COMP 6125 An Introduction to Electronic

Commerce

Session 4: B2B, B2C, C2C and B2G E-

Commerce

B2B E-Commerce• Typically takes the form of automated processes

between businesses

• Also encompasses marketing activities between businesses; not just final transactions that result from marketing

• Approximately makes up 80% of e-commerce

• Has two primary components– E-frastructure– E-markets

E-frastructure

• Logistics– Transportation, warehousing, distribution

• Application Service Providers– Deployment, hosting and management of packaged

software from central facility

• Outsourcing of functions in the process of e-commerce– Web-hosting, security and customer care solutions

E-frastructure

• Auctions solution software for efficient real-time auctioning on the Internet

• Content management software– Facilitates Web site content management and

delivery

• Web-based commerce enablers

E-markets

• Web sites where buyers and sellers interact with each other and conduct transactions

B2C E-Commerce

• Business conducted online between customers and companies

• Involves the following:– Customers obtaining information about an

organisation– Customers purchasing physical or information

goods from the company– Receiving the products over an electronic

network (if applicable)

Benefits of B2C E-Commerce

• Reduces transaction costs

• Increases consumer access to information

• Allows consumers to find most competitive price for a product or service

• Reduces market entry barriers as cost of putting up and maintaining a Web site is much cheaper than installing brick-and-mortar structure

Benefits of B2C E-Commerce

• Removes additional cost of a physical distribution network for information goods

• Increases feasibility of delivering information goods by those countries with a growing and robust Internet population

C2C E-Commerce

• Commerce between private individuals or consumers [Wikipedia.org]

• Characterized by growth of e-marketplaces and online auctions

Forms of C2C E-Commerce

• Online auctions facilitated at a portal– For example: eBay, Bajanbid.com

• Peer-to-peer systems– For example: Napster, Morpheus, bitTorrent

• Online classified ads at portals– For example: eWanted, Excite Classifieds

Of Note – C2B

• Involves reverse auctions where consumer drives the transaction

• For example: A traveler posts the intention of flying from Miami to Boston. Competing airlines offers the traveler best travel and ticket pricing in response to her post

B2G E-Commerce

• Commerce between companies and the public sector

• Refers to the use of the Internet for public procurement (or e-procurement), licensing procedures, filing of tax forms, and other government-related operations

• Sometimes referred to as e-government

B2G E-Commerce

• The use of e-commerce by governments to improve the efficiency with which they undertake their support services and serve their stakeholder is on the rise

• Governments and government agencies are developing websites to better meet the needs of their stakeholders and to facilitate the dissemination of information

Features of B2G E-Commerce

• The public sector assumes a piloting or leading role in establishing e-commerce

• It is assumed that the public sector has the greatest need for making its procurement system more effective

Home Assignment

• Read Chapter 6, pg 263 - 300

Payment Options For E-Commerce

• Payment options should be safe, convenient and widely accepted

• Must integrate well with existing systems and practices

• Should not require customers to learn a new way of doing something that they were already comfortable doing

Current Payment Options

• Cash

• Checks

• Credit cards

• Debit cards

• Electronic transfer (includes automated payments)

“Newer” Payment Technologies

• Digital cash – Scrip: minted by a company and not a

government; must be exchanged for goods or services by the issuing company; now used mainly by not-for-profit organisations

• Case Study: Flooz and Beenz, pg 496

Payment Technologies

• Payment cards

• Electronic cash

• Electronic wallets

• Stored-value cards

Payment Cards• Credit card – Visa, Mastercard; have limit to spenditure

based on credit history of user

• Debit card – direct removal from account of funds at time of purchase

• Charge card – no spending limit; entire amount charged is due at end of billing period; no interest charges

• Single-use cards – developed to address concern of security in providing payment card numbers online; unique card number valid for one transaction only

Advantages Of Payment Cards

• Fraud protection – authentication authorization using payment card processing network

• Built-in security for merchants of assurance that they will be paid by the issuing card company

• Limited liability is fraud does occur (mostly in US)

• Worldwide acceptance

• No special hardware or software required for use

Disadvantages Of Payment Cards

• Card companies charge per-transaction and monthly processing fees to businesses – cost of an online transaction can be 50% higher than offline transaction; price of goods are slightly higher as a result

• Consumers have to pay an annual fee (credit and charge cards mainly)

• Stores typically require minimum purchase value amounts

• Small payments not profitable

Electronic Cash

• Supposedly looking promising for the future

• Any value storage and exchange system created by a private, non-governmental organisation that does not use paper documents or cash

• Can serve as a substitute for physical currency issued by the government

• Can be readily exchanged for physical cash on demand

Advantages of E-Cash

• Small payments are more feasible (and more profitable for merchants), especially for sales $10 or less

• Most of the world’s population do not have credit cards; hence, makes online purchasing more available to them

• Authorization by one party in the transaction is not required

Disadvantages Of E-Cash• No audit trail

• Money laundering

• Susceptible to forgery – less difficult than using a fraudulently obtained credit card number, however

• Not yet a global commercial success

• Multiple e-cash standards exist

Electronic Wallets• Holds credit card numbers, e-cash, owner identification,

owner contact information, shipping and billing information (multiple versions possible)

• Information provided at an e-commerce checkout counter

• Information is entered once, as opposed to re-entering for each e-commerce site

• Two types:– Server-side e-wallet– Client-side e-wallet

Server-side E-Wallets• Wallet information stored on a remote server

belonging to a specific merchant or wallet provider

• Issue: security breach exposes thousands of users’ information to unauthorized parties

• Typically use strong security measure that minimize possibility of this occurrence

• Must be enabled on the merchant site before a user can use the wallet

Client-side E-Wallets

• Stores information on user’s computer – removes risk associated with storing on remote server

• Wallet software required to be downloaded to user’s computer

• Not very portable – not available for use if you switch computers

Examples Of E-Wallets

• Microsoft .NET Passport

• Yahoo! Wallet

Stored-value Cards

• Elaborate smart card containing a microchip or magnetic strip that records currency balances

• Can store larger amounts of information

• Examples:– Magnetic strip cards (rechargeable)– Smart cards (better suited for Internet

payments due to processing capability

Discussion

• Visit Payment Online at http://www.paymentonline.com

Links

• Reference– Electronic Commerce, Seventh Annual Edition by Gary

Schneider– Whatis.com, http://www.whatis.com– Webopedia.com, http://www.webopedia.com– Wikipedia, http://www.wikipedia.org

• Of Interest– Onvia, http://www.onvia.com– Dept. of Homeland Security, http://www.dhs.gov/– Payment Online, http://www.paymentonline.com