Electronic commerce, commonly known as e-commerce, ecommerce, eCommerce or ecomm, refers to the buying and selling of products or services

over electronic systems such as the Internet and other computer networks. However, the term may refer to more than just buying and selling products online. It also includes the entire online process of developing, marketing, selling, delivering, servicing and paying for products and services. The amount of trade conducted electronically has grown extraordinarily with widespread Internet usage. The use of commerce is conducted in this way, spurring and drawing on innovations in electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices and telephones as well. A large percentage of electronic commerce is conducted entirely in electronic form for virtual items such as access to premium content on a website, but mostly electronic commerce involves the transportation of physical items in some way. Online retailers are sometimes known as e-tailers and online retail is sometimes known as e-tail. Almost all big retailers are now electronically present on the World Wide Web. Electronic commerce that takes place between businesses is referred to as business-tobusiness or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants (private electronic market). Electronic commerce that takes place between businesses and consumers, on the other hand, is referred to as business-to-consumer or B2C. Digital Payment Systems: An e-commerce payment system facilitates the acceptance of electronic payment for online transactions. Also known as a sample of Electronic Data Interchange (EDI), e-commerce payment systems have become increasingly popular due to the widespread use of the internetbased shopping and banking. There are numerous different payments systems available for online merchants. These include the traditional credit, debit and charge card but also new technologies such as digital wallets, e-cash, mobile payment and e-checks. Another form of payment system is allowing a 3rd party to complete the online transaction for you. These companies are called Payment Service Providers (PSP). credit cards have become one of the most common forms of payment for e-commerce transactions. In North America almost 90% of online B2C transactions were made with this payment type [1]. Turban et al. goes on to explain that it would be difficult for an online retailer to operate without supporting credit and debit cards due to their widespread use. Increased security measures include use of the card verification number (CVN) which detects fraud by comparing the verification number printed on the signature strip on the back of the card with the information on file with the cardholder's issuing bank [2]. Also online merchants have to comply with stringent rules stipulated by the credit and debit card issuers (Visa and MasterCard)[3] this means that merchants must have security protocol and procedures in place to ensure transactions are more secure. This can also include having a certificate from an authorized certification authority (CA) who provides PKI infrastructure for securing credit and debit card transactions.

Despite this widespread use in North America, there are still a large number of countries such as China, India and Pakistan that have some problems to overcome in regard to credit card security. In the meantime, the use of smartcards has become extremely popular. A Smartcard is similar to a credit card; however it contains an embedded 8-bit microprocessor and uses electronic cash which transfers from the consumers card to the sellers device. A popular smartcard initiative is the VISA Smartcard. Using the VISA Smartcard you can transfer electronic cash to your card from your bank account, and you can then use your card at various retailers and on the internet. There are companies that enable financial transactions to transpire over the internet, such as PayPal. Many of the mediaries permit consumers to establish an account quickly, and to transfer funds into their on-line accounts from a traditional bank account (typically via ACH transactions), and vice versa, after verification of the consumer's identity and authority to access such bank accounts. Also, the larger mediaries further allow transactions to and from credit card accounts, although such credit card transactions are usually assessed a fee (either to the recipient or the sender) to recoup the transaction fees charged to the mediary. The speed and simplicity with which cyber-mediary accounts can be established and used have contributed to their widespread use, although the risk of abuse, theft and other problemswith disgruntled users frequently accusing the mediaries themselves of wrongful behavioris associated with them. Model for Commercial Transaction:
A model for commercial transactions- Understanding the ways in which commercial transactions take place online across Internet requires understanding the way in which any commercial transaction takes place. There will be different types of transactions and differences also. Establishing trust-Before any purchase can be made from retail store, a customer must enter it. The merchant may control access to the goods it offers in several different ways. It can sell to any and all come through an open storefront, or it can restrict its sales to a certain client. The customer also makes choices prior to entering a store. The degree to which the merchant will restrict access to its products will vary depending on the type of business. The merchant and consumer each establish a level of trust in the other. The merchant trust that the customer is a potential purchases, capable of selecting and paying for some product offered the consumer trusts that the merchant may be offering the desired product and will be capable of delivering that the product if needed. There are other identity issues that both buyer and seller are concerned with when first initiating contact. Many products have distribution limits. For example, Prescription drugs may not be dispensed to anyone without a legitimate prescription Alcoholic beverages may not be sold to minors and may be subject to other sales restrictions depending on the locality Firearms and ammunition are subject to a wide range of restrictions varying by locality Tobacco products may not be sold to minors Adult entertainment products may be subject to local restrictions on sales to minors Establishing trust between parties in a commercial transaction that takes place across a public network is difficult. Online transactions require mechanisms for establishing trust between prospective buyers and sellers. Negotiating a deal-Determining the item to be purchased and the price to be charged are trivial matters in most retail stores. The buyer selects the desired item, and the price is usually clearly

marked either on the item itself or near its display area. In most cases, this is all that is necessary. When we order products by phone from a catalog, we can refer to the price in the catalog. Ordering products over the Internet does not offer an explicit method to reference the offering price, nor does it offer an explicit method to reference the original order. Neither the buyer nor the seller should be able to repudiate the offered price or the products ordered, mechanisms to accomplish this are available for electronic commerce. Payment and settlement- In store the transaction is completed as soon as the buyer pays for an item. The vendor takes a smaller risk when selling online, since credit cards can be authenticated through automated connections to settlement companies. The Internet environment- Electronic Funds Transfer (EFT) is another field that is now reaching a mass market as ATMs, gas stations and supermarkets increasingly accept credit and debit cards. Internet advantage- Despite Internets long existence as a non commercial research network, its commercialization owes its apparent success to several factors: The Internet is an open system The Internet itself does not belong to anyone. The WWW is Internets killer app

Public key encryption

By choosing two large prime numbers and properly manipulating them, we can extract two keys, multiply them to get the number to evaluate the modular expressions. We can encrypt a message by chopping it up into small chunks, converting those chunks to numbers raising those numbers to the power of one of the keys and calculating the result modulo the sum of the two original primes. As a result these two keys work together to create an encryption algorithm. We can encrypt a message with one of the keys; use another key to decrypt it, doing the same process on encrypted text.

Encrypting with one key cannot be reversed without the other key. One of the keys is called a public key and can be safely distributed publicly; the other key is called a private or secret key and is not for distribution. The idea behind the dominant public key encryption scheme is simple. Named for its inventors, Ron Rivest, Adi Shamir and Len Adleman, RSA was patented and it is now owned by RSA Data Security,Inc.(RSADSI). Very simply we got public and private keys you can communicate securely and reliably. Encryption of the key is done with recipients public key only the recipient is able to decrypt that transmission. If the numbers we select as keys are too small, someone could intercept our encrypted messages and apply a brute force attack with some chance of success.

Trusted key distribution and verification With wider application of public key cryptography for the purpose of commerce, mechanisms for trusted publication and distribution of public keys are necessary. Simply having a customer send a copy of public key will not do since a forger could send her own public key while pretending to be someone else.

Advantages And Disadvantages Of E-commerce Advantages Of E-commerce Lower Cost

Doing e-business is cost effective; it reduces logistical problems and puts a small business on a par with giants such as Amazon.com or General Motors. In a commercial bank, for example. a basic over-the-counter transaction costs 0.50 to process; over the Internet, the same transaction costs about 0.01. Every financial transaction eventually turns into an electronic process. The sooner it makes the conversion, the more cost-effective the transaction becomes.
Economy

Unlike the brickandmortar environment, in ecommerce there is no physical store space, insurance, or infrastructure investment. All you need is an idea, a unique product, and a well designed web storefront to reach your customers, plus a partner to do fulfillment. This makes ecommerce a lot more economical.
Higher Margins

Ecommerce means higher margins. For example, the cost of processing an airline ticket is 5. According to one travel agency, processing the same ticket online costs 1. Along with higher margins, businesses can gain more control and flexibility and are able to save time when manual transactions are done eletronically.
Better Customer Service

Ecommerce means better and quicker customer service. Online customer service makes customers happier. Instead of calling your company on the phone, the web merchant gives customers direct to their personal account online. This saves time and money. For companies that do business with other companies, adding customer service online is a competitive advantage. The overnight package delivery service, where tracking numbers allow customers to check the whereabouts of a package online, is one good example.

Quick Comparison Shopping

Ecommerce helps consumers to comparison shop. Automated online shopping assistants called hopbots scour online stores and find deals on everything from apples ro printer ribbons.
Productivity Gains

Weaving the web throughout an organisation menas improved productivity. For example IBM incorporated the web into every corner of the firm products, marketing, and practices. The company figured it would save $750 million by letting customers find answers to technical questions via its website. The total cost savings in 1999 alone was close to $1 billion.
Teamwork

Email is one example of how people collaborate to exchange information and work on solutions. It has transformed the way organisations interact with suppliers, vendors, business partners, and customers. More interactions means better results.
Knowledge Markets

Ecommerce helps create knowledge markets. Small groups inside big firms can be funded with seed money to develop new ideas. For example, DaimlerChrysler has created small teams to look for new trends and products. A Silicon Valley team is doing consumer research on electric cars and advising car designers.
Information Sharing, Convenience, And Control

Eletronic marketplaces improve information sharing between merchants and customers and promote quick, justintime deliveries. Convenience for the consumer is a major driver for changes in various industries. Customers and merchants save money; are online 24 hours a day, 7 days a week; experience no traffic jams, no crowds, and do not have to carry heavy shopping bags.
Disadvantages Of Ecommerce Security

Security continues to be a problem for online businesses. Customers have to feel confident about the integrity of the payment process before they commit to the purchase.
System And Data Integrity

Data protection and the integrity of the system that handles the data are serious concerns. Computer viruses are rampant, with new viruses discovered every day. Viruses cause unnecessary delays, file backups, storage problems, and other similar difficulties. The danger of hackers accessing files and corrupting accounts adds more stress to an already complex operation.

System Scalability

A business develops an interactive interface with customers via a website. After a while, statistical analysis determines whether visitors to the site are onetime or recurring customers. If the company expects 2 million customers and 6 million show up, website performance is bound to experience degradation, slowdown, and eventually loss of customers. To stop this problem from happening, a website must be scalable, or upgradable on a regular basis.
Ecommerce Is Not Free

So far, success stories in ecommerce have forced large business with deep pockets and good funding. According to a report, small retailers that go headtohead with ecommerce giants are fighting losing battle. As in the brickandmortar environment, they simply cannot compete on price or product offering. Brand loyalty is related to this issue, which is supposed to be less important for online firms. Brands are expected to lower search costs, build trust, and communicate quality. A search engine can come up with the best music deals, for example, yet consumers continue to flock to trusted entities such as HMV.
Consumer Search Is Not Efficient or Costeffective

On the surface, the electronic marketplace seems to be a perfect market, where worldwide sellers and buyers share and trade without intermediaries. However, a closer look indicates that new types of intermediaries are essential to ecommerce. They include electronic malls that guarantee legitimacy of transactions. All these intermediaries add to transaction costs.
Customer Relations Problems

Not many businesses realise that even ebusiness cannot survive over the long term without loyal customers.
Products People won't buy online

Imagine a website called furniture.com or living.com, where venture capitalists are investing millions in selling home furnishings online. In the case of a sofa, you would want to sit on it, feel the texture of the fabric etc. Beside the sofa test, online furniture sotres face costly returns which makes the product harder to sell online.
Corporate Vulnerability

The availability of product details, catalogs, and other information about a business through its website makes it vulnerable to access by the competition. The idea of extracting business intelligence from the website is called web framing.
High Risk Of Internet Startup

Many stories unfolded in 1999 about successful executives in established firms leaving for Internet startups, only to find out that their getrich dream with a dot.com was just that a dream.

Plastic money is a term that is used predominantly in reference to the hard plastic cards we use everyday in place of actual bank notes. They can come in many different forms such as cash cards, credit cards, debit cards, pre-paid cash cards and store cards. Cash Cards - A card that will allow you to withdraw money directly from your bank via an Authorised Teller Machine (ATM) but it will not allow the holder to purchase anything directly with it. Credit Cards - Again this card will permit the card holder to withdraw cash from an ATM, and a credit card will allow the user to purchase goods and services directly, but unlike a Cash Card the money is basically a high interest loan to the card holder, although the card holder can avoid any interest charges by paying the balance off in full each month. Debit Cards - This type of card will directly debit money from your bank account, and can directly be used to purchase goods and services. While there is no official credit facility with debit cards per se, as it is linked to the bank account the limit is the limit of what is in the account, for instance if an overdraft facility is available then the limit will be the extent of the overdraft. Pre-paid Cash Cards - As the name suggests the user will add credit to the card themselves, and will not exceed that amount. These are usually re-useable in that they can be 'topped up' however some cards, usually marketed as Gift Cards are not re-useable and once the credit has been spent they are disposed of. Store Cards - These are similar in concept to the Credit Card model, in that the idea is to purchase something in store and be billed for it at the end of the month. These cards can be charged at a very high interest rate and can are limited in the places they can be used, sometimes as far as only the store brand that issued it.