Introduction to Information Technology
2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
Electronic Commerce (continue …)
Prepared by:
Roberta M. Roth, Ph.D.
University of Northern Iowa
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-1
Electronic Commerce Innovations
 E-Government – deliver information and
public services to citizens and members of the
public sector
 M-Commerce – use of wireless devices to
deliver mobile e-commerce
 Consumer-to-consumer EC – direct
interaction facilitated by auctions, classifieds, and
bartering
 Intrabusiness EC – business units interact or
employees interact with employers
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-2
Electronic Commerce Requirements
 Infrastructure – hardware, software, and networks
needed to conduct transactions, communicate, and
collaborate
 Electronic Payment Mechanisms
 Electronic checks
•
•
•
Customer opens account with a bank
the customer e-mails an encrypted electronic check signed
with a digital signature
the merchant deposits the check in his or her account; money
is debited in the buyer’s account and credited to the seller’s
account
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-3
Electronic Commerce Requirements

Electronic Payment Mechanisms (continued)

Electronic credit cards
•
•

Unencrypted payments - the buyer e-mails her or his credit card
number to the seller on the Internet
Encrypted payments - credit card details encrypted for security
Electronic cash in PC
•
•
•
•
•
•
bank provides special software to consumer
customer buys “electronic money” from the bank through software
the bank sends electronic money note to this customer, endorsing it
with a digital signature
the money is stored on the buyer’s PC and can be spent in any
electronic store that accepts e-cash
the software is also used to transfer the e-cash from the buyer’s
computer to the seller’s computer
the seller either deposits the e-cash in a bank or uses the e-cash to
make purchases elsewhere
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-4
Electronic Commerce Requirements
 Electronic Payment Mechanisms (continued)
 Electronic payment cards with e-cash
•
•
Credit cards using magnetic strips
Card holds information about prepaid cash which can be
used to make payments
 Smart cards
•
Cards with microprocessors can hold much more information
 Person-to-person payment systems
•
Transfer of funds between individuals (PayPal)
 EFT
 Electronic wallets
 Purchasing cards
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-5
Electronic Commerce Requirements
 Security





Authentication - assurance regarding the identity of the parties
who are involved in the deal
Integrity - assurance that data and information (orders, reply to
queries, and payment authorization) are not accidentally or
maliciously altered or destroyed during transmission
Non-repudiation - Protection against the customer’s
unjustifiable denial of placing an order; buyer needs protection
against the vendor denial of shipment, or sending wrong order
Privacy - many customers want their identity to be undisclosed
Safety - assurance that it is safe to provide a credit card number
on the Internet
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-6
Electronic Commerce Requirements
 Security (continued)
 Encryption - a process of making messages indecipherable
except by those who have an authorized decryption key
• Single-key encryption
• Public/private key encryption
• Public key infrastructure
 Electronic Certificates
 Secure Socket Layer (SSL)
 Secure Electronic Transaction Protocol (SET)
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-7
Electronic Commerce Requirements
 Order Fulfillment





Find, assemble, and pack product
Ship product to customer
Collect customer payment
Arrange for returns if needed
Provide on-going support (e.g.,
animated assembly instructions)
 EC is a ‘pull’ operation – hard to forecast
demand and prepare to fulfill orders
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-8
Electronic Commerce Issues
 Buyer Protection










look for reliable brand names at sites like Wal-Mart Online, Disney
Online, and Amazon.com
search any unfamiliar selling site for company’s address and phone and
fax number
check out the seller with the local Chamber of Commerce and/or Better
Business Bureau
investigate how secure the seller’s site is by reading the posted privacy
notice, and evaluate how well the site is organized
examine the money-back guarantees, warranties, and service
agreements
compare prices to those in regular stores (suspect the too cheap sites)
ask friends what they know about the vendor
find out what your rights are in case of a dispute
consult the National Fraud Information Center
check www.consumerworld.org for a listing of useful resources
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-9
Electronic Commerce Issues
 Seller Protection
 Need protection against consumers who refuse to pay
or pay with bad checks and buyers’ claims that the
merchandise did not arrive
 Need protection against the use of their name by
others as well as use of their unique words and phrases,
slogans and Web address
 Need legal recourse against customers who download
copyrighted software and/or knowledge and sell it to
others
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-10
Electronic Commerce Issues
 Ethics
 Privacy
• most electronic payment systems know who the
buyers are; therefore, it may be necessary to
protect the buyers’ identity
 Web Tracking
• by using sophisticated software it is possible to
track individual movements on the internet
 Disintermediation
• the use of EC may result in the elimination of some
of a company’s employees as well as brokers and
agents
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-11
Electronic Commerce Issues
 Legal Concerns
 Domain Names
• several companies that have similar or same
names (in different countries) compete over a
domain name that is not a registered trademark
 Taxes and Other Fees
• Federal, state, and local taxing authorities are
trying to figure out how to impose taxes on
Internet sales
 Copyright
• intellectual property is protected by copyright laws
and cannot be used freely
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-12
Chapter Summary
 B2C EC encompasses e-tailing, auctions, and




online services
B2C EC provides numerous marketing and
advertising opportunities and challenges
B2B EC has the highest volume, and provides
several business models
Payment mechanisms and security are critical EC
issues
EC introduces many legal and ethical concerns
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-13
Copyright © 2003 John Wiley & Sons, Inc. All rights reserved. Reproduction
or translation of this work beyond that permitted in Section 117 of the 1976
United Stated Copyright Act without the express written permission of the
copyright owner is unlawful. Request for further information should be
addressed to the Permissions Department, John Wiley & Sons, Inc. The
purchaser may make back-up copies for his/her own use only and not for
distribution or resale. The Publisher assumes no responsibility for errors,
omissions, or damages, caused by the use of these programs or from the
use of the information herein.
Introduction to Information Technology, 2nd Edition
Turban, Rainer & Potter
© 2003 John Wiley & Sons, Inc.
9-14