Subject : E-Commerce

Class: I sem MMS

Subject In-charge: Mrs. Rashmi Ghate Pode

 UNIT I: E-COMMERCE OVERVIEW

Q. 1) What is E-Commerce?
 E-Commerce or Electronics Commerce is a concept used in modern business, to reduce time,
money and to provide quick response.
 It can be broadly defined as the process of buying or selling of goods or services using an electronic
medium such as the Internet.
 E-Commerce or Electronics Commerce is a methodology of modern business, which addresses the
need of business organizations, vendors and customers using the following 4 components −
i. Electronic Data Interchange (EDI):
This component is used for doing data exchange in between the two communicating parties. 2 types
of exchanges are involved during e-commerce. 1st is the exchange of information through EDI i.e.
Electronic Data Interchange and 2nd is exchange of fund through EFT i.e. Electronic Fund Transfer.
Whenever we decide to purchase anything through electronic medium, we need to share
information like shipping address, name and other required details. In return of that purchasing, we
have to pay money through electronic channels like credit card, debit card, etc.
ii. Electronic Publishing:
Without marketing no-one will get aware about our products. So for attracting customer marketing
or advertising of our products is important. In case of e-commerce this advertising is done through
electronic channels like social media sites (facebook, twitter, etc), blogs, e-mails, text messages,
radios, etc.
iii. Electronic Messaging:
While performing exchange in between 2 communicating parties, we require some medium of
communication in between them. Through that communicating medium, messages will get shared.
The mediums which are used for messaging are e-mails, fax, text messages, etc.
For example: Invoice or bill of our purchasing is send to us on our e-mail address, and track record
of delivery of that purchasing is conveyed through text messages.
iv. Corporate Digital Library:
Library is place where every information is made available for the purchasers. That library is
termed as digital library when information is available in digital form i.e. in form of soft copy.
Electronic mediums like mobile app (Portal) or websites provide such details information of all
category products to the customers. That information is collectively (collaboratively) available on
the websites or applications.
 Q. 2) What are the features of E-commerce?
E-Commerce provides the following features −
 Non-Cash Payment − E-Commerce enables the use of credit cards, debit cards, smart cards, electronic
fund transfer via bank's website, and other modes of electronics payment.
 24x7 Service availability − E-commerce automates the business and the way they provide services to their
customers. These services are available anytime, anywhere.
 Advertising / Marketing − E-commerce increases the reach of advertising of products and services of
businesses. We can easily grab the national as well as international market.
 Improved Sales − Using e-commerce, orders for the products can be generated anytime, anywhere without
any human intervention. It increases sales volumes. It also provides better options for comparison and
quick delivery, also helps to increase the sales volume.
 Support − E-commerce provides various ways to provide pre-sales and post-sales assistance to provide
better services to customers. It is a kind of support to the purchasers.
 Inventory Management − E-commerce automates inventory management. Reports get generated instantly
when required. Inventory means maintaining records, so with the help of e-commerce as all records are
available at one place in uniform pattern, inventory management becomes very efficient and easy to
maintain. It also helps to check quantity of available products, quantity of required products and many
more such required information.
 Communication improvement − E-commerce provides ways for faster, efficient and reliable
communication with customers and partners.
Q. 3) Differentiate between Traditional commerce & E-Commerce

Sr. No. Traditional Commerce E-Commerce

Traditional commerce focuses on the

exchange of products and services E-commerce trading activities are online via the
1: Exchange
through personal interactions and is internet so they can be performed automatically.
therefore manual.

Traditional commerce is limited to time E-commerce service is available 24/7, it can be

2: Timing
of business hours mostly during the day. done anytime day and night.

Traditional commerce allows a buyer to

3: Physical With e-commerce, products and services are not
physically inspect goods and test out
Interaction examined physically.
services before making a purchase.

4:
Traditional commerce is limited to a E-commerce is global and has no physical
Geographical
particular geographical location. limitation.
Location

With traditional commerce, there‘s no

E-commerce has a unique uniform platform for
5: Platform uniform platform for information
exchanging information
exchange.

Modes of payment in traditional

With e-commerce, there‘s electronic funds
6: Payment commerce include cash, cheques, and
transfer, credit card, debit card and more.
cards.

Good and delivery of services is instant In e-commerce delivery of goods & service takes
7: Delivery
with traditional commerce. some time.

It is difficult to establish and maintain

However, with e-commerce, uniform strategies
8: Standards standard practices in traditional
can be quickly established and maintained.
commerce.

Traditional commerce is not cheaper then E-commerce is cheaper than maintaining a

9: Cost
e-commerce. physical store in an equal popular location.

10: Quality & Testing are the main

Simultaneous transactions and offers are the main
Competitive competitive edges of traditional
competitive edges of e-commerce.
edge commerce.
 Q. 4) What are the advantages of E-Commerce?
E-Commerce advantages can be broadly classified in three major categories −
 Advantages to Organizations
 Advantages to Consumers
 Advantages to Society

Advantages to Organizations
 Using e-commerce, organizations can expand their market to national and international markets with
minimum capital investment. An organization can easily locate more customers, best suppliers, and
suitable business partners across the globe.
 E-commerce helps organizations to reduce the cost to create process, distribute, retrieve and manage the
paper based information by digitizing the information.
 E-commerce improves the brand image of the company.
 E-commerce helps organization to provide better customer services.
 E-commerce helps to simplify the business processes and makes them faster and efficient.
 E-commerce reduces the paper work.
 E-commerce increases the productivity of organizations. It supports "pull" type supply management. In
"pull" type supply management, a business process starts when a request comes from a customer and it
uses just-in-time manufacturing way.

Advantages to Customers
 It provides 24x7 support. Customers can enquire about a product or service and place orders anytime,
anywhere from any location.
 E-commerce application provides users with more options and quicker delivery of products.
 E-commerce application provides users with more options to compare and select the cheaper and better
options.
 A customer can put review comments about a product and can see what others are buying, or see the
review comments of other customers before making a final purchase.
 E-commerce provides options of virtual auctions.
 It provides readily available information. A customer can see the relevant detailed information within
seconds, rather than waiting for days or weeks.
 E-Commerce increases the competition among organizations and as a result, organizations provides
substantial discounts to customers.

Advantages to Society
 Customers need not travel to shop a product, thus less traffic on road and low air pollution.
 E-commerce reduces paper work, so it also contributes to the green revolution.
 E-commerce helps in reducing the cost of products, so less affluent people can also afford the products.
 E-commerce has enabled rural areas to access services and products, which are otherwise not available to
them.
 E-commerce helps the government to deliver public services such as healthcare, education, social services
at a reduced cost and in an improved manner.
 Q. 5) What are the dis-advantages of E-commerce?
The disadvantages of e-commerce can be broadly classified into two major categories −
 Technical disadvantages
 Non-Technical disadvantages

Technical Disadvantages
 There can be lack of system security, reliability or standards owing to poor implementation of e-commerce.
 The software development industry is still evolving and keeps changing rapidly.
 In many countries, network bandwidth might cause an issue.
 Special types of web servers or other software might be required by the vendor, setting the e-commerce
environment apart from network servers.
 Sometimes, it becomes difficult to integrate an e-commerce software or website with existing databases.

Non-Technical Disadvantages
 Initial cost − The cost of creating/building an e-commerce application in-house may be very high. There
could be delays in launching an e-Commerce application due to mistakes, and lack of experience.
 User resistance − Users may not trust the site being an unknown faceless seller. Such mistrust makes it
difficult to convince traditional users to switch from physical stores to online/virtual stores.
 Security/ Privacy − It is difficult to ensure the security or privacy on online transactions.
 Lack of touch or feel of products during online shopping is a drawback.
 E-commerce applications are still evolving and changing rapidly.
 Internet access is still not cheaper and is inconvenient to use for many potential customers, for example,
those living in remote villages.

Q. 6) What are the Applications of E-commerce?

E-commerce is used in various business areas such as retail, wholesale and manufacturing. The most
common E-commerce applications are as follows:
1. Online marketing
2. Retail and wholesale
3. Finance
4. Manufacturing
5. Online Auction
6. E-Banking
7. Online publishing
8. Online booking (ticket, seat.etc)
Online marketing

Data collection about customer behavior, preferences, needs and buying patterns is possible through Web
and E-commerce. This helps marketing activities such as price fixation, negotiation, product feature
enhancement and relationship with the customer.

Retail and wholesale:

E-commerce has a number of applications in retail and wholesale. E-retailing or on-line retailing is the
selling of goods from Business-to-Consumer through electronic stores that are designed using the
electronic catalog and shopping cart model. Cybermall is a single Website that offers different products and
services at one Internet location. It attracts the customer and the seller into one virtual space through a Web
browser.

Finance:
Financial companies are using E-commerce to a large extent. Customers can check the balances of their
savings and loan accounts. Another application of E-commerce is on-line stock trading. Many Websites
provide access to news, charts, information about company profile and analyst rating on the stocks. By
analyzing the stock ratings we can take better decision about the financial investments.

Manufacturing:
With the help of e-commerce we have direct access to the customer requirements, which helps to easily
manage inventory record. Efficient inventory management speeds up the flow of raw material and finished
goods among the members of the business community which helps in manufacturing process. Due to faster
manufacturing, there is no need to maintain large amount of stock in inventory, which again helps to
maintain quality of product and indirectly boosts our sales.

Auctions:
Customer-to-Customer E-commerce is direct selling of goods and services among customers. It also
includes electronic auctions that involve bidding. Bidding is a special type of auction that allows
prospective buyers to bid for an item. For example, airline companies give the customer an opportunity to
quote the price for a seat on a specific route on the specified date and time.
E-Banking:
Online banking or E- banking is an electronic payment system that enables customers of a financial
institution to conduct financial transactions on a website operated by the institution, Online banking is also
referred as internet banking, e-banking, virtual banking and by other terms.

Online publishing:
Electronic publishing (also referred to as e-publishing or digital publishing) includes the digital publication
of e-books, digital magazines, and the development of digital libraries and catalogs.
For example we can write our own article on blogger.

Online booking (ticket, seat.etc)

An Internet booking engine (IBE) is an application which helps the travel and tourism industry support
reservation through the Internet. It helps consumers to book flights, hotels, holiday packages, insurance and
other services online. This is a much needed application for the aviation industry as it has become one of
the fastest growing sales channels.

Q. 7) Describe the infrastructure of e-commerce.

Here are seven important infrastructure decisions that ecommerce businesses face.
1. Marketing: Of all the infrastructure elements, marketing may be the most important. To succeed, your
website must be found. Once visitors are on your site, you need to keep them there and compel them to buy
from you. That‘s the job of your marketing team. Whether it‘s website design, social media, search
marketing, merchandising, email, or other forms of advertising, it‘s all about marketing. To effectively
manage marketing activities in-house is very challenging. Most small ecommerce businesses outsource
some element of marketing.

2. Facilities: A key competitive advantage that ecommerce businesses have over brick-and mortar stores is
the investment in their physical offices and warehouses. In many cases, you can host your business out of a
home office and your basement or garage. If you drop ship or outsource fulfillment, you may be able to do
that for a long period of time. Even when you grow to have many employees, you can set up your offices in
class B or C space, as you have no need for a fancy store in the right location. A word of advice is to keep
your options flexible. Try to find an office park that has a wide variety of spaces in different sizes. You
may be able to start in a smaller space and move up to a larger one without penalty, as your needs change.

3. Customer Service: There are many choices today for delivering high-quality customer service. You can
manage those activities in-house or outsource to a third party. Basic customer service for sales and post-
sales activities can be handled using email, and by providing an 800 number for more extensive phone
support. A customer-management system will make those activities easier, but for smaller companies it is
not a requirement. Live chat will impact your operations as someone needs to be available during specified
hours of operation. Be sure to gauge the impact of that on your organization, if you decide to handle those
activities in house.

4. Information Technology: Choosing the right ecommerce platform is one of the most important
decisions you will make in your business. Do you want to build and host your own system, outsource the
development and then manage the system going forward, or use a hosted, software-as-a-service platform
that is more turnkey and externally managed? If you build and host your own system, you may need more
cash upfront and skilled administrators and developers on your staff. By using a SaaS platform, you will
not need to host or manage the system in-house, but you may still need web developers on staff. Choosing
to outsource the development and hosting will reduce your staffing costs, but you will incur higher costs
for any future enhancements or changes to your websites. There are pros and cons to any approach. Just be
sure to think through the impacts on both your staffing and your cash flow and bottom line before you
move forward.

5. Fulfillment: Another key decision is whether you will manage your own inventory or outsource those
activities to a fulfillment house or through drop shipping arrangements with your suppliers. Managing your
own inventory will provide you with a high level of control, but you will tie up your cash in inventory,
warehouse space, and your own fulfillment staff. In some industries — like the jewelry supply industry that
my previous business was in — managing your own inventory was the most logical choice. We had no
alternative for drop shipping, and most items were purchased in bulk and were very small. We did not trust
preparation and fulfillment to an outside service. Select the best fulfillment option to meet your needs. Be
sure to understand the costs involved and analyze the other options before moving forward.

6. Finance and Administration: As with other business operations, you will need to decide if you want to
manage your finance and administration activities in-house, outsource, or a hybrid of the two. If your
ecommerce platform is tightly integrated to your accounting system, you may have very little need for an
in-house bookkeeper. If you use separate systems for your website, order management and accounting, you
may need more help for data entry and making sure that the information is properly managed. Many
ecommerce companies use outside services for vendor payments, payroll, and other basic accounting
activities. They decide to focus on the sales, marketing, and customer service. This allows them to maintain
a focus on growing their businesses, instead of paying an internal accountant — or doing that work
yourself as the business owner. On the administration side, you need a leadership team and provide
direction to them. Good communication is important, whether you have 3 or 100 employees. Whether you
choose to be more authoritative or democratic in your management style is up to you. But choose a style
and stay consistent. Be sure that everyone understands their roles, as well as the overall business strategies.
You may need to adjust your approach as your business evolves.

7. Human Resources: Many small-business owners avoid the human resources function. Recruiting,
setting up compensation, maintaining compliance and other HR activities are specialized and time
consuming. You may choose to bring the resources in-house to manage those activities, but also evaluate
outsourcing them. There are many individuals and agencies well equipped to take on your HR activities.

Q. 8) What are the different channels of E-commerce?

OR
Explain the various categories of e-commerce.
As shown in above figure, trade cycle of e-commerce consist of 7 steps in which payment can be done
either before delivery of product or after delivery of product. These 7 steps of trade cycle are categorized
into 3 channels:
 Electronic Market
 EDI
 Internet Commerce

1. Electronic Market:
Electronic market provides us the facility of searching for a particular product on various websites. With
the help of this searching we can compare prices of same product on several sites. Due to this the search
step of trade cycle will come under the electronic market category.
Ex.: Online Airline booking system

2. EDI:
In this channel customers and websites will interchange (exchange) some information with each other. That
information can either be the details of product which we want or the count of points in our wallet for
negotiation or the details like shipping address and details of buyer. Due to this negotiate and order steps of
trade cycle of e-commerce will come under the EDI channel.
Ex.: Exchange of information for order placement in between car assembler and supplier.

3. Internet commerce:
This channel deals with the actual exchange of money and product in between the buyer and seller. In some
cases payment can be done before delivery of product whereas in some cases payment can be done after the
delivery of product. Due to this invoice, delivery, payment and after sell service steps of trade cycle will
come under the internet commerce channel.
Ex.: Online shopping where we can pay after delivery of product or else we can pay before delivery of
product.

Q.9) Explain SCM as an application of e-commerce.

Supply Chain Management can be defined as the management of flow of products and services, which
begins from the origin of products and ends at the product‘s consumption. It also comprises movement and
storage of raw materials that are involved in work in progress, inventory and fully furnished goods.
The main objective of supply chain management is to monitor and relate production, distribution, and
shipment of products and services. This can be done by companies with a very good and tight hold over
internal inventories, production, distribution, internal productions and sales.

Supply chain management basically merges the supply and demand management. It uses different
strategies and approaches to view the entire chain and work efficiently at each and every step involved in
the chain. Every unit that participates in the process must aim to minimize the costs and help the companies
to improve their long term performance, while also creating value for its stakeholders and customers. This
process can also minimize the rates by eradicating the unnecessary expenses, movements and handling.
Supply Chain Management – Process
Supply chain management is a process used by companies to ensure that their supply chain is efficient and
cost-effective. A supply chain is the collection of steps that a company takes to transform raw materials
into a final product. The five basic components of supply chain management are discussed below:

Plan
The initial stage of the supply chain process is the planning stage. We need to develop a plan or strategy in
order to address how the products and services will satisfy the demands and necessities of the customers. In
this stage, the planning should mainly focus on designing a strategy that yields maximum profit.
For managing all the resources required for designing products and providing services, a strategy has to be
designed by the companies. Supply chain management mainly focuses on planning and developing a set of
metrics.

Develop (Source)
After planning, the next step involves developing or sourcing. In this stage, we mainly concentrate on
building a strong relationship with suppliers of the raw materials required for production. This involves not
only identifying dependable suppliers but also determining different planning methods for shipping,
delivery, and payment of the product.
Companies need to select suppliers to deliver the items and services they require to develop their product.
So in this stage, the supply chain managers need to construct a set of pricing, delivery and payment
processes with suppliers and also create the metrics for controlling and improving the relationships.
Finally, the supply chain managers can combine all these processes for handling their goods and services
inventory. This handling comprises receiving and examining shipments, transferring them to the
manufacturing facilities and authorizing supplier payments.

Make
The third step in the supply chain management process is the manufacturing or making of products that
were demanded by the customer. In this stage, the products are designed, produced, tested, packaged, and
synchronized for delivery.
Here, the task of the supply chain manager is to schedule all the activities required for manufacturing,
testing, packaging and preparation for delivery. This stage is considered as the most metric-intensive unit
of the supply chain, where firms can gauge the quality levels, production output and worker productivity.

Deliver
The fourth stage is the delivery stage. Here the products are delivered to the customer at the destined
location by the supplier. This stage is basically the logistics phase, where customer orders are accepted and
delivery of the goods is planned. The delivery stage is often referred as logistics, where firms collaborate
for the receipt of orders from customers, establish a network of warehouses, pick carriers to deliver
products to customers and set up an invoicing system to receive payments.

Return
The last and final stage of supply chain management is referred as the return. In the stage, defective or
damaged goods are returned to the supplier by the customer. Here, the companies need to deal with
customer queries and respond to their complaints etc.
This stage often tends to be a problematic section of the supply chain for many companies. The planners of
supply chain need to discover a responsive and flexible network for accepting damaged, defective and extra
products back from their customers and facilitating the return process for customers who have issues with
delivered products.
 UNIT II: E-COMMERCE BUSINESS MODELS

E-commerce business models can generally be categorized into the following categories.
 Business - to - Business (B2B)
 Business - to - Consumer (B2C)
 Consumer - to - Consumer (C2C)
 Consumer - to - Business (C2B)
 Business - to - Government (B2G)
 Government - to - Business (G2B)
 Government - to - Citizen (G2C)

Q. 1) Describe the basic models of e-commerce.

Business - to - Business
A website following the B2B business model sells its products to an intermediate buyer who then sells the
product to the final customer. As an example, a wholesaler places an order from a company's website and
after receiving the consignment, sells the end product to the final customer who comes to buy the product
at one of its retail outlets.

Business - to - Consumer
A website following the B2C business model sells its products directly to a customer. A customer can view
the products shown on the website. The customer can choose a product and order the same. The website
will then send a notification to the business organization via email and the organization will dispatch the
product/goods to the customer.
Consumer - to - Consumer
A website following the C2C business model helps consumers to sell their assets like residential property,
cars, motorcycles, etc., or rent a room by publishing their information on the website. Website may or may
not charge the consumer for its services. Another consumer may opt to buy the product of the first
customer by viewing the post/advertisement on the website.

Consumer - to - Business
In this model, a consumer approaches a website showing multiple business organizations for a particular
service. The consumer places an estimate of amount he/she wants to spend for a particular service. For
example, the comparison of interest rates of personal loan/car loan provided by various banks via websites.
A business organization who fulfills the consumer's requirement within the specified budget, approaches
the customer and provides its services.
Q. 2) Describe the extended models of e-commerce.
Business - to - Government
B2G model is a variant of B2B model. Such websites are used by governments to trade and exchange
information with various business organizations. Such websites are accredited by the government and
provide a medium to businesses to submit application forms to the government.

Government - to - Business
Governments use B2G model websites to approach business organizations. Such websites support auctions,
tenders, and application submission functionalities.

Government - to - Citizen
Governments use G2C model websites to approach citizen in general. Such websites support auctions of
vehicles, machinery, or any other material. Such website also provides services like registration for birth,
marriage or death certificates. The main objective of G2C websites is to reduce the average time for
fulfilling citizen‘s requests for various government services.
 UNIT III: E-PAYMENT SYSTEM

E-commerce sites use electronic payment, where electronic payment refers to paperless financial
transactions. Electronic payment has revolutionized the business processing by reducing the paperwork,
transaction costs, and labor cost. Being user friendly and less time-consuming than manual processing, it
helps business organization to expand its market reach.

Q. 1) What is EPS? What are the several advantages & dis-advantages of EPS?
EPS is a process of exchange of goods/service & financial fund through any one electronic medium in
between buyers and sellers.
Definition: Electronic Payment System is a way of paying for a good or services electronically, instead of
using cash or cheque, in person or a mail.
Ex.: use of credit card for purchasing car.

Advantages:
 It reduces paperwork.
 It provides 24 hours service.
 We can do purchasing from our own residence rather than going into shop.
 It provides various offers in terms of rewards.
 It provides easy return option.
 It gives faster service.
 It provides worldwide acceptance.

Dis-advantages:
 EPS has limits regarding minimum amount in account, no. of transactions per day and the amount
of output.
 There is always a risk of loss of our secret information.
 Due to virus attack or internet dis-connectivity some of our transactions may remain incomplete.
 Everyone cannot easily handle this e-payment system due to lack of literacy.
 EPS are dependent on some devices/cards which require extra installation charges.
 E-payment options are not suitable for small amount of transactions.

Q.2) What are different options for e-payment?

EPS is also known as EFT, which is defined as transfer of funds initiated through any of the electronic
terminal, telephone instrument, computer or even magnetic tape to order, instruct or authorized a financial
institution to debit or credit of an account. Work on EFT can be categorized on three broad categories:

Category
Online Payment System Card Based Payment Token Based Payment system
•Online banking System •---e-cash
•Paytm •Debit Card •--e-checks
•Credit Card
Q. 3) Explain token based e-payment system.
OR
Explain E-cash Payment System
OR
Explain E-checks as a electronic payment system.
1. Digital Token Based Payment System:
New forms of financial instruments called electronic tokens are handled in the form of electronic cash or
cheques. E-tokens are designed as electronic analogue of various forms of payment backed by a bank or
financial institution, basically they are equivalent to cash that is assured by a bank.

1.1 Electronic Cash: it is a new concept in online payment systems because it combines computerized
convenience with security and privacy that improve on paper cash. It can be based on e-payment protocol
that supports a series of payment transactions using electronic tokens or coins issued by third party.
There are three types of users in this payment system:
 a payer e.g. consumer
 a payee e.g. merchant
 a financial network where both the payer and payee have accounts.
There are three types of transactions in this payment system as given below:
 Withdrawal: the payer transfers some money from his bank account to his or her payment card.
 Payment: the payer transfers the money from the card to the payee.
 Deposit: the payee transfers the money received to his bank account.
There are two types of implementations of this system as given below:
 Online Payment: the merchant calls the bank and verifies the validity of the consumer‘s token or
electronic coin before accepting the payment and delivering the merchandise.
 Offline payment: the merchant submits the consumer‘s payment for verification and deposit
sometimes after the payment transaction is completed.
There are three participants involved in this system as given below:
 Client wallet software: e-cash software should be installed on the client computer from where the
consumer can use e-coins to make purchases from the merchants. The client can store the coins in
the client wallet, withdraw coins from that and request new coins from the bank.
 Merchant software: there has to another merchant software installed on the merchant machine to
accept and process payments and sell items. This software will interact with the bank to perform
validation and authentication. Also the software can make refunds, if required.
 Banks: both the client and merchant should have e-cash account in the bank. The bank can issue
new coins to the client, validate the coins when presented.
1.2 Electronic cheques: e-cheques are another form of electronic token. They are designed to
accommodate many individuals and entities that might prefer to pay on credit or through some mechanism
other than cash. In e-cheques buyer must register with a third party account server before they are able to
write electronic cheques. The account server also acts as a billing service. The registration procedure can
vary depending on the particular account server and may require a credit card or a bank account to back the
cheques. Once registered, a buyer can then contact sellers of goods and services. To complete a transaction,
the buyer sends a cheque to the seller for a certain amount of money. These cheques may be sent using e
mail when deposited. The cheque authorizes the transfer of account balances from the account against
which the cheque was drawn to the account to which the cheque was deposited.

There are three types of users in this payment system:

 a payer e.g. consumer
 a payee e.g. merchant
 a financial network where both the payer and payee have accounts.

There are three types of transactions in this payment system as given below:
 Withdrawal: the payer transfers some money from his bank account to his or her payment card.
 Payment: the payer transfers the money from the card to the payee.
 Deposit: the payee transfers the money received to his bank account.

Advantages:
 No fear of loss of cheque
 Faster clearance
 More secured
 Decreases error and fraud
 No geographic restriction.

Dis-advantages:
 It requires basic education for the customer as well as for the service provider.
 Need different infrastructure for processing.
 Q. 4) Write a short note on credit card electronic payment system.
2. Card Based Payment System
2.1 Credit Card
Payment using credit card is one of most common mode of electronic payment. Credit card is small plastic
card with a unique number attached with an account. It has also a magnetic strip embedded in it which is
used to read credit card via card readers. When a customer purchases a product via credit card, credit card
issuer bank pays on behalf of the customer and customer has a certain time period within which he/she can
pay the credit card bill. It is usually credit card monthly payment cycle. Following are the actors in the
credit card system:
 The card holder − Customer
 The merchant − seller of product who can accept credit card payments.
 The card issuer bank − card holder's bank
 The acquirer bank − the merchant's bank
 The card brand − for example, visa or MasterCard.

Credit Card Payment Process

Step Description
Step 1 Bank issues and activates a credit card to the customer on his/her request.
The customer presents the credit card information to the merchant site or to the merchant from
Step 2
whom he/she wants to purchase a product/service.
Step 3 Merchant validates the customer's identity by asking for approval from the card brand company.
Card brand company authenticates the credit card based on its validity, the transaction limit and
Step 4 cardholder‘s available fund. Accordingly sends an authorization response and pays the
transaction by credit. Merchant keeps the sales slip.
Step 5 Merchant submits the sales slip to acquirer banks and gets the service charges paid to him/her.
Step 6 Acquirer bank requests the card brand company to clear the credit amount and gets the payment.
Step 7 Now the card brand company asks to clear the amount from the issuer bank.

Information provided on credit card:

 Name of card holder
 Issuing bank name
 Expiry date (only month and year)
 Type of card i.e visa, master, maestro or rupey

Advantages:
 Simple and convenient to use
 Substituted for cash
 Provides 24 hours service
 No need to approach bank for taking credit
 Offers some rewards to the customers

Dis-advantages:
 Risk of fraud
 Risk of stealing of card
 Q. 5) Write short note on debit card electronic payment system.
2.2 Debit Card
Debit card, like credit card, is a small plastic card with a unique number mapped with the bank account
number. It is required to have a bank account before getting a debit card from the bank. The major
difference between a debit card and a credit card is that in case of payment through debit card, the amount
gets deducted from the card's bank account immediately so there should be sufficient balance in the bank
account for the transaction to get completed; whereas in case of a credit card transaction, there is no such
compulsion, because payment is done on credit basis.
Debit cards free the customer to carry cash and cheques. Even merchants accept a debit card readily.
Having a restriction on the amount that can be withdrawn in a day using a debit card helps the customer to
keeps a check on his/her spending.

Following are the actors in the debit card system:

 The card holder − Customer
 The merchant − seller of product who can accept credit card payments.
 The card issuer bank − card holder's bank
 The acquirer bank − the merchant's bank
 The card brand − for example, visa or MasterCard.

Debit Card Payment Process

Step Description
Step 1 Bank issues and activates a credit card to the customer on his/her request.
The customer presents the credit card information to the merchant site or to the merchant from
Step 2
whom he/she wants to purchase a product/service.
Step 3 Merchant validates the customer's identity by asking for approval from the card brand company.
Card brand company authenticates the credit card based on its validity, the transaction limit and
Step 4 cardholder‘s available fund. Accordingly sends an authorization response. At the same time card
brand company request issuer‘s bank for payment.
Step 5 Issuer‘s bank validates account details and accordingly responds to card brand company.
Step 6 After receiving payment from card brand company, it forwards same to the acquirer‘s bank.
After receiving payment in acquirer‘s bank, merchant provides product and slip to the
Step 7
cardholder..

Information provided on debit card:

 Name of card holder
 Issuing bank name
 Issue date and expiry date (only month and year)
 Type of card i.e visa, master, maestro or rupey
 Customer service no.
 Signature bar
 Card Verification Value (CVV) which is also a unique no. that needs to be provided while doing
some payments.
Advantages:
 Limit our purchasing as per the balance in our bank account
 No need to carry cash or cheque
 As money gets deducted from our bank account, we get aware about the balance amount
 Can be used in case of emergencies

Dis-advantages:
 Risk of fraud
 Risk of stealing of card or pin no.
 Some extra annual charges need to paid to issuer bank
 Dependent on device

Q. 6) What are different types of credit card?

1. Standard Credit card:
Standard credit cards are sometimes referred to as "plain-vanilla" credit cards because they offer no
frills or rewards. They're also relatively easy to understand. You might choose this type of credit
card if you want a card that isn't complicated and you're not interested in earning rewards.

2. Balance transfer credit card:

While many credit cards come with the ability to transfer balances, a balance transfer credit card is
one that offers a low introductory rate on balance transfers for a period of time. If you want to save
money on a high-interest rate balance, a balance transfer is a good way to go.

3. Reward credit card:

Just as the name indicates, rewards cards are those that offer rewards on credit card purchases.
There are three basic types of rewards cards: cash back, points, and travel. Some people prefer the
flexibility of cash back rewards, while others like points that can be redeemed for cash or other
merchandise. Travel rewards cards remain a favorite among frequent travelers because of the ability
to earn free flights, hotel stays, and other travel perks.

4. Student credit card:

Student credit cards are those specifically designed for college students with the understanding that
these young adults often have little or no credit history. A first-time credit card applicant would
generally have an easier time getting approved for a student credit card than another type of credit
card.

5. Charge credit card:

Charge cards do not have a preset spending limit and balances must be paid in full at the end of
each month. Charge cards typically do not have a finance charge or minimum payment since the
balance is to be paid in full. Late payments are subject to a fee, charge restrictions, or card
cancellation depending on your card agreement.
You typically need to have a good credit history to qualify for a charge card.

6. Secured credit card:

Secured credit cards are an option for people who don't have a credit history or who have damaged
credit. Secured cards require a security deposit to be placed on the card. The credit limit on a
 secured credit card is typically equal to the deposit made on the card, but it could be more in some
cases. You're still expected to make monthly payments on your secured credit card balance. Check
out reviews of the best-secured credit cards.

7. Prepaid card:
Prepaid cards require the cardholder to load money onto the card before the card can be used.
Purchases are withdrawn from the card's balance. The spending limit does not renew until more
money is loaded onto the card.

8. Business Credit Cards:

Business credit cards are designed specifically for business use. They provide business owners with
an easy method of keeping business and personal transactions separate. There are standard business
credit and charge cards available.

Q. 7) Explain Paytm as an electronic payment system?

1. What is Paytm?
 Paytm is a digital electronic payment system available in India.
 It was founded by Vijay Shekhar Sharma in August 2010 and is based out of Noida SEZ,
India.
 It is used for doing online payments apart from using cash or cheques.
 The usage of Paytm has been increased after demonetization.
 It is more widely used after the implementation of Digital India concept.
 Today over 7 million merchants across India use this QR code to accept payments directly
into their bank account.
 Paytm is owned by One97 Communications.

2. What is Paytm Wallet?

 Paytm Wallet is the digital payment instrument where you can transfer money from your
bank account or credit card to use for transactions on the platform.
 You need to set up an account using your mobile phone number and email ID to setup a
Paytm account and transfer cash to the wallet. You can add up to Rs. 10,000 in a month in
the Wallet; if you want to increase the monthly limit, then you can get the KYC (Know
Your Customer) processor done. With this, you can have up to Rs. 1 lakh in the Paytm
Wallet at any point of time.

3. How to use Paytm?

In order to use the Paytm Wallet and transact cash-free, follow the steps below:
i. Set up a Paytm account using your mobile number and email ID
ii. Add some money to your Paytm Wallet using netbanking, debit card, or credit card
iii. To transfer money to someone else, select the 'Pay or Send' option
iv. You can make payments to others or to bank accounts on Paytm by scanning a QR code
v. Alternatively, you can send money to another Paytm user via their phone number
 4. How to use Paytm for offline payments?
You can make cash-less payments using Paytm Wallet even without internet connectivity. If a
retailer accepts Paytm as a mode of payment, you can either use QR codes or bar codes, along with
a One-Time Password (OTP) to pay them. To do this, you need to open the app, select the ‗Pay or
Send‘ option, and choose between QR code or bar codes (provided in two separate tabs). Just scan
the code and enter the OTP to authorize the payment offline. This feature can be especially useful
right now, when the whole country is facing a cash crunch and internet connectivity is still not good
enough to facilitate online transactions.

5. Highlights of features of Paytm:

 Paytm Wallet can be used to buy goods and avail services online & offline
 Paytm Wallet can be recharged via netbanking and debit & credit cards
 Your Paytm Wallet can have up to Rs. 10,000; do KYC for higher limit
 It is available in 10 regional languages
 Among the transactions you can make on Paytm are:
 Recharges for mobile phones, metro cards, DTH cable, data cards, etc,
 Postpaid payments for mobile phones, landline/ broadband, electricity, water and gas
bills, etc.
 Book tickets for buses, trains, flights, movies, hotel rooms, etc.
 Pay for Uber cab rides using the platform.
 We can buy goods on the company‘s e-commerce platform using the wallet, and
even make offline payments at over 8 lakh merchants, Paytm claims.

6. Paytm transaction is secured or not?

Security is top of everyone's mind when it comes to any digital, but Paytm – which is an RBI-
approved wallet – says it keeps the money you put in the Wallet is ―protected under Escrow account
with a reputed bank.‖ Paytm uses Verisign-certified 128-bit encryption technology, which means
that the secret key used in transactions is a sequence of 128 bits and does not reveal anything about
the password length or contents.

Q. 8) Explain Online Banking as an electronic payment system?

Introduction:
 Online banking, also known as internet banking.
 It is an electronic payment system that enables customers of a bank or other financial institution to
conduct a range of financial transactions through the financial institution's website.
 The online banking system will typically connect to or be part of the core banking system operated
by a bank and is in contrast to branch banking which was the traditional way customers accessed
banking services.

Operation:
 To access a financial institution's online banking facility, a customer with internet access will need
to register with the institution for the service, and set up a password and other credentials for
customer verification.
 The credentials for online banking is normally not the same as for telephone or mobile banking.
 Financial institutions now routinely allocate customers numbers, whether or not customers have
indicated an intention to access their online banking facility.
  Customer numbers are normally not the same as account numbers, because a number of customer
accounts can be linked to the one customer number. Technically, the customer number can be
linked to any account with the financial institution that the customer controls, though the financial
institution may limit the range of accounts that may be accessed to, say, cheque, savings, loan,
credit card and similar accounts.
 The customer visits the financial institution's secure website, and enters the online banking facility
using the customer number and credentials previously set up.

Features:
 A bank customer can perform non-transactional tasks through online banking, including:
o Viewing account balances
o Viewing recent transactions
o Downloading bank statements, for example in PDF format
o Viewing images of paid cheques
o Ordering cheque books
o Download periodic account statements
o Downloading applications for M-banking, E-banking etc.
 Bank customers can transact banking tasks through online banking, including:
o Funds transfers between the customer's linked accounts
o Paying third parties, including bill payments (see, e.g., BPAY) and third party fund transfers
(see, e.g., FAST)
o Investment purchase or sale
o Loan applications and transactions, such as repayments of enrollments
o Credit card applications
o Register utility billers and make bill payments
o Applying for FD, RD of PF
o Applying for Loans
o Applying for transferring bank account or branch
 Financial institution administration
 Management of multiple users having varying levels of authority
 Transaction approval process
 UNIT IV: E-COMMERCE SECURITY SYSTEMS

Security is an essential part of any transaction that takes place over the internet. Customers will lose his/her
faith in e-business if its security is compromised.

Q. 1) Explain several types of risk involved in EPS?

Different types of risks involved during electronic transaction or payment are:
 Operational risk
 Reputational risk
 Legal risk
 Cross border risk
 Other risks

1. Operational Risk:
The risk which may occur during transactions of e-payment system are termed as operational risks. Various
types of operational risks are:
 Security: Some of our personal information like user id, card no, purchaser‘s information, etc may
get hacked by the hacker through electronic mediums during e-payment transactions.
 System Design: Some of the problems may get occur during transaction due to automatic
redirection or non proper usability of website. This problem may occur due to improper designing
of system.
 Implementation: During the actual implementation of e-payment transaction, some problem may
occur due to power failure, virus attack or device failure.
 Maintenance: Non proper maintenance of website may provide wrong information to the users
because the information is not regularly updated.

2. Reputational Risk:
 Negative image: Non proper provision of after sell services or damaged product may create a long
lasting negative image of our brand into the customers mind. Some failures during transaction will
also create negative image of the bank & there provided services.
 Trust: Major loss of public confidence in banks ability to perform the transactions. Even if our link
is not in the top most ranking of search engine, it may also hamper the trust factor of our brand. Due
to this our product or system may not work as expected.

3. Legal Risk:
Legal risks arise from violence or non conformance of laws or rules and regulations. It may also arise when
legal rights of obligation of members to transaction are not well establishes.

4. Cross border risk:

Banks may require different legal and regulatory requirements when they are dealing with the customers
across national borders. Non compliance with different national and international laws will leave to arise
cross border risk. This risk may also occur due to change in the rate of currencies.
 5. Other risks:
 Credit risk: Risk which may occur if the borrower is not able to pay with the credit provided to
him/her.
 Liquidity risk: Risk in which a company or bank may be unable to meet the short term financial
demand of their customers.
 Interest rate risk: Risk which may occur due to the changes in the interest rates is termed as
interest rate risk. It may reduce the market value of our bonds and shares.
 Market risk: It is the possibility for an investor to experience loss due to the factors that affect
overall performance of financial markets.

Q. 2) What are different risk management options of e-payment system?

1. Authorization:
An e-payment system with some integrity (rules) that allows no money to be taken from a user without
explicit authorization is termed as authorized e-payment system. In this EPS some access rights are
provided to the user like read only, write only and read and write both. A person who is having particular
access right can only access that account.
There are three types of authorization:
 Outband authorization: In this approach a verifying party typically a bank notifies the authorizing
party (payer) about the transaction. The authorizing party is required to approve or deny the
payment using a secured outband channel.
 Password authorization: In this approach a secret alphanumeric code i.e a password is used to
restrict the access of our account. No one can change our password; therefore it is one of the
strongest security authorizations.
 Signature Authorization: In this approach verifying party requires digital signature of the
authorizing party. Digital signature is not only a scanned copy of a signature but it must contain a
digital certificate issued by some authorized company.

2. Privacy:
For preventing e-payment transactions from risk, we may wish the confidentiality of our secret
information. To maintain confidentiality we use encryption at the sender side which converts our original
message into some non-understandable code, and decryption at the receiver side which retrieves original
message from that non-understandable code. That non-understandable code is termed as ciphertext whereas
original message is termed as plaintext.

3. Reliability:
In the first step reliability means checking whether a person who is accessing our account is a human being
or a machine. This verification is done by using captcha code. In the second step of reliability we have to
check whether the person who is doing transaction is reliable or not. This checking is done by checking
identity cards are any other verification document. Finally we have to check whether transaction is
completed or not. If the transaction is incomplete then some reliable options are provided to the customer
in which deducted amount will be refund to the customer within 3 working days.

Q. 3) What are the probable reasons to have e-security?

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

Q. 4) Explain the various threats hampering internet security.

The internet security threats are classified as:
 Communication channel threats
 Client threats
 Server threats

1. Communication channel threats:

It is a medium through which machines are connected with each other in one network.
i. Secrecy threat: It records the secret information transferring through communication channel. This
information can be misused by unauthorized users.
ii. Integrity threat: It causes the modification of information transferring through the communication
channel. Due to this wrong information is conveyed to the receiver.
iii. Wire trapping threat: In such kind of threat the stored files of a device will get damage.
iv. Vandalism: This kind of threat will modify the contents available on the website. It can also be
termed as website integrity threat.
v. Necessity threat: It affects the normal processing of a computer or a device which is used for
transaction.
vi. Spoofing: It is pretending to be someone else that we are not in actual. It can be done by stealing
the username & password of other user.

2. Client threats:
Clients are the individual machines which are connected in one network. Client threats mostly rose from
viruses which are also termed worms. Viruses are the self replicating programs which are executed by
their own. This program creates a copy of itself & causes it to execute without any intervention.
Ex.: Trojen Horse

3. Server threats:
A server is an intermediate in between consumer & supplier. All the threats which are affecting
communication channels and clients can also damage the server machine. Apart from that some extra
threats affecting on server are:
 Mail Bomb: It causes the 100‘s or 1000‘s of messages to be received with the help of some
programme to a particular address. Due to this our machine will get heavy & runs slow which can
cause failure of transaction.
  Buffering: Buffer is an temporary storage device. In case of server machine the access to the buffer
is restricted, therefore after one transaction it will not get cleared so it will be shown as overflow
while performing further transactions.

Q. 5) What are different types of attacks?

Attacks can be categorized into 2 types:
 Active attacks
 Passive attacks

1. Passive Attacks:
 Passive attacks are just monitoring the transmission carried over communication channel. They are
not going to cause any damage to the data transmitting through channels.
 The goal of passive attacks is to obtain information that is being transmitted through the channels.
 Passive attacks are of 2 types:
 Release of message contents: outsiders learn the content being transmitted through
channels
 Traffic analysis: by monitoring the frequency and length of messages, even encrypted,
nature of communication may be guessed.
 Disadvantage: Difficult to detect, because these attacks don‘t cause any damage.
 Advantage: They can be prevented rather than just detection. Uses encryption technique for
prevention.

2. Active Attacks:
 Active attacks involve some data stream modification or creation of false data.
 Active attacks are of 4 types:
 Masquerade: attacker pretends to be an authorized user of a system in order to gain access
to it or to gain greater privileges than they are authorized for.
 Replay: valid data transmission is maliciously or fraudulently repeated or delayed.
 Modification of messages: some portion of original message is altered.
 Denial of service: it is an attack meant to shut down a machine or network for making it
inaccessible to its intended users. This can be done by flooding the target with traffic.
 Advantage: Easy to detect. Detection may help for prevention. Uses authentication for it.
 Disadvantage: Hard to prevent, requires all time physical protection which increases cost.

Q. 6) What are 2 types of security systems over internet?

Internet is used as a medium for e-commerce transactions. In e-commerce we are performing transactions
either I between consumer and supplier or in between different vendors. During these transactions damage
may occur in a network. To get prevented from these damages, we need to first understand the types of
security systems required over the internet.
There are 2 types of security systems:
1. Transaction security:
Transaction security consist services such as privacy, authenticity and integrity constraints in the
transactions over internet. Transaction security is used to prevent our exchanging values. It refers to the
safety of confidential information when multiple entities communicate to complete a transaction.
 2. Access Security:
Access security is the selective restriction of access to a place or other resources. It performs authorization,
identification, authentication and access approval of entities through login credentials including password,
personal identification numbers (PIN‘s), biometric scans and physical or electronic keys.

Q. 7) Explain different security protocols working over internet.

Security Protocols in Internet
We will discuss here some of the popular protocols used over the internet to ensure secured online
transactions.
1. Secure Socket Layer (SSL)
It is the most commonly used protocol and is widely used across the industry. It meets following security
requirements −
 Authentication
 Encryption
 Integrity
 Non-reputability
"https://" is to be used for HTTP urls with SSL, where as "http:/" is to be used for HTTP urls without SSL.

2. Secure Hypertext Transfer Protocol (SHTTP)

SHTTP extends the HTTP internet protocol with public key encryption, authentication, and digital
signature over the internet. Secure HTTP supports multiple security mechanism, providing security to the
end-users. SHTTP works by negotiating encryption scheme types used between the client and the server.

3. Secure Electronic Transaction

It is a secure protocol developed by MasterCard and Visa in collaboration. Theoretically, it is the best
security protocol. It has the following components −
 Card Holder's Digital Wallet Software − Digital Wallet allows the card holder to make secure purchases
online via point and click interface.
 Merchant Software − This software helps merchants to communicate with potential customers and
financial institutions in a secure manner.
 Payment Gateway Server Software − Payment gateway provides automatic and standard payment
process. It supports the process for merchant's certificate request.
 Certificate Authority Software − This software is used by financial institutions to issue digital certificates
to card holders and merchants, and to enable them to register their account agreements for secure electronic
commerce.

Q. 8) What is cryptography? Explain several techniques used in cryptanalysis to provide e-security.

Cryptography refers to the tools or techniques used to make messages secure for communication between
participants.

The various components of a basic cryptosystem are as follows:

 Plaintext. It is the data to be protected during transmission.
 Encryption algorithm: It is a mathematical process that converts plaintext into ciphertext.
  Ciphertext: It is scrambled version of plaintext produced by encryption algorithm using a specific
encryption key.
 Decryption algorithm: It is a mathematical process that produces a unique plaintext from given
ciphertext and decryption key.
 Encryption key: It is a value that is known to the sender which is used while applying encryption
algorithm.
 Decryption key: It is a value that is known to the receiver which is used while applying decryption
algorithm. It is related to encryption key but not always identical.

Cryptography is of 2 types:
1. Symmetric key cryptography:
In symmetric key cryptography, same key is shared, i.e. the same key is used in both encryption and
decryption as shown in Fig. The algorithm used to decrypt is just the inverse of the algorithm used for
encryption. For example, if addition and division is used for encryption, multiplication and subtraction are
to be used for decryption.

1.1 Mono alphabetic substitution:

In this case, the relationship between a character in the plaintext and a character in the ciphertext is always
one-to-one. In this approach a character in the ciphertext is substituted by another character shifted by three
places, e.g. A is substituted by D. Key feature of this approach is that it is very simple but the code can be
attacked very easily.

1.2 Transposition:
The transposition cipher, the characters remain unchanged but their positions are changed to create the
ciphertext. Figure illustrates how five lines of a text get modified using transposition cipher. The characters
are arranged in two-dimensional matrix and columns are interchanged according to a key is shown in the
middle portion of the diagram. The key defines which columns are to be swapped.
 2. Public key cryptography:
In public key cryptography, there are two keys: a private key and a public key. The public key is
announced to the public, where as the private key is kept by the receiver. The sender uses the public key of
the receiver for encryption and the receiver uses his private key for decryption as shown in Fig.

Advantages:
 The pair of keys can be used with any other entity.
 The number of keys required is small

Disadvantages:
 It is not efficient for long messages
 Association between an entity and its public key must be verified
Q. 9) What is digital signature? What are the several steps of creation & verification of digital
signature?

DEFINITION
 A digital signature is a number dependent on some secret known only to the signer and,
additionally, on the content of the message being signed.
 Digital signatures are the e-signatures used for maintaining non-repudiation.
 Non-repudiation ensures that sender of the message cannot deny that he/she have send the message.

PROPERTY
A digital signature must be verifiable, i.e., if a dispute arises an unbiased third party must be able to solve
the dispute equitably, without requiring access to the signer's secret.

I. CREATION OF DIGITAL SIGNATURE (CERTIFICATE):

Creation of digital signature is done at sender side by following below specified steps:
1) Sender applies hash function on the original data and generates hash result. [The hash function is a
unique number which is a system generated number used for generating hash results for
authentication.]
2) Sender encrypts hash result by using his private key and generates a digital signature which is
unique.
3) Sender combines that digital signature with a digital certificate and generates a data which is
actually transmitted to the receiver. [Digital certificates are the original formats in which we have to
combine our data for creating a legal document.]

II. VERIFICATION OF DIGITAL SIGNATURE (CERTIFICATE):

The receiver of a digitally signed message must verify both that the message is originated from person
whose signature is attached and that the message has not been altered. This verification is done by
following below specified steps:
1) Receiver separates the data and signature from received content.
2) Receiver decrypts the signature by sender‘s public key and generates hash result.
3) It again applies hash function on received data and generates hash result.
4) Receiver verifies whether the hash results generated from data and signature and equal or not. If
they matches then it indicates that the message has not been modified else it means that either the
message is modified or it is originated by someone else (unauthorized user).
Digital signatures allow us to verify the author, date and time of signatures, authenticate the message
contents. It also includes authentication function for additional capabilities.

Applications
There are several reasons to implement digital signatures to communications:
 Authentication:
Digital signatures help to authenticate the sources of messages. For example, if a bank‘s branch
office sends a message to central office, requesting for change in balance of an account. If the
central office could not authenticate that message is sent from an authorized source, acting of such
request could be a grave mistake.
 Integrity:
Once the message is signed, any change in the message would invalidate the signature.
 Non-repudiation:
By this property, any entity that has signed some information cannot at a later time deny having
signed it.
 UNIT V: E-COMMERCE B2B MODEL

Q. 1) Explain in detail the working of e-commerce B2B model.

A website following the B2B business model sells its products to an intermediate buyer who then sells the
products to the final customer. As an example, a wholesaler places an order from a company's website and
after receiving the consignment, it sells the end product to the final customer who comes to buy the product
at the wholesaler's retail outlet.

B2B identifies both the seller as well as the buyer as business entities. B2B covers a large number of
applications, which enables business to form relationships with their distributors, re-sellers, suppliers, etc.

Following are the leading items in B2B e-commerce.

 Electronics
 Shipping and Warehousing
 Motor Vehicles
 Petrochemicals
 Paper
 Office products
 Food
 Agriculture

Q.2) List down the advantages & dis-advantages of B2B model

Advantages:
 Market Predictability: Compared to the other business strategies, the B2B eCommerce business
model has more market stability. B2B sectors grow gradually and can adapt to various complex market
conditions. This helps to strengthen the online presence and business opportunities and get more
potential clients and resellers.
  Better Sales: An improved supply chain management process along with a collaborative approach
increase customer loyalty in the B2B eCommerce business model. This, in turn, leads to improved
sales. It helps businesses to showcase product recommendations and unlock effective upselling and
cross-selling opportunities.
 Lower Costs: Due to an effective supply chain management process, this online business model leads
to lower costs for the businesses. In most cases, the work is done through automation that eradicates
chances of errors and undue expenditure.
 Data Centric Process: One of the main advantages of the model is that it relies on effective and factual
data to streamline the whole process. In this way, errors can be avoided and proper forecasts can be
made. With an integrated data-driven approach, you can calculate detailed sales statistics.

Disadvantages:
 Limited Market: Compared to the B2C model, this type of business has a limited market base as it
deals with transactions between businesses. This makes it a bit of a risky venture for small and medium
e-commerce businesses.
 Lengthy Decision: Here, the majority of the purchase decisions involve a lengthy process as there are
two businesses involved. The process may involve dependence on multiple stakeholders and decision
makers.
 Inverted Structure: Compared to the other models, consumers have more decision making power than
sellers in the B2B business model. They may demand customizations, impose specifications and try to
lower price rates.

Q. 3) Elaborate different key technologies used in B2B model.

Key Technologies
Following are the key technologies used in B2B e-commerce −
 Electronic Data Interchange (EDI) − EDI is an inter-organizational exchange of business documents in a
structured and machine processable format.
 Internet − Internet represents the World Wide Web or the network of networks connecting computers
across the world.
 Intranet − Intranet represents a dedicated network of computers within a single organization.
 Extranet − Extranet represents a network where the outside business partners, suppliers, or customers can
have a limited access to a portion of enterprise intranet/network.
 Back-End Information System Integration − Back-end information systems are database management
systems used to manage the business data.

Q. 4) Describe the architectural models used in B2B model.

Architectural Models
Following are the architectural models in B2B e-commerce −
 Supplier Oriented marketplace − In this type of model, a common marketplace provided by supplier is
used by both individual customers as well as business users. A supplier offers an e-stores for sales
promotion.
 Buyer Oriented marketplace − In this type of model, buyer has his/her own market place or e-market. He
invites suppliers to bid on product's catalog. A Buyer company opens a bidding site.
 Intermediary Oriented marketplace − In this type of model, an intermediary company runs a market
place where business buyers and sellers can transact with each other.
 UNIT VI: E-COMMERCE B2C MODEL

Q. 1) Explain the working of B2C e-commerce model in detail.

In B2C model, a business website is a place where all the transactions take place directly between a
business organization and a consumer.

In the B2C model, a consumer goes to the website, selects a catalog, orders the catalog, and an email is sent
to the business organization. After receiving the order, goods are dispatched to the customer.

Following are the key features of the B2C model −

 Heavy advertising required to attract customers.
 High investments in terms of hardware/software.
 Support or good customer care service.

Consumer Shopping Procedure:

Following are the steps used in B2C e-commerce −
A consumer −
 determines the requirement.
 searches available items on the website meeting the requirement.
 compares similar items for price, delivery date or any other terms.
 places the order.
 pays the bill.
 receives the delivered item and review/inspect them.
 consults the vendor to get after service support or returns the product if not satisfied with the delivered
product.
Q. 2) Write a brief note on Disintermediation and Re-intermediation.
In traditional commerce, there are intermediating agents like wholesalers, distributors, and retailers
between the manufacturer and the consumer. In B2C websites, a manufacturer can sell its products directly
to potential consumers. This process of removal of business layers responsible for intermediary
functions is called disintermediation.

Nowadays, new electronic intermediary breeds such as e-mall and product selection agents are
emerging. This process of shifting of business layers responsible for intermediary functions from
traditional to electronic mediums is called re-intermediation.
 UNIT VII: E-COMMERCE-EDI

Q. 1) Write a note on Electronic Data Interchange.

EDI stands for Electronic Data Exchange. EDI is an electronic way of transferring business documents in
an organization internally, between its various departments or externally with suppliers, customers, or any
subsidiaries. In EDI, paper documents are replaced with electronic documents such as word documents,
spreadsheets, etc.

EDI Documents
Following are the few important documents used in EDI −
 Invoices
 Purchase orders
 Shipping Requests
 Acknowledgement
 Business Correspondence letters
 Financial information letters

Steps in an EDI System

Following are the steps in an EDI System.
 A program generates a file that contains the processed document.
 The document is converted into an agreed standard format.
 The file containing the document is sent electronically on the network.
 The trading partner receives the file.
 An acknowledgement document is generated and sent to the originating organization.
 Q. 2) List out the several advantages of using EDI system in e-commerce.
Advantages of an EDI System
 Reduction in data entry errors − Chances of errors are much less while using a computer for data entry.
 Shorter processing life cycle − Orders can be processed as soon as they are entered into the system. It
reduces the processing time of the transfer documents.
 Electronic form of data − It is quite easy to transfer or share the data, as it is present in electronic format.
 Reduction in paperwork − As a lot of paper documents are replaced with electronic documents, there is a
huge reduction in paperwork.
 Cost Effective − As time is saved and orders are processed very effectively, EDI proves to be highly cost
effective.
 Standard Means of communication − EDI enforces standards on the content of data and its format which
leads to clearer communication.