1. INTRODUCTION
In the late 1970s, technology such as Electronic Data Interchange (EDI) and Electronic
Funds Transfer (EFT) were used for doing commercial transactions electronically. Now
businesses could send commercial documents like purchase orders or invoices
electronically.
The growth and acceptance of credit cards, automated teller machines (ATM) and
telephone banking in the 1980s was another form of electronic commerce.
In 1990, the World Wide Web was invented by Tim Berners-Lee. By the end of 2000 many
companies in America were offering their business services through the internet.
DEFINATION
A fairly broad definition of Electronic Commerce is given below:
“Electronic commerce is the process of doing business electronically. It involves the
automation of a variety of business-to-business-to-consumer transactions through reliable
and secure connections.”
FEATURES
Ubiquity
Ubiquity means found everywhere. E-commerce is available just about everywhere. With
E-commerce it is possible to shop from desktop, at office, at home, even when you are
travelling. There is no need to visit the physical market place.
Universal Standards
One unusual feature of E-commerce technologies is that the technical standards of the
Internet are universal standards- they are shared by all nations around the world.
Richness

2. It refers to richness in providing information to the consumer. Information about a
product is provided to the consumer by using Audio/Video.
Interactivity
E-commerce allows two way communications between merchant and consumer.
Communication can be with E-mail or on line chatting etc.
InformationDensity
Internet is making information more useful and important than ever. Information
becomes more plentiful, less expensive and of higher quality.
ADVANTAGES
1. Reduced cost to buyers.
2. Reduced errors as orders are processed electronically.
3. Reduced cost to the traders as the orders are obtained online.
4. Reduced time per transaction.
5. New markets are easily created even in remote areas.
6. Better quality achieved due to product standardization.
7. Optimization of resource utilization.
8. Lower inventory costs to the traders.
9. Lower advertising costs.
10. Equal oppurtinity for big and small merchants.
LIMITATIONS
1. E-commerce as being new technology, one has to be aware of how to use it in the
business.
2. E-commerce suffers from Security, Authenticity, Reliability and Accessibility.
3. E-commerce also suffers from bandwidth restrictions therefore sometime it is
difficult to use.
TYPES
Traditional forms of commerce have been in existence for decades and will
Continue to do so. However due to the various advantages of E—Commerce
listed in the previous chapter, the trend to use E-Commerce has been
increasing and is bound to continue to do so. There are different types of E-
Commerce and this distinction is by the nature of the relationship i.e. the
parties involved in the buying and selling.

3. The types of E-Commerce are
1. Business - to - Consumer (B2C)
2. Business - to - Business (B2B)
3. Consumer - to - Consumer (C2C),
4. Peer - to - Peer (P2P)
Business-to-Consumer (B2C)
It is a form of electronic commerce in which products or services are sold from a firm
directly to consumers. Example: amazon.com.
Business-to-business(B2B)
It is a form of electronic commerce in which products or services are sold from a firm
to another firm. It is performed in much higher volumes than B2C. Example:
shop2gether.com.
Consumer-to-Consumer(C2C)
It is a form of electronic commerce in which products or services are sold from one
consumer to another consumer with the help of online market such as the auction site
eBay. Example: ebay.com.
Peer-to-Peer (P2P)
It is a form of electronic commerce in which user can share files and computer
resources directly without having to go through a central Web server. Example:
BitTorrent.com.
REVENUE MODELS
Advertising Revenue
A Web site that offers its users contents, services, and/or products also provides a
forum for advertisements and receives fees from advertisers. Web sites, those are able
to attract the greatest viewer ship are able to charge higher advertising rates. Example:
Yahoo.
SubscriptionRevenue

4. A Web site that offers its users contents or services charges a subscription fee for
access to some or all of its offerings. They may charge monthly/ annual subscription fee.
The contents offered by such site, must be a high-value-added, premium offering that
neither is readily available elsewhere nor easily replicated. Example:
Consumerreports.org.
TransactionFee Revenue
A company receives a fee for executing a transaction. For example eBay provides an
online auction marketplace and receives a small transaction fee from the seller if the
seller is successful in selling the item. Example: eBay.
Sales Revenue
Companies derive revenue by selling goods, information or services to consumers.
Example: Amazon.
Affiliate Revenue
Sites that steer business to an “affiliate” receive a referral fee or percentage of the
revenue from any resulting sales. Example: Mypoints.
PAYMENT SYSTEMS
When commerce has become Electronic, the means of paying for goods and services
has also become electronic. The traditional paper based systems used for making
payments cannot give the speed, privacy and internationalization needed in E-
commerce. The following payment systems are used in E-commerce :
1. Digital Cash
Digital Cash is the electronic parallel of notes and coins. It is a string of numbers that
represent an amount of money. The customer or consumer has to deposit cash in
the banks, in lieu of which, the bank will be give electronic authenticated tokens. The
merchant who receives these electronic tokens then deposits them in his bank and
his bank credits his account.
2. Online storedvalue systems
Online Stored value payment systems enable consumers to make instant online
Payments to merchants and other individuals based on value stored in a digital
account. Online value systems rely on the value stored in a Consumer’s bank,
checking, or credit card account and some of these Management Information
systems require the use of a digital wallet. E-count offers a prepaid debit
account for online purchases.

5. 3. Digital Accumulating Balance Payment
Accumulated balance digital payment systems enable users to make micropayments
and purchases on the Web, accumulating a debit balance that they must pay
periodically on their credit card or telephone bills. IPIN has been widely adopted by
online music sites that sell music tracks for 99 cents. It invoices customers through
existing consumer billing services such as telephone and wireless service companies,
Internet service providers, and banks. PaymentOne and Trivnet enable consumers to
charge small purchases to their monthly telephone bill.
4. Digital Credit Card Payment
Credit cards account for 80 percent of online payments in the United States and
about 50 percent of online purchases outside the United States. The more
sophisticated electronic commerce software has capabilities for processing credit
card purchases on the Web. Businesses can also contract with services that extend
the functionality of existing credit card payment systems. Digital credit card payment
systems extend the functionality of credit cards so they can be used for online
shopping payments. They make credit cards safer and more convenient for online
merchants and consumers by providing mechanisms for authenticating the
purchaser’s credit card to make sure it is valid and arranging for the bank that issued
the credit card to deposit money for the amount of the purchase in the seller’s bank
account.
5. Digital Checking
Digital checking payment systems, such as Western Union Money Zap and e-Check,
extend the functionality of existing checking accounts so they can be used for online
shopping payments. Digital checks are less expensive than credit cards and much
faster than traditional paper-based checking. These checks are encrypted with a
digital signature that can be verified and used for payments in electronic commerce.
Electronic check systems are useful in business-to-business electronic commerce.
PRIVATE KEY ENCRYPTION
Private key encryption is the standard form. Both parties share an encryption key,
and the encryption key is also the one used to decrypt the message. The difficulty is
sharing the key before you start encrypting the message - how do you safely
transmit it?Many private key encryption methods use public key encryption to
transmit the private key for each data transfer session.If Bob and Alice want to use

6. private key encryption to share a secret message, they would each use a copy of the
same key. Bob writes his message to Alice and uses their shared private key to
encrypt the message. The message is then sent to Alice. Alice uses her copy of the
private key to decrypt the message. Private key encryption is like making copies of a
key. Anyone with a copy can open the lock. In the case of Bob and Alice, their keys
would be guarded closely because they can both encrypt and decrypt messages.
PUBLIC KEY ENCRYPTION
Public key encryption uses two keys - one to encrypt, and one to decrypt. The sender
asks the receiver for the encryption key, encrypts the message, and sends the
encrypted message to the receiver. Only the receiver can then decrypt the message -
even the sender cannot read the encrypted message.When Bob wants to share a
secret with Alice using public key encryption, he first asks Alice for her public key.
Next, Bob uses Alice's public key to encrypt the message. In public key encryption,
only Alice's private key can unlock the message encrypted with her public key. Bob
sends his message to Alice. Alice uses her private key to decrypt Bob's message.The
things that make public key encryption work is that Alice very closely guards her
private key and freely distributes her public key. She knows that it will unlock any
message encrypted with her public key.
DIGITAL SIGNATURE
Digital signatures are often used to implement electronic signatures, a broader term
that refers to any electronic data that carries the intent of a signature,[1] but not all
electronic signatures use digital signatures.[2][3] In some countries, including the
United States, India,[4] and members of the European Union, electronic signatures
have legal significance.
Digital signatures employ a type of asymmetric cryptography. For messages sent
through a nonsecure channel, a properly implemented digital signature gives the
receiver reason to believe the message was sent by the claimed sender. Digital
signatures are equivalent to traditional handwritten signatures in many respects, but
properly implemented digital signatures are more difficult to forge than the
handwritten type. Digital signature schemes in the sense used here are
cryptographically based, and must be implemented properly to be effective. Digital
signatures can also provide non-repudiation, meaning that the signer cannot
successfully claim they did not sign a message, while also claiming their private key
remains secret; further, some non-repudiation schemes offer a time stamp for the
digital signature, so that even if the private key is exposed, the signature is valid.
Digitally signed messages may be anything representable as a bitstring: examples
include electronic mail, contracts, or a message sent via some other cryptographic
protocol.

7. SECURE SOCKET LAYER(SSL)
The Secure Sockets Layer (SSL) is a commonly-used protocol for managing the
security of a message transmission on the Internet. SSL has recently been succeeded
by Transport Layer Security (TLS), which is based on SSL. SSL uses a
program layer located between the Internet's Hypertext Transfer Protocol (HTTP)
and Transport Control Protocol (TCP) layers. SSL is included as part of both the
Microsoft and Netscape browsers and most Web server products. Developed by
Netscape, SSL also gained the support of Microsoft and other
Internet client/server developers as well and became the de facto standard until
evolving into Transport Layer Security. The "sockets" part of the term refers to
the sockets method of passing data back and forth between a client and a server
program in a network or between program layers in the same computer. SSL uses
the public-and-private key encryption system from RSA, which also includes the use
of a digital certificate.
SECURE ELECTRONIC TRANSACTIONS(SET)
Secure Electronic Transaction (SET) is a systemfor ensuring the security of financial
transactions on the Internet. It was supported initially by MasterCard, Visa,
Microsoft, Netscape, and others. With SET, a user is given an electronic wallet (digital
certificate) and a transaction is conducted and verified using a combination of digital
certificates and digital signatures among the purchaser, a merchant, and the
purchaser's bank in a way that ensures privacy and confidentiality. SET makes use of
Netscape's Secure Sockets Layer (SSL), Microsoft's Secure Transaction Technology
(STT), and Terisa System's Secure Hypertext Transfer Protocol (S-HTTP). SET uses
some but not all aspects of a public key infrastructure (PKI).
 Explain any E-commerce website and explain showing the product they sell and
payment system of their website?

8. Flipkartis an Indian e-commerce company founded by Sachin and Binny
Bansal, headquartered in Bangalore, Karnataka .The company acts as a
mediator between sellers and customers and is regarded as the Amazon
of India.
About the company
• Online Retail Industry
• It is one of the leading e-commerce players in the country
• With over 11.5 million book titles listed, 11 different categories, more than 2 million
registered users and sale of 30000 items a day.
• Founded by Sachin bansal & Binny bansal in Bangalore, Karnataka in 2007.
• Started with initial capital of INR 4 lakh.
• 7 warehouses, offices and delivery centers (2011).
• Revenue is of 75 Crore (FY 2010-11).
• 4600+ employees till December 2011.
• Subsidiaries are “We Read”, “Mime 360” and “Lets Buy”.
FLIPKART PRODUCT LIST

9. PAYMENT SYSTEM