Internet browser serves as the development platform. The programmers
write EC systems using a combination of HTML and script languages such as HTX,
CGI, IDC, and JavaScript. Databases developed on top of a database management
system (DBMS) usually serve as the information repository to store EC data. Al-
though this first generation of EC development has built up valuable experience and
achieved industrial momentum, the lack of reusability (i.e., the likelihood a segment
of source code can be used again to add new functionalities with slight or no
modification) in current EC applications and the lack of interoperability (i.e., the ability
to connect people, data and diverse systems, standards) created a great bar-rier to
widespread application of EC. This however is being countered by emergent
technologies on the web such as xml and web services to ensure interoperability and
re usability in that order. Although in-house development—in sourcing—can be time
consuming and costly, it may lead to EC applications that better fit an orga-nization’s
strategy and vision and differentiate it from the competition. Companies that have the
resources to develop their e-business application in-house may follow this approach
in order to differentiate themselves from the competition, which may be using
standard applications that can be bought or leased. The in-house develop-ment of
EC applications, however, is a challenging task, because most applications are
novel, have users from outside the organization, and involve multiple organiza-tions.
Shurville and Williams (2005) demonstrate how a combination of hard and soft
project and change management methodologies guided successful in-house de-
velopment of a campus wide information system.

Development Options
Developers have three major options for developing an application:

Build from scratch. This option is used rarely. It should be considered only
for specialized applications for which components are not available.
It is expen-sive and slow, but it may provide the best fit.

Build from components. The required applications are often constructed

from standard components (e.g., Web servers such as Apache or
Microsoft’s IIS)

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using Web scripting languages, such as PHP, Microsoft’s Active Server

Pages (ASP), JavaServer Pages (JSP), or ColdFusion. These scripting
languages make it easier to integrate application functionality with back-
end databases and other back-office systems (e.g., order entry).

Enterprise application integration. The enterprise application integration (EAI) option

is similar to the build from components option, but instead of using
components, an entire application is employed. This is an especially attrac-tive
option when applications from several business partners need to be inte-
grated.In sourcing is a challenging task that requires specialized IT resources.
For this reason, most organizations usually rely on packaged applications or
completely outsource the development and maintenance of their EC sites.

4.2. BUY THE APPLICATIONS

A number of commercial packages provide standard features required by EC
appli-cations. These packages are ready to turn on and operate. This option is
also known as a turnkey approach; the package is ready to use without further
assembly or test-ing. The turnkey approach involves buying a commercial
package, installing it as is, and starting it up. Buying a commercial package
requires much less time and money than in-house development. When selecting
a particular package, the pack-age should not only satisfy current needs, it must
also be flexible enough to handle future ones; otherwise the package may quickly
become obsolete. Additionally, because one package can rarely meet all of an
organization’s requirements, it is sometimes necessary to acquire multiple
packages. In this case, the packages need to be integrated with each other and
with other software and data. This option has several major advantages:

1. Many different types of off-the-shelf software packages are available.

2. It saves time and money (compared to in-house development).

3. The company need not hire programmers specifically dedicated to

an EC project.

4. The company knows what it is getting before it invests in the product.

5. The company is neither the first nor the only user.

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6. The price is usually much lower than the in-house option.

7. The vendor updates the software frequently.

This option also has some major disadvantages:

1. Software may not exactly meet the company’s needs.

2. Software may be difficult or impossible to modify, or it may require

huge process changes.

3. The company may experience loss of control over improvements and

new versions.

4. Off-the-shelf applications can be difficult to integrate with existing systems.

5. Vendors may drop a product or go out of business.

4.2.1. OUTSOURCING/LEASING EC APPLICATIONS

The use of outside contractors or external organizations (often software vendors)
to acquire EC applications is called outsourcing. It is a method of transferring the
management and/or day-to-day execution of an entire business function to a
third-party service provider. Outsourcing is a valuable option that more and more
com-panies are using. In many cases, systems need to be built quickly, and the
special expertise of outside contractors and software vendors is necessary.
Large companies may choose outsourcing when they want to experiment with
new EC technologies without a great deal of up-front investment. Outsourcing
also allows large firms to protect their internal networks and to gain expert
advice. Small firms with limited IT expertise and tight budgets also find
outsourcing advantageous. Outsourcers can perform any or all tasks in EC
applications development. For example, they can plan, program, and build
applications and integrate, operate, and maintain them. It is useful for firms to
develop good relationships with outsourcers (see Kishore et al. 2003).

4.2.2. APPLICATION SERVICE PROVIDERS (ASP)

An application service provider (ASP) manages application servers in a centrally
controlled location rather than on a customer’s site. Applications are then accessed

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via the Internet or VANs through a standard Web browser interface. Such an ar-
rangement provides a full range of services for the company using the ASP: Ap-
plications can be scaled, upgrades and maintenance can be centralized, physical
security over the applications and servers can be guaranteed; and the necessary crit-
ical mass of human resources can be efficiently utilized. The determinants of ASP
adoption as an innovation are discussed by Daylami et al. (2005). The end user
businesses pay a licensing fee. Monthly fees are separate and are paid to the maker
of the software and to the ASP “host” of the software. In general, these fees include
payment for the application software, hardware, service and support, maintenance,
and upgrades. The fee can be fixed or may be based on utilization. Leasing from an
ASP is a particularly desirable option for SMEs, for which in-house development and
operation of IT applications can be time consuming and expensive. Leasing from
ASPs saves various expenses (e.g., labor costs) in the initial development stage. It
also helps reduce software maintenance, upgrading, and user training costs in the
long run. A company can select other software products from the same ASP to meet
its changing needs and does not have to invest further in upgrading the existing one.
Thus, overall business competitiveness can be strengthened through reducing time-
to-market and enhancing the firm’s ability to adapt to changing mar-ket conditions.
ASPs are particularly effective for IT applications for which timing, flexibility, and
agility are crucial.

4.2.3. EC SUITES
An EC suite is a type of merchant server software that consists of an integrated collection
of a large number of EC tools and components that work together for EC applications
development. EC suites offer builders and users greater flexibility, spe-cialization,
customization, and integration in supporting complete front- and back-office functionality.
In an EC suite, the functionality is distributed across a number of servers and databases
instead of relying on a single server and database, as with less sophisticated merchant
server systems. The elements displayed in are indica-tive of the components contained in
a typical EC suite, the processes supported by an EC suite, and the back-end databases
and operational systems utilized by the pro-cesses. Over the past few years, the EC suite
market space has experienced a sub-stantial amount of consolidation. Among the major
products that remain on the mar-
ket isMicrosoft’sCommerceServer2007(microsoft.com/commerceserver/default.mspx),IBM’sWebSphe

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306.ibm.com/software/websphere/),andOracle’sECapplications(downloadeast.oracle.com/docs/cd/B10
Up-and-coming EC suites include SalesPro (webbusconnect.com/serve.aspx?page=ec_ecomm_suite),
OnLine Suites (onlinesuites.com),andAIT,Inc.’sE-CommerceSuite(ait.com/ecommercesuite.php).
Microsoft’sCommerceServer2007(microsoft.com/commerceserver/default.mspx) of-
fers a comprehensive framework for building tailored EC solutions.The
framework consists of six main systems:

1. Product Catalog System. Enables the creation, management, and

syndication of customer-specific and location-specific catalogs with
specialized pricing and sophisticated search capabilities.

2. Targeting System. Creates and deploys multilingual merchandising

and ad-vertising campaigns that support advanced discounting,
cross-selling, and customer profiling.

3. Profiling System. Enables catalog personalization, pricing, business

process-ing, merchandising, and advertising to specific needs of
customers, suppliers, and partners.

4. Business Processing Pipelines System. Enables firms to tailor order

and mer-chandising processes to handle currency conversions,
multiple shipments, and complex discounting.

5. Business Analytics System. Offers businesses the ability to analyze,

forecast, and mine the business data resulting from EC activities and
processes, in-cluding clickstream usage, purchase histories, browsing
behaviors, campaign effectiveness, and currency preferences, so that they
can make informed de-cisions about the success of their online business.

6. User Management Console: Business Desk. Enables business

managers to respond quickly to changing customer and business needs
through a central-ized intuitive console for managing customer and
partner profiles, person-alization rules, product catalogs and pricing,
merchandising and advertising campaigns, and business analysis.

Microsoft’s Commerce Server comes in three editions—Standard, Developer, and

Enterprise—which are designed to handle medium, large, and extremely high-traffic

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sites, respectively. All three editions are built on top of Microsoft’s Windows op-
erating system, SQL Server database,and the Visual Studio .NET development en-
vironment.All three editions also operate seamlessly with Microsoft’s other .NET
servers (e.g., Microsoft BizTalk Server and Microsoft’s Content Management
Server). The new version of Commerce Server, released in late 2006
(Microsoft.com 2007a), enables enterprises to accelerate and automate the
delivery of online services and products to drive their revenue growth and reduce
operational costs. An example of a business portal built using Microsoft’s
Commerce Server 2007 and BizTalk Server 2006 is described in Case.

Example . Enumerate on the three main options for an e commence site

Solution:

develop the site in-house,either from scratch or with off the shelf
components; buy a packaged application designed for a particular
type of EC site; or lease the application from a third party.

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Revision Questions

EXERCISE 13. Discuss five benefits that are associated with the Global Internet

EXERCISE 14. Mr. Khados is a small fresh juice equipment retailer with
one store in Nairobi-Kenya. He has a strategy to make his business
online. Currently he carries out the following activities:
Opens his store from 9am-5pm from Monday to Friday.
He sells mainly within Nairobi
He writes the customers phone numbers in a booklet, which he keeps in
one of the drawers in his store.
He pays his suppliers after a month and often has to travel to his
supplier’s office to drop the cheque or cash
New stock is delivered a week after he submits the orders mainly due to
processing of the order documents.
He advertises his business through word of mouth and posters on walls in
the main streets including tom Mboya.
For each of the activities outlined above discuss the kind of changes and benefits
associated with the changes expected if he were to implementing an online model.

EXERCISE 15. What are some of the benefits of outsourcing a website

EXERCISE 16. List some of the technologies you would need to be familiar
with in order to Build a site from scratch

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References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

LESSON 5
Introduction

Learning outcomes
Upon completing this topic, you should be able to:
1. Define a shopping cart application.

2. List the technologies used in implementing a shopping cart.

3. Use ASP as one of the server side technologies for developing shopping carts.

5.0.4. Microsoft Commerce sever.

Until 2009 Microsoft provided and supported the Microsoft Commerce

server a product intended for EC. As seen in the previous lesson the
release of the 2007 version provided a variety of services Vital for an EC
solution. Future releases of this product was left to Ascentium. This
product however still provides support for Microsoft ASP.net.

5.0.5. What is a shopping Cart?

This is usually a web based application. In concept it is very similar to what we find in
a Supermarket. It allows a shopper to store in good as they shop before checking out
of the store. It is however developed based on a number of web technologies such
as databases for storing shipping cart records as well as ability to add, update or
remove an item a capability of a DBMS, scripting technologies that create an actual
shopping session and managing it from the server or the client e.t.c Some shopping
carts in cooperate other applications such as software wallets for making payments.
Elements that are critical to a shopping cart should be, website wizards, merchant
tools, shopping features, payment options, shipping and taxes configura-tions,
statistics and security. There are literally hundreds of shopping carts available hence
the designer needs to make a choice of developing one from scratch or using an
already developed one. They range from simple scripts to complete ecommerce
solutions. A truly great shopping cart is considered an eCommerce solution.
Whether you use client- or server-side scripting to implement the shopping
cart, you will probably interface the cart to the catalog through a form:

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<FORM METHOD=POST ACTION="/cgi-

bin/cart.cgi"> ...
<INPUT TYPE=SUBMIT VALUE="I’ll take
it"> </FORM>
We can either intercept or process the shopping request from within the browser
(client-side scripting), or pass the data on to the server for processing (server-side).

5.0.6. Server-Side Cart

This is the most popular implementation of a shopping cart. To implement a
shop-ping cart from the server, we’ll need to create a temporary database file
that stores the user’s selections. This is easily done by having the cart.cgi
script generate the standard flat-file database sequence:
The algorithm should go something like this.

1. Open a file, if it exists or create one.

2. Read any data from the file into an internal list.

3. Add the new purchase to the list.

4. Write the whole thing back out again.

The only trick is making sure that the file name you pick isn’t used by anyone else. A
common technique for this is to keep a separate counter file on the server that

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records the last order number used. When the cart first loads, the counter file
is checked, incremented, and the new number is used as the new cart file
name. To make certain that this happens at the correct time, create the cart
file when the user first enters the catalog as part of the catalog.cgi script.
Additionally, as each catalog page generates, it’s necessary to include
information back to the browser identifying the name of the cart file. This is
done in one of two ways:

1. As a parameter added to the ACTION attribute of the form cart.cgi generates.

2. As a hidden field contained within the form.

The hidden field is a bit less obtrusive, but either method works.
Additional information you may want to pass back to the browser may include:
The total number of items selected.
The total cost of all selected items.
A side-effect of using server-side temporary files is the potential for the user to
"wander off" your site if they decide not to continue shopping, or to be disconnected
from their provider due to a bad internet connection. This results in a temporary file
lying around on your system, which can be handled in one of two ways:

1. You must periodically do some system maintenance to clean up any

files left over.

2. Switch to storing the shopping cart on the client computer within the
user’s browser, using cookies.

Maintenance can be automated by adding some additional functions to

your server’s periodic maintenance routines that run. Have it scan the cart
directory and delete any old files. Client-side scripting of the cart
eliminates this problem entirely, and is discussed next.

5.0.7. Client-Side Cart

The client-side (browser) cart relies on the browser’s ability to dynamically create
objects and add data to the local dataset within the browser’s dataspace. In order
to appreciate how this to works please refer to JavaScript object notes.

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Object Persistence in JavaScript

Because loading a new page totally clears the browser of any JavaScript
(objects, functions, methods, and so on) that was associated with that page,
storing the cart data within the document that contains the shopping form
won’t work. If your site is framed, however, you can store the cart objects in a
frame that doesn’t get reloaded. This keeps its persistence even though the
catalog display pages and order form are constantly being updated.
It may not be practical to dedicate a frame simply to hold data, especially when
you want to use as much of the browser as you can for your products. Dedicating
a frame has, however, been demonstrated in rather unique ways on some sites.
The parent frame is the document that contains the <FRAMESET> directives
that structure your site. If you store your code in this frame, you can access
the objects as often as you want until the user leaves your site.

5.0.8. Storing Data in the Parent Frame

<HTML>
<HEAD>
<SCRIPT LANGUAGE="JavaScript">
<!-- begin hide
...
your code can go here
...
// end hide -->
</SCRIPT>
<FRAMESET ...>
...
</FRAMESET>

With this used as the parent document, any pages loaded within child frames
reaches back and accesses any functions or objects by simply prefacing any
references to the desired JavaScript component with parent., as follows:

parent.object Or Function
This is, of course, assuming that the document making the call is a direct child of the
parent. A direct child is loaded within the frames defined by the <FRAME>tags in

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HBT 2306 Electronic Commerce

the parent. If any of the children are themselves framesets with their own
children, you have to preface the object call with another parent.:

parent.parent.object Or Function
This process continues for every level deeper you get into the frame
structure-although at some point, it becomes impractical to nest frames
too deeply. If you’re not certain how deep you’re getting in your frames,
you can always access your objects from the top instead of the bottom.
The JavaScript top property is a syn-onym for the topmost window within
the browser. Because your parent document is loaded first, it is the
topmost window, meaning that you can access objects within it by:

top.object Or Function
Which will work properly no matter what child (or child of a child) window
you’re in within the site.

5.0.9. User-Defined Objects

Once you know where you’re going to store your objects, you need to create
them. This requires creating a user-defined object. To create your own objects,
you first need to write a function whose name is the same as that of the object
you wish to define (like Item). You then initialize the properties of the object, such
as its name and price. Listing 19.2 is an example of the object-creation function.
Defining a Cart Object function Item(strDescription, strCost) { this.Name = strDe

With your object type defined, you simply create an array (the "cart") that stores another item each tim

The Cart <SCRIPT LANGUAGE="JavaScript">

<!-- begin hide
... cart = MakeArray();
numItems = 0;
totalCost = 0;
function PickOneUp() {
cart[++numItems] = new Item(theForm.Name.value,
theForm.Cost.value);
totalCost += parseFloat(theForm.Cost.value); }
// end script --> </SCRIPT> ... <FORM METHOD=POST ACTION="

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HBT 2306 Electronic Commerce

/cgi-bin/purchase.cgi"> ...
<INPUT TYPE=BUTTON VALUE="Pick one Up" ONCLICK="PickOneUp()"> </FORM>

CAUTION When indexing into a complex array-one that holds objects, not just simple
properties or s This simple loop structure keeps the total count of objects in numItems, and the
total cost of the cart in total Cost. Note that when adding to the value
stored in total Cost, it’s a good idea to use the parseFloat() method to
ensure that the value retrieved from the Cost field of the form is treated as
a number. JavaScript tends to be fond of strings and assuming that it will
treat a number as a number is not a good idea.
Shopping Cart Example employing vb scripts

<%
''
A Simple Shopping Cart'
'This is just a simple example of how to start ' 'Shopping cart
for your site. You can Add/Delete' 'and View your items'

'this also shows you how to use Session'

'variables and the dictionary object'
'Please do not steal code, give credit where it ' 'is do!'

'
Dim Basket' This will hold our shopping cart information
dim tmpItems ' This will hold all of the items we have in our Shopping Cart

' This If statement will check to see if anything is in the

querystring it creates a form if true is returned

'Write a form to take in information Response.Write

"<HTML><BODY><FORMNAME='addit' ACTION='./Basket.asp?action=Add'
METHOD='POST'>" Response.Write "<INPUT TYPE='TEXT' NAME='ITEM'
VALUE=><INPUT TYPE='SUBMIT' VALUE='ADD'></FORM>" Response.Write
"</BODY></HTML>"
'End the program so no further code will be executed Response.End end if '

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HBT 2306 Electronic Commerce

This If statement will check to see if add is in the querystring

and if we have previously saved session variables
if Request.QueryString("action") = "Add" then if Is
Object(Session("ShopCart")) then 'Check to see if we have any
previously saved session variables
set Basket = Session("ShopCart") 'Since we do, we set
that info to our Basket else 'Else if we dont have anything
else saved, Set Basket
= Create Object("Scripting.Dictionary") 'Create a new dictionary object end if dim Cnt Cnt
= Basket.Count
do
'if Basket.Exists(Cnt) then Cnt =
Cnt + 1
'end if
loop until Basket.Exists("X" & Cnt) = false
Basket.Add "X" & Cnt, Request.Form("ITEM") 'Add and item to our basket, we take the
total number
'of items and add one
set Session("ShopCart") = Basket
'Save our session so we can use it later tmpItems
= Basket.Items
'Set tmpItems to hold all of our items in the basket for i
= 0 to Basket.Count - 1 'Loop to show whats currently in our basket 'writes the value
of the current item(i) and gives the option
to delete it Response.Write i + 1 & ": " & tmpItems(i) & " - <a href='./Bask s in the querystring ' if
Request.QueryString("action")
= "Del" then if IsObject(Session("ShopCart")) then
'Check to see if we have any previously saved session variables set Basket = 'Else if we dont
have anythign else saved, Set Basket
= CreateObject("Scripting.Dictionary") 'Create a new dictionary
object end if tmpKeys = Basket.Keys on error
resume next 'Use this for error checking Basket.Remove tmpKeys(int(trim(Requ 'Remove the
item if err.number <> 0 then
'If error other than 0 Response.Write "Error " & err.number &

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HBT 2306 Electronic Commerce

"<BR>" & err.Description & "<P>" 'display error info Response.Write "QueryString
Item: " & trim(Request.QueryString("Item")) & "<P>" 'Display end if tmpItems =
Basket.Items
'Set tmpItems to hold all of our items in the basket set
Session("ShopCart") = Basket 'Save our session so we can use it later
tmpItems = Basket.Items
'Set tmpItems to hold all of our items in the basket for i = 0 to Basket.Cou 'Loop to show whats
currently in our basket
'writes the value of the current item(i) and gives the option to
delete it Response.Write i + 1 & ": "
& tmpItems(i) & " - <a href='./Basket.asp?action=Del&Item=" & i & "'>Delete< next

end if
%>

Example . Define a shopping cart stating its significance in terms of the

functions it does
Solution: This is an application that allows an online user to make online purchases
by first of all storing the items they want to purchase in an application (shopping cart)
Most shopping carts make the shopping experience easier for online users guiding
them using simple familiar components such as a shopping basket and a catalogue.
They are usually connected to payment systems for users to be able to
make payment as they check out

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HBT 2306 Electronic Commerce

Revision Questions

EXERCISE 17. Discuss five benefits that are associated with the Global Internet?

EXERCISE 18. List any three server side technologies used in creating
shopping carts.

EXERCISE 19. Describe the working of a client side cart?

EXERCISE 20. Enumerate on the role of CGI in shopping cart applications?

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HBT 2306 Electronic Commerce

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

LESSON 6
The e Commerce Architecture

Learning outcomes
Upon completing this topic, you should be able to:

1. list different commerce servers

2. Describe Web services

3. Illustrate the N tier Architecture

6.1. Introduction
E commerce applications similar to web based applications are based on the
client server architecture. The Traditional key components of this architecture are
the client tier and the server tier. This Architecture has however over the recent
past undergone considerable changes that have seen it change to the three tier
model which included an application logic tier and later an n tier model to in
cooperate all other modules that may be important to these applications such as
the database and its DBMS In e-commerce the client is defined as the requester
of a service and a server is the provider of the service In most cases the browser
is the client application that sends HTTP request for HTML files to the server. We
have however seen other types of clients emerge more or less similar to the
browser only that they are more specialized for electronic commerce. Products
such as the play store for the android devices (by google) are quickly gaining
popularity and provide users an easier way to shop for software products online.
The server is also a computer program that provides services to other computer
programs. We have various types of servers found on the internet some of these
include: web servers ( i.e. apache, commerce servers would also fall in this
category), file servers, database servers e.t.c Web Servers
A web server is the computer program that serves requested HTML pages or files.

• Uses client/server model and http(hypertext transfer protocol)

• Every computer on the internet that hosts a web site must have a
web server program.

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HBT 2306 Electronic Commerce

Most popular web servers are Apache for Open source and Microsoft’s
Internet Information Server (IIS)
Web servers are included as part of a larger package of internet and
intranet related programs for serving e-mail, downloading requests for
FTP files and building and publishing web pages.
Typically the e-commerce customer is the client and the business is the
server. Some client/ server models utilise a database server in which
RDBMS user queries can be answered directly by the server

6.1.1. Some benefits of the Client server Model

• The client/ server architecture reduces network traffic by providing a
query response to the user rather than transferring total files.

• Client can focus on presentation

• The client/ server model improves interraction with the system through a
graphical user interface (GUI) front end to the shared database.

• Thie cleint server model give the internet scalability such that we can add
many more clients without necessarily affecting the working of the intrenet.

• In client/ server architectures client and server architectural approach

spreads out the modules and reduces load that traditionally was
handled by only two components to now being handle by atleast three
tiers. This help in program design( modularity) and also reduces
overhed costs such as the costs for run-ning a fat client or a fat server.

Example. Fig showing the N tier architectural layout of a web based system

2
HBT 2306 Electronic Commerce

6.1.2. The Distributed Enterprise Architecture.

Based on ORB (Object Request Broker )technology which is a marraige

between distributed computing and object oriented technologies. OrB is
concerned with object communication, ensuaaring object transparency as
far as distibuted systems are concerned and providing object services by

• Using shared, reusable business models on a business enterprise-wide scale.

• Standardising business object models and distributed object

computing are combined to give greater flexibility to the business

• Enabling e commerce extend business processes at enterprise level

6.1.3. Web Services

Web services evolved from previous technologies that served the same
purpose such as RPC, ORPC (DCOM, CORBA and JAVA RMI). Web
Services were intended to solve three main problems:

1. Interoperability

2. Firewall traversal

3. Complexity

Web Services may be defined as network accessible interfaces to application

func-tionality that is built using standard internet technologies (Doug et al, 2001)

6.1.4. Components of Web Services

• XML – extensible Markup Language – A uniform data representation
and exchange mechanism.

• SOAP – Simple Object Access Protocol – A standard way for

packaging and sending messages.

• UDDI – Universal Description, Discovery and Integration specification –

A mechanism to register and locate WS based application.

• WSDL – Web Services Description Language – A standard meta

language to described the services offered.

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HBT 2306 Electronic Commerce

The service Oriented Architecture (SOA)

The service oriented Architecture is a business centric approach to supporting busi-
ness integration as linked repeatable tasks or services. Consider for a moment vis-
iting a shop in the estate you stay in. Your reason for the visit will be with an intention
to either purchase or make an inquiry. This will be done through the shop attendant.
For instance You would ask if the shop has a particular product you are looking for,
how much it costs and then make the business transaction of purchasing the
product. Consider another scenario where you visit a super market. The sce-nario in
this particular case is slightly different since instead of making the inquiry at the shop
attendant you may browse through the alleys looking for the product you want place
it in a shopping cart and then make the business transaction. If we critically consider
the two cases above we find that they are both very similar in the sense that the
processes being performed are more or less the same.

• These are Inquiry Process

• Order Process/Expression of Interest

• Payment Process/ Invoicing for payment

• Money taking process

• Concluding the business transaction

The SOA architecture is built on these notions that business processes are
the same across the world hence in terms of applications being developed
they may be reused time and again instead of developing them time and
again. SOA is known to provide agility, flexibility, reuse, data rationalization,
and integration and reduced costs in developing business solutions SOA
Applications are created from loosely coupled web services.

Example . Describe a web service

Solution: A web service is a network accessible interface to application
functional-ity, built using standard Internet technologies.(Dougetal,2001)

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HBT 2306 Electronic Commerce

Revision Questions

EXERCISE 21. Discuss five benefits that are associated with the Global
Internet EXERCISE 22. List the components of a web service.

EXERCISE 23. List some of the benefits of web services

EXERCISE 24. List any three commerce serves available commercially?

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HBT 2306 Electronic Commerce

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

6
HBT 2306 Electronic Commerce

LESSON 7
What is EDI?

Learning outcomes
Upon completing this topic, you should be able to:

1. Define EDI standard

7.1. Introduction
What is EDI? Electronic Data Interchange is the computer-to-computer
exchange of business data and documents between companies using
standard formats rec-ognized both nationally and internationally. EDI provides
a technical basis for commercial "conversations" between two entities, either
internal or external The information used in EDI is organized according to a
specified format set by both companies participating in the data exchange.
The general idea behind EDI was originated by a group of railroad companies
in the mid-1960’s, in the United States. Much of the early work on EDI was
driven by the industry sectors for the following purposes:

1. transportation

2. pharmaceuticals

3. groceries

4. automobiles

5. banking

Currently EDI has three distinct components which are:

1. The EDI Standard

2. The EDI documents

3. The transmission Media

Some major sets of EDI standards include:

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HBT 2306 Electronic Commerce

1. The UN-recommended UN/EDIFACT is the only international

standard and is predominant outside of North America.

2. The US standard ANSI ASC X12 (X12) is predominant in North America.

3. The TRADACOMS standard developed by the ANA (Article Numbering As-

sociation now known as GS1) is predominant in the UK retail industry.

4. The ODETTE standard used within the European automotive industry

These standards may prescribe a variety of document formats depending
on a num-ber of factors such as the industry or sectors involved.

270-A1 Eligibility, Coverage or Benefit Inquiry 271-A1 Eligibility, Coverage or Benefit

Information 2 Trading partners are free to use any method for the transmission of documents.
Furthermore, they can either interact directly, or through a third party.

ANSI x12
Accredited Standards Committee (ASC) X12 was created in 1979 by the
American National Standards Institute. It is a not-for-profit membership.
Members meet three times each year to develop, maintain and build on the
EDI standards. Its purpose: To standardize the EDI formatting and exchanges
between companies in order to make the transfers less time consuming, due
to differences in formatting and information presentation i.e.

Note: Linefeeds and "(Continued)" notes inserted for clarity ISA*00* *00* *01*123454321
*01(Continued) *012341234 *031016*2359*U*00401*987600111*0*P*: \GS*RA*123454321
*012341234*031016*2359*987600111*X*004010 \ST*820*987600111 \BPR*C*77.77*C*A
\REF*AA*EDI6 \N1*PR*WHIZCO OF AMERICA INC \N3*

55 MEGAPLEASANT ROAD*SUITE 999 \N4*SUPERVILLE*NY*10954

\N1*PE*YOWZACO \ENT*1 \RMR*AP*1111111111111111*PO*11.11
\RMR*AP*2222222222222222*PO*22.22 \RMR*AP*4444444444444444*PO*44.44
\DTM*055*031016 \SE*000000014*987600111 \GE*1*987600111
\IEA*1*987600111\ (http://www.x12.org)

2
HBT 2306 Electronic Commerce

EDIFACT
Electronic Data Interchange for Administration, Commerce, and Transport is
the international set of EDI standards Became a UN standard in 1987
Maintenance and further development is the responsibility of the United
Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT)
Includes syntax rules and im-plementation guidelines, message design
guidelines, data elements, code sets, and other definitions Used for business-
to-business (B2B) communication rather than business-to-consumer (B2C)
Allows multi-country and multi-industry exchange Europe adopted EDIFACT
early and has a large installed base indicating its contin-ued use i.e.

UNB+IATB:1+1APPC+LHPPC+940101:0950+1' UNH+1+PAORES:93:1:IA'
MSG+1:45' IFT+3+?*XYZCOMPANY AVAILABILITY?*' ERC+A7V:1:AMD'
IFT+3+NO MORE FLIGHTS' ODI' TVL+240493:1000::1220+FRA+JFK+DL+400+C'
PDI++C:3+Y::3+F::1' APD+74C:0:::6++++++1A' TVL+240493:1740
::2030+JFK+MIA+DL+081+C' PDI++C:4' APD+EM2:0:1630::6+++++++DA'
UNT+13+1' UNZ+1+1'

7.1.1. Characteristics of EDI

• Provides standardized rigid format

– American National Standards Institute (ANSI)EDI standards (X12)

– Stability and uniformity

• High level of security

• Point-to-point integration

• Exchanges large amounts of data with no intervention

• Requires dedicated EDI server

• Minimizes file size in the exchange

• Machine decipherable (difficult for a person to read)

• Focus on data and structure

3
HBT 2306 Electronic Commerce

• Many trading partners available

7.1.2. Serial communications

This was possible at one time through the use of a bisync modem. The partners
involved would each have at least a modem and a dedicated connection. With
this type of a setup it was possible to call other partners and transmit information.

7.1.3. Internet

As more organizations connected to the Internet, eventually most or all

EDI was pushed onto it. Initially, this was through ad-hoc conventions,
such as unencrypted FTP of ASCII text files to a certain folder on a certain
host, permitted only from certain IP addresses.

7.1.4. Peer-to-Peer
EDI standards are written such that trading partners could connect directly to each
other. For example, an automotive manufacturer might maintain a modem-pool that
all of its hundreds suppliers are required to dial into to perform EDI. However, if a
supplier does business with several manufacturers, it may need to acquire a different
modem (or VPN device, etc.) and different software for each one.

7.1.5. Value-added networks

To address the limitations in peer-to-peer adoption of EDI, VANs (value-

added networks) were established A value-added network (VAN) is a
private network provider (sometimes called a turnkey communications
line) that is hired by a com-pany to facilitate electronic data interchange
(EDI) or provide other network ser-vices.
Consider a bank leasing a telkom line (kenstream) to provide its customers
with 24 hour ATM services. Other banks such as family bank make use of
kenswitch Because of these and other services VANs provide, businesses
frequently use a VAN even when both trading partners are using Internet-
based protocols. Healthcare clearinghouses perform many of the same
functions as a VAN, but have additional legal restrictions.
VANs may be operated by various entities:

• telecommunication companies;

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HBT 2306 Electronic Commerce

• industry group consortia;

• a large company interacting with its suppliers/vendors.

7.1.6. Benefits of EDI

Lower operational costs (Saves time and money). Costs such as

transportation costs that are vital for an organizations daily operations and
the time it takes to transport these are usually saved.
Less Errors = More Accuracy. In EDI Systems there is reduced human element
in the handling of the data being exchanged. No data entry, so less human error
Increased Productivity. More efficient personnel and faster throughput. The tech-
nology presents a means for information to be exchanged in a timelier manner
bringing onboard efficiency in the organizations activities
Faster trading cycle. Due to streamlined processes there is improved
trading rela-tionships and more coherent supply chains

7.1.7. Disadvantages of EDI

• High Dependence on the participation of trading partners

• Costly for smaller companies

• Difficult to agree on standard to be used

Example . Example of UNEDIFACT Structure extracted from http://www.unece.org

An interchange consists of:
Solution:

An interchange consists of: Service String Advice UNA Conditional _____ Inter-
change Header UNB Mandatory | ___ Functional Group Header UNG Conditional
| | _ Message Header UNH Mandatory | | | User Data Segments As required | | |_
Message Trailer UNT Mandatory | |___ Functional Group Trailer UNE Conditional
|_____ Interchange Trailer UNZ Mandatory —————————————– |Es-
tablishment |CONNECTION| Termination | A CONNECTION contains one ——
————–|——————– or more interchanges. | The technical protocols | for
establishment | maintenance and | termination etc. are not +——————-+——
————-+ part of this standard. | | —————————————– |Interchange

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HBT 2306 Electronic Commerce

|INTERCHANGE |Interchange | An INTERCHANGE contains: ——————-|—

—————— - UNA, Service string | advice, if used | - UNB, Interchange header
| - Either only Functional | groups, if used, or | only Messages | .....——— —–+—
—————–+ - UNZ, Interchange . | | trailer ———————————
——– |UNA|UNB|’| Either |or only |UNZ|’| A FUNCTIONAL GROUP | | | |FUNC-
TION.GRPS |MESSAGES| | | contains: —————–|———-.———— - UNG,
Functional group | . header | . - Messages of the same +—————-+———-.—
——–+ type | +........+..+ | - UNE, Functional group | . . | trailer ——————
———————– |UNG |’|Message |MESSAGE |Message |UNE|’| A MESSAGE
contains: ——————–|——————– - UNH, Message header | - Data seg-
ments +——————-+——————-+ - UNT, Message trailer | | ————— —
———————– |UNH |’|Data |DATA |Data |UNT|’| A SEGMENT contains:
| | |segment |SEGMENT |segment | | | - A Segment TAG ——————-|———
———— - Simple data elements or | - Composite data elements +——————
+——————-+ or both as applicable | | —————————————- |TAG
|+|SIMPLE |+|COMPOSITE |’| A SEGMENT TAG contains: | | |DATA ELEMENT
| |DATA ELEMENT | | - A segment code and, —|————–|———-|—–|—- if ex-plicit
indication, | | | | repeating and nesting | | | | value(s). See 8.1 and 9. | | | | | | | | A
SIMPLE DATA ELEMENT ————– ——- ————- contains: |Code|:|Value|
|Value| |COMP|:|COMP| - A single data element ————– ——- |D/E | |D/E | value |
| | | A COMPOSITE DATA ELEMENT –|——|— contains: | | - Component data
elements ——- ——- | | | | A COMPONENT DATA ELEMENT |Value| |Value|
contains: ——- ——- - A single data element value –.– –|– . means alternative to

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HBT 2306 Electronic Commerce

Revision Questions

EXERCISE 25. List some of the disadvantages of EDI

EXERCISE 26. Explain the following EDI standards

• UN/EDIFACT

• X.12

• XML/EDI

EXERCISE 27. List the characteristics of EDI?

EXERCISE 28. Differentiate XML from EDI?

7
HBT 2306 Electronic Commerce

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

• AACRAO EDI in Education: general introduction to EDI technology http://www.aacrao.org/speed

• Quick ‘n’ Easy SPEEDE: includes the software, implementation guide,

and FAQ’s http://www.utexas.edu/student/giac/speede/spaacrao/

• Univ. of Texas-Austin EDI Server: includes registration how to, list of partic-
ipants, and FAQ’s http://www.utexas.edu/student/giac/speede/ediserv.html

• MIT Distribution Center: download the freeware version of PGP 6.5.8 http://web.mit.edu/network

8
HBT 2306 Electronic Commerce

LESSON 8
Electronic Payment System

Upon completing this topic, you should be able to:

1. list various electronic payment methods.

2. Identify characteristics of e cash

8.1. Introduction

The term electronic payment is commonly used to refer to financial

exchange of money between interested parties that takes place online. Or
simply put the transfer of money over the internet.
Traditionally the financial transaction of making payments involved the use of
method such as writing cheques, payments in cash and even the use of credit
cards. Of these the credit method was the most flexible and advanced using
modern network tech-nologies to allow this type of a payment. Electronic
payment methods popular in the market currently include the use of digital cash
and software wallets, the use of smart cards, credit and debit cards.

8.1.1. Requirements for an electronic payment system

Atomicity: A payment system should have atomicity as an attribute. This means
that at no point within a transaction should the system create or loose
money. All the money within the system should be well accounted for

• Money is not lost or created during a transfer

Good atomicity: A good payment system should allow for atomic types of trans-
actions either on the side of the goods or the money being exchanged.

• Money and good are exchanged atomically

Non-repudiation: This is also an important aspect of an electronic payment

sys-tem especially given the fact that transactions are usually done
remotely. None repudiation employs the use of digital signatures for
the participating parties

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HBT 2306 Electronic Commerce

• No party can deny its role in the transaction

Storage Options for electronic payment systems

• On-line

– Individual does not have possession personally of electronic cash

– Trusted third party, e.g. online bank, holds customers’ cash accounts I.e
in the mpesa system the money is stored in mpesa servers on behalf
of the customer. A draw back to this type of storage is that when the
third party is ofline the customer may be inconvenienced.

• Off-line

– Customer holds cash on smart card or software wallet

– Fraud and double spending is possible hence requires tamper-proof

encryption when using off-line storage system

8.1.2. Types of electronic payments

There are four common types of electronic payments supported by e

commerce systems namely:
1. E Cash/ Digital Cash
2. Smart Cards
3. Software wallets
4. Credit Cards

Digital Cash
Refers to some form of digital equivalent of money that is exchangeable in place of
physical money. It is usually in the form of bits that computers and other dig-ital
systems understand. This type of money is exchangeable electronically over a
network and is provided by a third party specifically for online trading to allow
customers buy and merchants to sell their products without physically coming into
contact with each other. The Primary advantage of e cash is with purchase of items
costing less than $10. Credit cards have been known to charge high transaction fee

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making small purchases unprofitable. E cash is also very useful in making

micro purchases of goods costing less than a dollar. Some of the popular
e cash providers include:

1. E cash technologies

2. CyberCash

3. Mondex

4. Magnex

How E cash Works

Below is an illustration of how an e cash system will work logically. In

reality the scenario is quite different because there are other players that
come on board such as payment gateways that authorize the payments
and ensure security of the transaction.

The E cash concept

1. Consumer buys e-cash from Bank/ e cash provider i.e. CyberCash

2. Bank/Provider sends e-cash bits to consumer (after charging that

amount plus fee)

3. Consumer sends e-cash to merchant

4. Merchant checks with Bank/Provider that e-cash is valid (check for

forgery or fraud)

5. Bank verifies that e-cash is valid, Parties complete transaction: e.g., merchant

present e-cash to issuing back for deposit once goods or services are delivered

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Note : Consumer now has (invalid) e-cash

8.1.3. Required Characteristics of E Cash

The following are some of the desirable characteristics electronic cash. It
is difficult to find any e cash that fulfills these properties fully. We have
many systems fulfilling some but not all.

• Universally accepted( should be accepted as legal tender in most if

not all countries)

• Transferable electronically over any available medium. i.e one can send
the money electronically to facilitate payment for a good or service.

• Non-forgeable, non-stealable : similar to other legal tender it should

have some security features that make it difficult to forge.

• Private (no one except parties know the amount)

• Work off-line (no on-line verification needed)

• E-cash must allow spending only once

• Must be anonymous, just like regular currency

– Safeguards must be in place to prevent counterfeiting
– Must be independent and freely transferable regardless of
nationality or storage mechanism

• Should be divisible hence convenient

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8.1.4. Merits and Demerits of E Cash

Advantages
• More efficient, eventually meaning lower prices

• Lower transaction costs

• Anybody can use it, unlike credit cards, and does not require special
autho-rization

Disadvantages

• Tax trail non-existent, like regular cash. For Governments and

concerned bodies the users of e cash may evade payment of tax.

• Money laundering: because of the nature of the money it is easy to

conceal money obtained through non legal means

• Susceptible to forgery. Just like ordinary currency some

unscrupulous people may replicate it

Past and Present E cash systems

• Checkfree (currently fisev coorperation): Allowed payment to be done

with elec-tronic cheques

• Clickshare: was designed for magazine and newspaper publishers. It is

a micro-payment system only. Purchases are billed to a user’s ISP,
who in turn bill the customer

• CyberCash: Combines features of cash and cheques offering credit card, mi-
cropayment, and check payment services Connects merchants directly with
credit card processors to provide authorizations for transactions in real time.
No delays in processing prevent insufficient e-cash to pay for the transaction

• CyberCoins Stored in CyberCash wallet, a software storage mechanism

located on customer’s computer May be used to make purchases
between .25c and $10

• DigiCash This is the trailblazer in e-cash systems It allowed customers

to pur-chase goods and services using anonymous electronic cash

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• Coin.Net Electronic tokens stored on a customer’s computer is used to

make purchases Works by installing special plug-in to a customer’s
web browser. Merchants on the other hand do not need special
software to accept eCoins. eCoin server prevents double-spending
and traces transactions, but consumer is anonymous to merchant

8.1.5. Electronic Wallets

This is a software product that stores credit card, electronic cash, owner
identifica-tion and address. It will store numbers for the credit card, bits for e cash
and bio data and contact information usually required for shipping purposes.
Electronic wallets makes shopping easier and more efficient giving one a
more pleasant online experience.

• Eliminates need to repeatedly enter identifying information into forms

to pur-chase

• Accepted in many different store fronts to speed up checkout

• Amazon.com one of the first online merchants to eliminate repeat

form-filling while making purchases

Microsoft Wallet
• Comes pre-installed in Internet Explorer 4.0, but not in Netscape

• All information is encrypted and password protected

• Microsoft Wallet Merchant directory shows merchants setup to

accept Mi-crosoft Wallet

Agile Wallet
• Developed by CyberCash

• Allows customers to enter credit card and identifying information

once, stored on a central server

• Information pops up in supported merchants’ payment pages,

allowing one-click payment

• Does not support smart cards or CyberCash, but company expects to soon

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eWallet
• Developed by Launchpad Technologies

• Free wallet software that stores credit card and personal information
on users’ computer, not on a central server; info is dragged into
payment form from eWallet

• Information is encrypted and password protected

• Works with Netscape and Internet Explorer

8.1.6. Smart Cards

There are different forms of smart cards that may be used for a variety of
reason. They come with the ability to store data in them using at least five
different tech-nologies namely

• Magnetic stripe

– 140 bytes, cost $0.20-0.75

– An example is the visa debit cards we get from banks

• Memory cards

– 1-4 KB memory, no processor, cost $1.00-2.50

– i.e the sd memory cards we use on phones or digital cameras

• Optical memory cards

– 4 megabytes read-only (CD-like), cost $7.00-12.00

– i.e the smart bus cards which were available in Nairobi used to board the buses

• Microprocessor cards

– Embedded microprocessor

*(OLD) 8-bit processor, 16 KB ROM, 512 bytes RAM

*Equivalent power to IBM XT PC, cost $7.00-15.00

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*32-bit processors now available

• Plastic card containing an embedded microchip

Some of these technologies have been around for over 10 years. Most have not
been successful in U.S., but are popular in Europe, Australia, and Japan. Part of the
reason they have been unsuccessful in U.S. is because there are few card readers
available Smart cards gradually reappearing in U.S.; success depends on:

• Critical mass of smart cards that support applications

• Compatibility between smart cards, card-reader devices, and applications

These cards are however popular in the local market especially as storage
mech-anisms for loyalty points, they are also common in fuel stations as
fuel cards for making purchases of fuel product. Some insurance
companies use them to provide cover for their clients

Smarts card areas of application

• Ticketless travel
– Seoul bus system: 4M cards, 1B transactions since 1996
– The Kenyan Smart Bus

• Authentication, ID

• Medical records

• Ecash

• Store loyalty programs

• Personal profiles

• Government
– Licenses

• Mall parking

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8.1.7. Merits and demerits of Smart cards

Advantages:
1. Atomic, debt-free transactions

2. Feasible for very small transactions (information commerce)

3. (Potentially) anonymous

4. Security of physical storage

5. (Potentially) currency-neutral

Disadvantages:
1. Low maximum transaction limit (not suitable for B2B or most B2C) High

2. Infrastructure costs (not suitable for C2C) ie investing in card readers

3. Single physical point of failure (the card)

4. Not (yet) widely used

8.1.8. Credit Cards

It is a deferred method of payment where settlement is made later by a
trusted financial institution owning the card

• Used for the majority of Internet purchases

• Has a preset spending limit determined by the card issuer

• Currently most convenient method across the world

• It is also the most expensive e-payment mechanism i.e. MasterCard

charges will be as follows: $0.29 + 2% of transaction value

Disadvantages
• Does not work for small amount (too expensive)

• Does not work for large amount (too expensive)

• Charge card may lead to unhealthy spending habits

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• No spending limit

• Entire amount charged due at end of billing period

Example . Outline two security risks associated with a credit card

Solution: Stolen cards,Reneging by the customer authorizes a payment and later
denies it. The solution is to invoke the use of digital signatures. Theft of card
details stored on merchant’s computer The solution for this is to isolate computer
storing information so it cannot be accessed directly from the Web.

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Revision Questions

EXERCISE 29. Describe the following modes of e-payment

Debit card
Smart card
Electronic wallet

EXERCISE 30. The following are some of the ills associated with the
internet. Discuss these
i. Theft of Personal Information
ii. Spamming
iii. Virus Threat .

EXERCISE 31. Describe an electronic wallet?

EXERCISE 32. list any four commercial electronic wallets available in the
mar-ket?

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References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

LESSON 9
Security of Electronic Payments

Learning outcomes
Upon completing this topic, you should be able to:

1. list security methods applicable of

2. Understand Payment Processing

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9.1. Introduction
9.1.1. Payment Acceptance and Processing
There is a lot that goes on before a financial transaction is concluded online. There is
usually a complex process of checking with financial institution before a payment
goes through. To be able to transact money online one requires a payment gateway.
This is a body or firm that authorizes payments to be done online. It facilitates se-
cure transfer of funds from one financial institution to the next. Some international
banks offer this as additional service hence one does not need to approach a third
party. PayPal is a good example of an organization the offers a payment gateway. A
simple payment card processing would go through the following:
• Merchants are required by most payment processing agencies to set up
merchant accounts to accept payment cards
• Payment card transaction requires:
– Merchant to authenticate payment card
– Merchant must check with card issuer to ensure funds are available and
to put hold on funds needed to make current charge
– Settlement occurs in a few days when funds travel through banking
system into merchant’s account
The law prohibits charging payment card until merchandise is shipped to
preferred destination.

9.1.2. The Open loop and closed loop system

There are two possible implementations for processing electronic

payments avail-able as mentioned earlier in this lesson. We can either
have a third party for the payment gateway or alternatively the bank could
offer such a service to its cus-tomers. Hence the two possible systems
are: The closed loop system and the open loop system

Closed loop systems

• Banks and other financial institutions serve as brokers between card

users and merchants – no other institution is involved

• American Express and Discover are examples

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Open loop systems

• Transaction is processed by third party

• Visa and MasterCard are examples

A merchant account
Most payment gateways have a facility on their website that assists merchants to
create an account easily without necessarily visiting them. As a merchant
however you will require to have bank account with a bank that will support you
receiving money through a payment gateway The Merchant bank is also called
acquiring bank. This bank does business with merchants that want to accept
payment cards. Merchant will receive an account where they deposit card sales
totals. Value of sales slips is credited to merchant’s account

Processing cards online

This is an automatic process that may be done by a software packaged with
elec-tronic commerce software .To handle payment card processing the
application has the ability to contact the third party involved (card issuer) to verify
payment. The software may also pick, pack, and ship products to the customer.
This allows mer-chant to focus on web presence and supply availability.

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9.2. SOURCE: PAYMENT PROCESSING INC.

9.2.1. Payment processing services
Internetsecure
It is a type of payment gateway that provides secure credit card payment services
Supports payments with Visa and MasterCard Provides risk management and fraud
detection, and ensures all proper security for credit card transactions is maintained.
Ensures all transactions are properly credited to merchant’s account

Tellan
Provides PCAuthorize for smaller commerce sites and WebAuthorize for
larger enterprise-class merchant sites Both systems capture credit card
information from the merchant’s form and connect directly to the bank
network using dial-up or pri-vate, leased lines Bank network receives credit
information, performs credit autho-rization, and deposits the money in the
merchant’s bank account The merchant’s web site receives confirmation or
rejection of the transaction, which is communi-cated to the customer

IC Verify
Provides electronic transaction processing for merchants for all major credit
and debit cards Also allows check guarantees and verification transactions

A CyberCash company
Authorize.Net Online, real time service that links merchants with issuing banks by
simply inserting a small block of HTML code into their transaction page

9.2.2. Secure Electronic transaction (SET)

It was jointly designed by MasterCard and Visa with backing of Microsoft,

Netscape, IBM, GTE, SAIC, and others It was designed to provide security
for card payments as they travel on the Internet Contrasted with Secure
Socket Layers (SSL) protocol, SET validates consumers and merchants in
addition to providing secure transmis-sion.

•.1. SET specification

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• Uses public key cryptography and digital certificates for validating

both con-sumers and merchants

• Provides privacy, data integrity, user and merchant authentication,

and con-sumer nonrepudiation

SET-protected payments work like this:

• Consumer makes purchase by sending encrypted financial

information along with digital certificate

• Merchant’s website transfers the information to a payment card

processing center while a Certification Authority certifies digital
certificate belongs to sender

• Payment card-processing center routes transaction to credit card

issuer for approval

• Merchant receives approval and credit card is charged

• Merchant ships merchandise and adds transaction amount for

deposit into merchant’s account

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The SET protocol coordinates the activities of the customer, Merchant,

merchant’s bank, and card issuer. [Source: Stein]
SET uses a hierarchy of trust all parties hold certificates signed directly or
indirectly by a certifying authority. [Source: Stein]

Secure Socket Layer (SSL)

SSL (Secure Socket Layer) was developed originally by Netscape in 1995 to pro-vide
secure and authenticated connections between browsers and servers. SSL pro-vides
transport layer security. Ref : TCP/IP layers -that the transport layer is where the
TCP and UDP protocols reside in the TCP/IP stack. [Since SSL sits immedi-ately
above TCP in the protocol stack, a more precise way of stating this would be that
SSL provides Session Layer security in the OSI model of the internet protocols.

IMPLEMENTATION OF SSL
Open SSL is an implementation of the SSL and the TLS (TRANSPORT LAYER
SECURITY) protocols. [OpenSSL is used by the HTTPS and SMTPS protocols.
When your browser connects with a web server to which you have to upload your
credit card or banking information, your browser is most likely to be using the HTTPS
protocol in its interaction with the server. SMTPS is for the secure transfer of email
between hosts in the internet. Another closely related protocol that uses the libssl
library component of the OpenSSL implementation is OpenSSH which is an
implementation of the SSH protocol “Secure Shell,” which is used for logging into
remote machines and for executing commands at those machines.]

Example . Describe the following e-payment security techniques

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Public key encryption

Digital signature
Digital certificates
Solution: i. Public key encryption Public key encryption is a cryptographic tech-nique
that is implemented by use of a public key that is distributed to anyone who wants it
and a private key that is kept secret. The public key is used to encrypt the message
while the owner of the message decrypts it using the private key. ii. Digital signature
This is a process that involves the use of public and secret keys to prove the senders
authenticity. Digital signatures enhance authentication which is the process by which
the receiver of a digital message can be confident of the sender’s identity. iii. Digital
certificates This is a message that contains a number of fields, the most important of
which are a user Identity and the associated public key. Certificates are issued by
trusted third parties called certifying authorities to
guarantee the user’s identity claim.

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Revision Questions

EXERCISE 33. Explain the following with reference to e payment systems?

Non Repudiation
Electronic funds transfer
Electronic payment fulfillment
Electronic tracking of transactions

EXERCISE 34. Briefly explain four characteristics of a successful e-

payment method.
EXERCISE 35. Explain each of the following Internet security issues that need
to be addressed in e-commerce systems:
Auditing
Authentification
Integrity
Nonrepudiation

EXERCISE 36. Differentiate he between open loop and closed loop precess
of payment systems

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References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

LESSON 10
Legal and Ethical Issues

Learning outcomes
Upon completing this topic, you should be able to:
1. Data protection legislation.

2. Personal data.

3. Use of customer information.

10.1. Introduction
We live in an information world and because of increase in information and the
value of information, there is need to protect it. Different countries have come up
with independent legislations to protect and govern the use and dissemination of
information. The data Protection Act is one such piece of legislation(DPA).

10.1.1. The Data Protection Act

This is a UK legislation agreed upon that governs the handling if information or data
about individual. The act makes any organization liable for handling information
about other parties. It touches on obtaining, processing, holding and disclosure
http://www.legislation.gov.uk Key areas of the Data Protection legislation include:-

• Privacy – is concerned with what information is held about an individual?

• Accuracy –besides what is held we need to ask ourselves is it correct?

• Property – who owns the information, and how can ownership be transferred?

• Accessibility – who is allowed access to the data, and under what

conditions? (Mason 1986)

Also to consider:-

• Transparency – who is collecting what?

• Security – how is the stored information protected?

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• Liability – who is responsible if the data is abused? (Fletcher

2001) If you hold data on individuals, you need to ensure it is:-

• Fairly and lawfully processed

• Processed for limited purposes

• Adequate, relevant and not excessive

• Accurate

• Not kept longer than necessary

• Processed in accordance with the data subject’s rights

• Secure

• Not transferred to countries without adequate protection

The EU released the Electronic Communications Directive (2002) covering e-marketing

• Marketers should comply with the relevant national data protection laws

• They should take all necessary steps to ensure that marketing

communica-tions are

• Suitable for those targeted

• Not sent unsolicited, if consent is required

• Not sent if the recipient has expressed a wish not to receive them

Opt In and Opt Out

These terms are used when referring to marketing information where the targeted
clients specify whether they would like to receive marketing information or not.

Opt-in

• This is when the user has subscribed to a free email service, or

checked a box on a form confirming that they wish to receive
marketing communications from the company

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Opt-out
• Tends to be centrally administered e.g. the mailing preference service,
and telephone preference service. In the UK, it is illegal to phone or mail
someone who has purposely expressed their wish to be left alone

Customer data can be broken down into the following three categories:-
Contact information, profile information and behavioural information
• Contact information – the most basic details

• Profile information – like age, sex, role for business customers

• Behavioural information
- On a single site
-Across multiple sites

Cookies

Cookies are small text files containing information such as user name, start
page, user preferences, possibly contents of a shopping cart usually written
using JavaScript. Cookies are known to be insecure since they can be
used by other programs to analyse users. Cookies have also been used to
support junk e mail and pop up advertising which some people find
annoying. In some countries cookies are considered illegal.

Example . Briefly explain the following:

Authentication

i. Authentication The process of the process by which one entity verifies that
an-other entity is who they claim to be by checking credentials of some sort
ii. Authorization The process that ensures that a person has the right to
access certain resources
iii. Integrity As applied to data, the ability to protect data from being altered or

destroyed in an unauthorized or accidental manner 3

HBT 2306 Electronic Commerce

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a
Revision Questions

EXERCISE 37. Electronic publishing involves issues like copyright, trademarks

and patents. Explain the terms in bold.
Copyright Trademarks
Patent

EXERCISE 38. The following are some of the ills associated with the
internet. Discuss these
i. Theft of Personal Information
ii. Spamming
iii. Virus Threat .

EXERCISE 39. Differentiate between Opt in and Opt Out

EXERCISE 40. Define a cookie explaining what it is used for on the WWW

References and Additional Reading Materials

• George Beekman,(2008) Tomorrow’s Technology and You, Complete,
9/E,Oregon State University Ben Beekman, ISBN-10: 0135045045

• ISBN-13: 9780135045046 ©2010

• Prentice Hall

• Paper, 672 pp

• Chuck Musciano and Bill Kennedy(2000)HTML & XHTML: The

Definitive Guide, 4th Edition, Oreilly, ISBN 0-596-00026-X

• Craig Grannell(2007 The Essential Guide to CSS and HTML Web

Design, Springer, ISBN-13 (pbk): 978-1-59059-907-5

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HBT 2306 Electronic Commerce

Solutions to Exercises
Exercise 1.
‘E-commerce covers outward-facing processes that touch customers, suppliers and
external partners, including sales, marketing, order taking, delivery, customer ser-
vice, purchasing of raw materials and supplies for production and procurement of
indirect operating-expense items, such as office supplies. It involves new business
models and the potential to gain new revenue or lose some existing revenue to new
competitors.’E-business-“..............includes e-commerce but also covers inter-
nal processes such as production, inventory management, product
development, risk management, finance, knowledge management and
human resources. E-business strategy is more complex, more focused on
internal processes, and aimed at cost savings and improvements in
efficiency, productivity and cost savings.’Bartels 00] Exercise 1
Exercise 5.
The value system describes the various tasks or functions of the
organization with reference to utilization of private or extended private
networks and how these net-works fit in to meet organizational bjectives
Exercise 5
Exercise 10.
B2C:Electronic stores www.amazon.com www.dell.com Electronic malls http://www.evvmall.com
-B2B: Auctions such as e bay Exercise 10

Exercise 16.
HTML, XML, CSS, XHTML, SOAP, SOA, PHP/ASP, SQL Exercise 16

Exercise 18.

ASP/ PHP
SQL
VB SCRIPT
Exercise 18
Exercise 22.

XML – extensible Markup Language – A uniform data representation and

exchange mechanism.

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HBT 2306 Electronic Commerce

SOAP – Simple Object Access Protocol – A standard way for packaging

and send-ing messages.
UDDI – Universal Description, Discovery and Integration specification – A
mech-anism to register and locate WS based application.
WSDL – Web Services Description Language – A standard meta
language to de-scribed the services offered.
Exercise 22

Exercise 23.

Interoperability
Firewall traversal
Complexity Exercise 23

Exercise 25.

High Dependence on the participation of trading partners

Costly for smaller companies
Difficult to agree on standard to be used
Exercise 25

Exercise 27.

Provides standardized rigid format

American National Standards Institute (ANSI)EDI standards (X12)
Stability and uniformity
High level of security
Point-to-point integration
Exchanges large amounts of data with no intervention
Requires dedicated EDI server
Minimizes file size in the exchange
Exercise 27

Exercise 30.

i. Theft of Personal Information If you use the Internet for online banking, social
networking or other services, you may risk a theft to your personal information

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HBT 2306 Electronic Commerce

such as name, address, credit card number etc. Unscrupulous people can
access this information through unsecured connections or by planting
software and then use your personal details for their benefit. Needless to
say, this may land you in serious trouble.
ii. Spamming Spamming refers to sending unwanted e-mails in bulk, which provide
no purpose and needlessly obstruct the entire system. Such illegal activities can be
very frustrating for you as it makes your Internet slower and less reliable.
iii. Virus Threat Internet users are often plagued by virus attacks on their systems.
Exercise 30

Exercise 34.
security should have security features, it should not be easy to alter and should
not allow double. Anonymity not attached to any particular person, ie negotiable.
Divisibility several denominations. Ease of use storable and retrievable.
Exercise 34

Exercise 37.

Copyright This refers to an exclusive grant from the government that allows
the owner to reproduce a work, in whole or in part, and to distribute, perform,
or display it to the public in any form or manner, including the Internet.
Trademarks A trademark is a symbol used by businesses to identify their
goods and services; government registration of the trademark confers
exclusive legal right to its use.
Patent This is a document that grants the holder exclusive rights on an invention for
a fixed number of years. Exercise 37

Exercise 38.

i. Theft of Personal Information If you use the Internet for online banking,
social networking or other services, you may risk a theft to your personal
information such as name, address, credit card number etc. Unscrupulous
people can access this information through unsecured connections or by
planting software and then use your personal details for their benefit.
Needless to say, this may land you in serious trouble.
ii. Spamming Spamming refers to sending unwanted e-mails in bulk, which provide

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HBT 2306 Electronic Commerce

no purpose and needlessly obstruct the entire system. Such illegal activities can
be very frustrating for you as it makes your Internet slower and less reliable.
iii. Virus Threat Internet users are often plagued by virus attacks on their systems.
Virus programs are Exercise 38