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E-Business (MBA-218)
Business
Business can be defined as the organized effort of individuals to produce and sell for a
profit, products and services that satisfy society’s needs.
(Example of Involved Process by business: Production, Purchases, Sales,
Advertisement, Exhibition of Products, Marketing of Products, Sampling of Products
etc.)
Commerce
Commerce is a negotiated exchange of valuable object (Cash, Cheque, Gold, etc) or
services between at least two parties and includes all activities that each of the parties
undertake the complete the transaction.
Example: My Person trades eggs to one of his neighbors in exchange for repairs to his
furniture.
E- Business
Definition 1: E-business in the simple words is the use of internet technologies and
computing to implement business transition online to improve customer services
operation enhances the market share, attract large number of consumers, streamline
supply chain and reach existing & new customers.
Definition 2: In general the term E-business means doing any kind of business
transaction on the internet with the aid of two integrate component of E-Commerce (EDI
& VAN).
E-Commerce
Definition 1: A part of e-business; the term refers only to the activities involved in
buying and selling online, which may include identify suppliers, selecting products or
services, making purchases commitments, completing financial transactions, and
obtaining services.
Definition 2: We will define e-commerce as the use of electronic data transmission to
implement or exchange any business activity.
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Example: A buyer sends an electronic purchases order to a seller. The seller then sends
and electronic invoice back to the buyer.
History of Internet
1969
: The US Department of Defense started the first network among major
research centers in US.
1971
: A total of major connection or nodes were established. E-mail was
introduced.
1973
: Defense Department started developing various forms of file transfer.
1984
: Domain Name Service (DNS), was introduced.
1986
: US National Service Foundation created Internet-based telephone lines
1987
: The number of hosts (Computer on the Internet) reached 10,000.
1988
: The number of hosts on the Internet became over 60,000.
1989
: Over 100,000 hosts on the Internet were registered.
1991
: The World Wide Web (WWW) was created by CERN in Switzerland.
(Conseil European pour la Recherché Nuclearire)
1992
: One million hosts on the Internet were found.
1995
: There were a total of 6.6 million hosts or computer on the Internet.
July 1997 : 1.3 million Domain names registered.
Dec. 1997 : 22 million servers, 40 million users on the WWW.
2000
: 110 million users and 72 million Domains Names.
2003
: 802.2 million users and 233 hosts.
Growth of Internet in India
Years
Internet Subscribers
Internet User
1997
25
45000
1998
250
200000
1999
359
1000000
2000
650
2000000
2001
1130
6668000
2002
1763
10684000
2003
3661
29000000
2004
4403
31723000
2005
6674
52875000
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60000
50000
40000
Subscribers
User
30000
20000
10000
0
1999 2000 2001 Internet
2002 2003
2004
2005
Usage
in India
History of E-Commerce
The term E-Commerce was derived from E-mail means conducting business online with
the help of electronic devices like personal computer, phone lines, fax machine, pager
etc. IBM was the first company who use the term internationally. During 1970, the
introduction of EFT (Electronic Fund Transfer) between banks over secure private
network changed financial changed financial market. During the late 1970 & early
1980’s, E-commerce becomes widespread with in companies in the form of electronic
messaging technologies: EDI & E-mail. The 1972, IBM used this term as ‘E-business’
and the first successful transaction is held between USA and European union in 1973
with invention of personal computers.
E-commerce refers to the paperless exchange of business information using EDI,
Electronic bulletin Boards, E-mail and other network based technologies. It not only
automates manual processes and paper transaction, but also helps organization move to
fully e-environment and change the way they operate.
Electronic commerce (e-commerce) has become a buzzword for business over the past
few years
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Total E-Commerce Transaction in India
Year
Total e-commerce transaction
1998-1999
131 crore Rs.
1999-2000
450 crore Rs.
2000-2002
1400 crore Rs.
2006 (Expected)
2300 crore Rs.
Difference between E-commerce & E-Business:
Internationally both the term can be interchange and having the same concepts i.e. doing
business online. However, E-Business is the term is derived from e-Commerce.
E-Commerce
E-Business
1. Open System.
1. Closed System.
2. Not Secured.
2. Secured.
3. Does not involve the use of EDI.
3. Used EDI.
4. E-Commerce always operates on Internet.
6. Used for small and large transaction.
4. Always operates on intranet or
extranet.
5. Involve explicitly business
transactions.
6. Used for bulky transaction.
7. amazon.com, bazaar.com are example
7. e-trade.com, e-business.com are
5. Involve all types of commerce.
of E-Commerce.
example of E-Business.
Main Goals of E-Commerce 
1. To understand what are the need of consumer, merchants, & organization.
2. How to improve quality & quantity of goods.
3. How to increase speed of services
Need for E-Commerce 
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E-Commerce Is the business environment in which information for the buying, Selling
and transportation of goods and service moves electronically. E-commerce includes any
technology that enables a company to do business electronically. Some of the direct
benefits of E-Commerce are:
 Improved Productivity: (Speed of Transactions with accuracy, easier access
document and information)
 Cost Saving: (Check on Duplication of entries, human Error)
 Streamline Business Process
 Better Customer Services: Customers can enjoy the convince of shopping at any
hour anywhere in the world.
 Opportunities for New Business
Major Affecting Factors of E-Commerce 
1. Growth of Internet: (Speed, Subscribers, Electronic Environment)
2. Govt. Policies & Laws: (Security, Computer Crime, Data Protection and Privacy,
Telecommunication Laws)
3. Consumer Awareness: (familiar with electronic media)
Function of E-Commerce
E-Commerce application enables various business functions and transactions to be done
electronically:-
E-Advertising: - Advertising of Information is currently the largest commercial activities
on the web like:
a) The organization’s own web site, where information about products and the
Organization’s profile can be found.
b) Clickable Banners
c) E-Commerce portals like: www.yahoo.com
d) Newsgroup
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E-Catalogs: - Electronic Catalogs are web pages offering information about the products
or services offered by the company. An e-catalog may offer information like:
a) Product attributes and characteristics,
b) Packaging
c) Availabilities,
d) Ways of Payment
e) Price etc.
E-Publishing: - The publication sector was one of the first to invest in new technologies
and especially in the Internet. Successful e-commerce efforts in relation to e-publishing
are the electronic newspapers and the independent publication through the internet.
Some of the services offered by the online publication include the following.
a) On-line reading/ browsing:
b) On-line Search
c) Customized Information Services
E-banking: - E-Banking offers remote banking facility electronically. Electronic
Banking is also known as cyber banking, on-line banking, virtual banking or home
banking. It enables web user to make purchase online and pay for the same using an
online banking facility. It is cost-effective, easy and 24-hour available way of doing
business. The services offered to customer include:
a) Bill Paying
b) Electronic Cheque Writing
c) Tracking of bank account, credit cards etc.
d) Record Keeping
E-Traveling
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Shopping Services
1. Shopping Services provided by independent business who send representative to
store comparison shop for specific products. A shopping service is hired by
contract and will compare competitive prices or prices for the same item in
competitive stores, depending on the request and needs of the client.
2. Shopping Service offered to cable television subscriber where consumer can buy
products (Usually at discount) that are displayed on a special shopping services
channel.
3. Shopping Service offered to subscribers of personal information services for
home computer use. For example: A Company provides on-line information to
subscribers. Among the many services offered by this company is one called
products, Guides, Etc. From which consumers may shop and select purchases
right from their own computer terminals.
Information Services:
Pronounced as separate letters, and short for Information Systems or Information
Services. For many companies, Information System or Services is the name of the
department responsible for as IT and Management Information System. Information
System Support different types of decision at different levels of the organizational
hierarchy. Major types of information system include structural databases and
information management software that can include the following;

Transaction Process System (TPS)

Enterprise Collaboration System (ECS)

Management Information System (MIS)

Decision Support System (DSS)

Executive Support System (ESS)
Electronic Data Interchange (EDI):EDI is a standard for exchanging business data or document. All trading partners must
have to agree to follow some standard for exchange information like (Payment order,
Purchases order, invoices, and bills).
In EDI the information must move without intervention among trading partners.
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Supply Chain Management (SCM):SCM can be define as an electronic alternative to the traditional paper chain, providing
companies with a smarter, faster, more efficient way to get the right product to the right
customer at the right time and price.
Multimedia Content for E-Commerce Application
1. Multimedia content can be considered both fuel and traffic for e-commerce
application.
2. Multimedia content is the combination of text audio, video, and graphics in a
computer file document.
Text
Image
Graphics
Audio
Multimedia
Numerical
Data
Hologram
Video
Animation
3. It is the natural way to communication to the people.
4. The goal of multimedia is to increase the utility of all information through the
processing & distribution of new forms such as image, audio, video.
5. Multimedia has come to means the combination of computers, television and
telephone capabilities in a single device.
Storage
Application:Multimedia
Servers
and
Electronic
Commerce
1. E-commerce requires robust server to store and distribute large amount of digital
content to consumer.
2. These multimedia storage servers are large information warehouse capable of
handling various content, ranging from books, newspapers, advertisement catalog,
movies and games.
3. These servers serve information upon request must handle, large scale
distribution, guarantee security and complete reliability.
E-Commerce Framework
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It is clear that e-commerce application will be built on existing infrastructure myriad of
computer, communication, network and connection software framing the nascent
information superhighway.
E-Commerce Application:
1. Supply chain Management
2. On-line Banking
3. Procurement & Purchasing
4. On-line Marketing & Advertisement
5. Home Shopping
Figure shows variety of possible e-commerce applications, including both inter
organizational & consumer oriented example none of these uses would be possible
without each of the building blocks in the infrastructure.
Common business services Infrastructure
/Security/Authentication/Electronic Payment
The messaging & information distribution
Infrastructure (EDI, E-mail)
Multimedia content & Network Publishing
Infrastructure
The information superhighway infrastructure
(Telecommunication, Cable TV, wireless network,
Internet
Public Policy legal & Privacy
Issues
(Cyber Law, IT Act 2000)
Technical Standard for edocument s, multimedia &
Network Protocols
Building Blocks in the information
1. Common business services, for facilitating the buying & selling process.
2. Messaging & Information distribution, as a means of sending & retrieving
information. We frequently send & retrieve the information so these are facilities
of E-commerce.
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3. Multimedia content & network publishing for creating a product and a means to
communication about it. The e-commerce related website has the information
about the products and its design.
4. The information superhighway- The very foundation for providing the highway
system along which all e-commerce.
The Two pillars supporting all e-commerce applications & infrastructure are just a
indispensable.
1. Public Policy, to govern such as universal access privacy and information pricing.
2. Technical Standard- To dictate the nature of information publishing, user
interface and transport in the interest of compatibilities across the entire network.
Information can be access by any type of devices which consumer choose &
support any type of Operating System.
Difference between E-Commerce & Traditional System
S.No.
Basis
E-Commerce
1
It does not involve data at
multi points. With EReduce the data commerce
data
goes
error
directly from one to
another computer without
involving human being.
2
Initial cost of e-commerce
is very high as compared
to paper process but over a
long period of time it is
very effective.
Reduce Cost
3
Reduce Paper
Work
4
Reduce Process
Cycle Time
Traditional
The buyer & Seller create
purchases order on their system
print it or fare it or mail to
receiver. The receiver then reenter the same information on the
computer. This will create the
error.
As time is money, time is directly
linked to saving the money. In it
there is a repetition of same work
at every level. So it involves a lot
of time and if the error is arisen
that will lead to more wastage
money.
It requires re-entry of data at each
E-Commerce data in the
level and requires lot of time. So
electronic form makes it
the peak time is wasted in reeasy to share it across the
entering and printing of the
organization.
reports.
In Traditional System, when the
E-commerce reduces the buyer order in a paper format, the
processing cycle time of data is re-entered into the seller’s
complete cycles as the data computer
and
then
only
is entered the system it is processing can take place which
simulating process.
is a time consuming and full
commitment.
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What is required in order to conduct E-Commerce?
Number 1-3 below are the components that you will need to conduct E-Commerce, and
number 4-5 are optional depending on how you intend to accept payment,
1. You need a commercial website.
2. You need products or services that you plan to sell through your website.
3. You need a shopping cart system or an order form that your customers can use to
shop for and purchases what you are selling.
4. If you plan to accept credit cards as payment, you will need a credit card merchant
account.
5. If you plan to process credit cards in real time over the web, you will need an
online payment gateway.
*** Website: It is collection of web pages which are linked each other.
*** Shopping Cart: A piece of software that keeps a record of the choices you making
during an online buying session.
*** Gateway: It is a software program used to connect two networks using different
Protocols so that they cam transfer data between the two network.
*** Electronic fund Transfer: It is transfer of money between financial institutions over
secure private networks.
Manufacturers
Open
Market
Direct
Transaction
Low Transaction Cost
Direct Access to
Market
New
Business
Electronic
Markets
Dealers
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Industry’s Perspective
Consumers
Quick
Shopping
Variety of Merchandise
Financial
Market
Xccccc
Shopping Worldwide at Home
Cccc
Labour
Markets
Assets Management
Job hunting at
home
Shopping Mall
Consumer’s Perspective
Households
Resource & Energy Savings
Decreasing Unemployment
Governments
Improving Quality of Life
Economic Growth in Developing
Countries
Enhancing International Free
Trade System
Electronic Market
Enterprises
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Impact on the society
Merchant
Web
Site
Online
Consumer
Internet
Private Gateway
Online Transaction
Server
Processing Network
Issuing
Consumer
Bank
Acquiring
Merchant
Bank
Institutes
Government
Merchants
Process
Marketing
Sales
erce
E- Commerce Entities
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Component of E-Commerce
On-Line Shopping
Services
Bill Payment
Inter bank clearing house
Real –time financial
information
(Stock ticker)
Consumer
Home
Investment vehicles
(bonds, mutual funds)
Bank
Server
Advances services and home banking
Consumer
Merchant or Commerce Server
 Transaction Management
 Security
 Return Management
 Settlement
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Browser:
Other Communication
Between the bank &
customer
A View of Internet Payment Process
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Merchant
Customer
1
8
Third Party
2
8
Encryption Software
Monthly
Statement
Processor
Verify
3
2
8
6
3
2
Credit Card Processor
8
4
3
On-line Credit
Card Transaction
2
8
5
Customer Bank
4
3
2
8
Simplified on-line mercantile model
7
2
8
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What is Electronic Payment System (EPS)?
The Electronic fund transfer of money between financial intuitions over secure
private network.
Making Payments on the internet are essentially electronic version of the traditional
payment systems. But in the electronic payment everything is digital and it is designed to
handle electronically, no change and/or old currency problems!
Electronic Payment System is more sure faster payment systems which serve its customer
fast and low cost services.
(2) Remittance
Request
(1) Buy Request
Customer with
need
Payment
Institution
Merchant
(4) Delivery
(3) Approval
Advantage of Electronic Payment System
1. EPS is not bounded by region boundaries so that fund can transfer anywhere.
2. It is secure method of fund transfer. It provides faster services compare to
conventional payment system.
3. It provides services not only to big organization, bank, business transaction but
also to users and consumers for online shopping & marketing at very low cost.
4. It provides various way by which a customer can make payment such credit card,
digital cash, debit card etc.
Issues Involves in EPS
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1. The selection of the mode of EPS which is chosen by consumers in which
customer must satisfy for example- E-Cash, E-Cheque, Credit Cards and Debit
Cards.
2. In online market, how can we manage the financial risk associated with various
payment instrument- Privacy, Frauds and Mistakes as well as other risks like bank
3. What are the step-by-step procedure & institutional arrangements that from the
fabric of the electronic payment business process that link consumer and
organization?
Types of E-Payment System
Three categories of EPS:
1) Banking & Financial Payments:
 Large scale or whole payment (e.g. bank to bank transaction)
 Small scale or retail payment (e.g. ATM)
2) Retailing Payments:
 Credit Cards(VISA or Master Cards)
 Private label credit/debit cards
 Charges cards(e.g. American Express)
3) Online E-Commerce Payments:
 E-Cash
 E-Cheque
Digital Token – Based Electronic System
In a traditionally system, their deficiency is their assumption that the parties will at some
time or other’s physical presence or that will be a sufficient delay in the process for
frauds, overdrafts and other undesirables to be identified and corrected.
Entirely new forms of financial instruments are also being developed. One such new
financial instrument is “Electronic Tokens” in the form of electronic Cash/Cheque.
Simply stated, electronic tokens are equivalent to cash that is backed by a bank.
Electronic tokens are of three types:
1. Cash or real-time: Transaction are settled with the exchange of electronic
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currency. An example of on-line currency exchange is
electronic cash (e-cash).
2. Debit or prepaid: User pay in advance for the privilege of getting information.
Examples of prepaid payment mechanism are stored in smart
card and electronic purses that store electronic money.
3. Credit or postpaid: The server authenticates the customers and verifies with the
bank and funds are adequate before purchases. Examples of
postpaid mechanism are credit/debit cards and electronic
Cheque.
Certificate Authority
Certificates Authority is issued to companies and organizations that are accessible via the
internet. They are issued for certain period of time and are used as a guarantee of the
security of a web site.
Digital Certificate
Digital certificate is defined as a method to verify electronically for authenticity. The
digital certificate equivalent of positive identification, such as a driver’s license.
Issued by various certificate authorities, digital certificates are used to prove that a
website, or a visitor to a website, is the entity or person they claim to be: An electronic
credential issued by a certification authority to establish the identity of an organization
when doing business on the internet.
Contents of digital certificate
It includes





Holder’s Name, organization, address.
The name of certificate authority.
Public key of the holders for cryptographic use.
Time limit, these certificates are issued for 6 month to a year long.
Digital certificate identification number.
Electronic Cash
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Electronic cash is a form of electronic payment system which is based on encryption; it
means it is a secure payment system. Security of e-cash is measures by digital signature.

It uses a pair of key for locking & unlocking fund.

Locking key is used for encoding of a message into a cipher text. The encoding
key is kept private and the decoding key is made public.

By supplying all customers (buyers & sellers) with its public key, a bank enables
customers to decode any message or (currency) encoded with banks private key.
Purchasing E-Cash from Currency Servers or e-mint
The purchase of e-cash from an on-line currency server (or bank) involves two steps.
1. Establishment of an account
2. Maintaining enough money in the account to back the purchases.
E-mint
2. Transfer
Money
7. Credit
Merchant a/c
Consumer’s
Bank
3. Send E-Cash
6. Return ECash
1. Request
to obtain
cash
4. Send E-Cash
Consumer
Merchant’s
Bank
Merchant
5. Delivers Goods
Working of E-Cash
The e-cash transaction take place in three district and independent phases as discussed
below:
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Phase- 1: Obtaining Electronic cash:
1. The consumer requests his/her bank to transfer money to the e-mint to obtain ecash.
2. The consumer bank transfers money from the consumer’s a/c to the e-mint.
3. The e-mint sends e-cash to the consumer. The consumer servers his/her cash.
Phase- 1: Purchasing with Electronic cash:
4. The consumers select the goods and transfer the e-cash to the merchant.
5. The merchant provides the goods to the consumer.
Phase- 3: Redeeming Cash by the Merchant:
6. The merchant may sent the e-cash to its bank and the bank in turn redeems the
money from the e-mint.
7. The e-mint transfer money to the merchant’s bank for crediting the merchant’s
a/c.
Properties of E-Cash
Following four properties
1) Monetary value: (E-cash created by one bank and accepted by others)
2) Interoperability: (Exchangeable as payment for other e-cash, paper cash, goods,
services. )
3) Retrieval & Storage
4) Security: (E-cash should not be easy to copy)
Advantage


Best suited for small transactions.
Authentication is not an issue who pay’s is not important as long as a
merchant gets his payment.
Operational risk associated with e-cash
1. The time over which given money is valid.
2. How much can be stored on and transferred by electronic money.
3. The no. exchange that can take place before a money needs to redeposit with a
bank or financial institutional.
4. The number of such transactions that can be made during a given period of time.
Electronic Cheque:
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Electronic Cheque has all the same features as a paper Cheque. It functions as a message
to the sender’s bank to transfer funds, the message is given to the receiver, who in turn
endorses the Cheque and presents it to the bank to obtain funds.
Consumer’s Bank
Merchant’s Bank
6. Forward
Cheque
8. Account
Update
7. Forward
Cheque
5. Forward
to bank
3. Validate
Cheques
Clearing House
Consumer
Browser
1. Access and Browser
2. Select goods pay e-Cheque
Merchant
System
4. Close Transaction
Working of E-Cheque
Phase-1: Purchasing Goods
1. The consumer accesses the merchant server and the merchant server presents its goods
to the consumer.
2. The consumer selects the goods and purchase them by sending an electronic Cheque to
the merchant.
3. The merchant may validate the electronic Cheque with its bank for payment
authorization.
4. Assuming the Cheque is validated the merchant closes the transaction with the
consumer.
Phase-2: Depositing Cheque at the merchant’s bank:
1. The merchant electronically forwards the Cheque to the bank.
2. The merchant bank forwards the e-Cheque for clearing house for cashing.
3. The clearing house with the consumer bank, clears the Cheque and transfers money to
the merchants bank, which updates the merchant account.
Smart Card:
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Smart cards are credit and debit cards and other card products enhanced with
microprocessor, capable of holding more information than the traditional magnetic stripe.
Most of these methods are known as stored value cards or electronic purse system. Units
of prepayment or currency value are electronically stored on an IC chip imbedded in
these cards.
Smart cards are basically of two types: Relationship-based smart credit card and
electronic purse. Electronic purse, which replace money, are also known as debit cards
and electronic money.
Relationship-based smart credit card: A relationship-based smart card is an
enhancement of existing card services and/or the addition of new services that a financial
institution delivers to its customers via a chip-based card or other device. These new
services may include access to multiple financial accounts, balance inquiry and other
information cardholder may want to store on their card.
Working :( Access multiple accounts, such as credit, debit, investments or stored value
for e-cash, on one card or electronic devices)
Electronic Purse and debit cards:
E-Purse is wallet size smart card embraced with programmable microchip that store
monitory value in form of money.
The electronic purse works in the following manner. After the purse is loaded with
money, at an ATM or through the use of an inexpensive special telephone, it can be used
to pay for example Candy in a vending machine equipped with a card reader. The
vending machine is authentic and there is enough money available for a chocolate bar.
Credit Card:
The credit card transaction simply requires that the consumer have a valid credit card
number and expiry date when placing an order. This information has been provided
through standard internet option like e-mail/sms.
In credit cards may used a long with a personal information number (PIN). The pin is a
secret code that the consumer must enter while using the credit card online. As such, it
prevents misuse of the card in case it is stolen.
Working of Credit Card:
Phase:1 Purchases of goods: transaction starting from 1-4.
Phase:2 Settlement of transaction from 5-6.
Phase:3 Consumer update of credit card bill in the transaction number.
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6. Forward receipt and obtain
payments
Card Issuer
Merchant’s
Bank
3. Request
and obtain
credit
authorization
Consumer
(Browser)
1. Access Home page
2. Select goods, make credit
card payment
4. Close Transaction
Working of Credit Card:
5. Provide
credit and
receipt
Merchant
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Merchant
Customer
1
8
Third Party
2
8
Encryption Software
Processor
Monthly
Statement
4
3
2
8
3
2
8
6
3
2
Credit Card Processor
8
5
4
3
E-Security
2
A security threat is define as a circumstances, condition, or event to cause economic
hardship to data or network resources in8the form of destruction, disclosure, and
Customer Bank
modification of data, denial of services and/or fraud & waste.
In addition, organization must be concerned with the inherent security threats associated
with business over the web such as:
1. Unauthorized user access
2. Tampering and eavesdropping
7
2
8
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To overcome this strong network security solution is essential which can transparently
and automatically control the access of corporate intranets or extranets. The solution must
provide identification and authentication of users, encryption of all traffic from the
application to the user, and access control to all information.
E-Security can be divided into two parts:
1) Client-server network security
2) Data & transaction security
Client-server network security: Client server security ensure that only authorized users
can access to information resources.
a) Physical Security: When unauthorized user gain physical access to computer
b) Software Security: When program/software is comprised into doing thing
they should not.
c) Inconsistent Usage: When administrator assembles combination of Hardware
& Software such that the system is seriously flowed from a security point of
view.
To reduce these security threats, various protection methods are used. Protection-also
called authorization or access control.
Protection methods are:1) Trust-based security
2) Security through
3) Passwords Schemes
4) Biometric System
A) Trust-based security: Trust based security means to trust everyone & do nothing
extra for protection and there is not access restriction on any kind of data access.
All users work in a network can shared information, this approach assume that no
any user make an expensive break as detection of files or modification of data or
unauthorized access of data Now a days this approach do not work, it used in
past.
B) Security through Obscurity: Any network can be secure as long as nobody
outside its management group is allowed to find out any thing about its
operational details.
 Hiding account password in binary files or script so that “nobody will
ever find them”.
 But its usefulness is minimal in the UNIX world. Where users are free to
move around the file system, have a great understanding of programming
techniques.
 They can easily guess at the bits of knowledge considered confidential.
These bypass the whole basis of STO and make this method of security
useless.
Page 27
C) Password Schemes: One security is password schemes. However it can also
break when we use some common words or names for password.
 The simplest method used by most hackers is dictionary comparison.
Comparing a list of encryption user passwords against a dictionary of
encryption common words. This schemes often works because users tend
to chose relatively simple or familiar words as passwords as passwords.
 As a solution we use mixed-case passwords containing at least one non
alphanumeric character & changing passwords every 60 to 90 days
 We can also include one time passwords, smart card randomized tokens.
D) Biometric System: Biometric system involve some identical aspects which
related to human body such as compare the finger prints, palm prints and voice
recognition. Biometric Systems are very expensive to implement. Biometric
System use one to one relationship and one to many relationships.
Data & Message Security:
Transaction securities have two parts:
I) Data Security
II) Message Security
Data Security: Data securities suffer from packet sniffing.




Sniffing attack begin when a computer is compromised to sharing some data
or program.
Cracker starts to install packet sniff into data that monitors the networks
sniffer program to attack on network traffic, telnet, FTP.
Session that legitimate user initiate to gain access to another system.
The session contains the login ID, password and user no. of the person
logging into other machines, all this necessary information a sniffer needs to
login into machine.
Message Security:
Threats to message security fall into three categories
a) Confidentiality
b) Integrity
c) Authentication/Identification
a) Message Confidentiality: Confidentiality is important for user sensitive data such as
credit card number. This requirement will be amplified when other kinds of data such as
employee records, government files and social security number, begin traversing the
nature.
b) Message Integrity: Content of transaction must be unmodified during transport.
Page 28




It must be clear that number one has added, delete or modified any part of the the
message.
Error detection codes or checksum, sequence no., and encryption techniques are
methods to enhance information integrity.
Sequence number prevents recording, loss or replaying of message by an attacker.
Encryption technique such as digital signature can detect modification of a
message.
C) Message Sender authentication/identification



For e-commerce, it is important that clients authenticate themselves to servers that
servers authenticate to clients, that both authenticate to each other.
Authentication in e-commerce basically requires the users to prove his or her
identify for each requested service.
Third-party authenticate services must exist within a distribution network
environment where a sender can not be trusted to identification itself correctly to
a receiver.
Client-Server Security Threats:
These threats can be divided into two major categories.
1) Threats to client
2) Threats to server
Threats to client
1) Client threats mostly arise from malicious data or code, Malicious code refers to
viruses, worms, Trojan horses and deviant.
Virus: A code segment that replicate by attaching copies of itself to existing executable
(EXE files). The new copy of the viruses is executed when users executes the host
programs some viruses displaying a text string or delete all files on the hard disk on a
particular date.
Trojan Horse: A program that performs a desired task but also includes unexpected
functions.
Example: Editing program for multi-user system. This program could be modified to
randomly delete one of the user’s file.
WORM: A self replicating program that a self continued & does not require a host
program.
Clients must scan for malicious data & executable program fragment that are transferred
from the server to the client.
Page 29
Threat to servers
Threat to server consist unauthorized modification of source data.
 Unauthorized eavesdropping
 Modification of incoming data packets.
Eavesdropping: Hackers can use electronic eavesdropping to trap user names &
unencrypted password sent over that network. It is difficult to delete that some one is
eavesdropping encryption can prevent eavesdropping from obtaining data traveling over
unsecured network.
Denial of Services: It is two types.
1) Service Overloading
2) Messaging Overloading
Service Overloading: One can easily overload a www server by writing a small
loop that sends requests continually for a particular file for example: A home page.
Message Overloading: Occurs when some one sends a very large file to a
message box every few minutes. The message box rapidly grows in size & begins to
occupy all space on the disk and increase the no. of receiving process on the recipients’
machine & causing a disk crash.
Packet Replay: Refer to the recording & retransmission of message packets in
the network. Hacker could replay legitimate authentication sequences message to gain
access to a secure system.
Packet Modification: Integrity threat, involve modifying a message packet or destroyed
the message packet.
IP Spoofing: A technique where an attackers attempts to gain unauthorized access
through a false source address to make it appear as though communication have
originated in a part of the network with high privileges.
Some Security threats & Solutions
Threats
Security
Data
intercepted, Encryption
read or modified
illicitly
False identify with Authentication
an intension of fraud
Unauthorized user Firewall
on one network
gains access to
another
Function
Technology
Encoder data to Symmetric
and
prevent tempering
Asymmetric
encryption
Identity verification Digital signature
of both sender &
receiver
Filter and prevents Firewalls:
certain traffic from Virtual private nets
entering the network
or server
Page 30
Encryption as the basis for data & messaging security:
Encryption is a cryptography technology to scramble (encrypted) the data with a key so
that no one can make sense of it while its being transmitted. When data reaches its
destination, the information is unscramble (decrypted) using same or different key.
Cryptography: The terms used commonly in a cryptography system are as follows:
Intruder: Intruder is a person who is not authorized to access the information or th
network.
Plain Text: Intelligible message that is to be converted into unintelligible message
(Encrypted message).
Cipher Text: Message in an encrypted form.
Example:
(Encrypt Form)
Plain Text
Algorithm
Cipher Text
(Decrypt Form)
Algorithm
Plain Text
Goods
Next Two Word
Iqqfu
Previous Two word
Goods
Sales
Previous One Word
rzkdr
Next One word
Sales
Encryption: Process of converting plain text to cipher text.
Decryption: Process of converting cipher text to plain text.
Algorithm: A cryptography algorithm is a mathematical function.
Key: String of digits.
There are two type of cryptography or methods of encryption


Secret key or symmetric key
Public key or asymmetric key
Page 31
Secret key: In this scheme, both the sender and recipient possess the same key to encrypt
and decrypt the data.
Original
Message
Encrypted
Message
Secret Key
Encrypt
Internet
Encrypted
Message
Original
Message
Secret Key
Decrypt
Example: DES: (Data Encryption Standard)
For example message A encrypts a message with secret key & e-mails the encrypted
message to B on receiving the message, B checks the header to identify the sender &
takes out the duplicate of the secret key, B then uses the secret key to decrypt the
message.



Shared key techniques suffer from the problem of key distributions since shared
keys must be securely distributed to each pair of communicating parties.
The i) Generation ii) Transmission & iii) storage of keys is called key
management.
In a business environment where a company deals with 1000 of on-line
customers, it is impractical to assume that key management will be flawless.
Drawbacks
 Both parties must agree upon a shared secret key.
 If there are “n” correspondent one have to keep track of n-different secret keys. If
the same key is used by more than one correspondent, common key holders can
read each other’s mail.
 Symmetric encryption schemes are also subjected to authenticity problems.
Because, sender & recipient have same secret key identity of originator or
recipient can not be proved. Both can encrypted or decrypted the message.
Page 32
Public Key Cryptography
This scheme operates on double key called pair key one of which is used to encrypt the
message and only the other one in the pair is used decrypt. This can viewed as two parts,
one part of the key pair, called private key known only by the designated by the owner,
the other part, called the public key, is published widely but still associated with owner.
Original
Message
Public Key
Encrypt
Encrypted
Message
(Cipher Text)
Internet
Original
Message
Encrypted
Message
Private Key
Decrypt
(Cipher Text)
Schematic diagram of Asymmetric Encryption
Encrypting & decrypting


Data encrypted with public key can only be decrypted with private key.
Data encrypted with private key can only be decrypted with public key.
Strong points of this scheme
The key can be used in two different ways:
1. Message confidentiality can be proved: The sender uses the recipients public key
to encrypt a message, so that only the private key holder can decrypt the message, non
other.
Page 33
2. Authenticity of the message originator can be proved: The receiver uses his
private key to encrypt a message, to which only the sender has access.
3. Easy to distribute public key: Public key of the pair can be easily distributed.
Person “X”
Original
Message
Person “Y’s”
Public Key
Encrypt
Encrypted
Message
(Cipher Text)
Internet
Encrypted
Message
Person “Y’s”
Private Key
Decrypt
Original
Message
(Cipher Text)
Person “Y”
Page 34
Firewalls:
The term firewall is a method of placing a device a computer or a router-between the
network and the internet to control and monitor all traffic between the outside world &
the local network.



A firewall system is usually located at a gateway point such as a site’s connection
to the internet.
A firewall is simply a barrier between two networks-in most cases an internal
network often called the trusted network and case an external network called
untrusted.
Firewalls examine incoming & outgoing packets according to a set of policies
defined by administrator either let them through or block them.
Internet
40,000
networks-no. of
hackers?
Enterprises
LAN
Or
WAN
Firewall by
pass should not
be allowed
Firewall Policy: Firewall generally implement one of two basic design policies.
1) Premises Approach
2) Restrictive Approach
Page 35
Permissive Approach: Allows all the services to pass the site by default, with the
exception of those services that the network services access policy has identified as
disallowed.
Restrictive Approach: A firewall that implement the second policy denies all services
by default, but then passes those services that have been identified as allowed.




The first policy is desirable, since it offers more a venues for getting around the
firewall.
Second policy follows the classic access model used in all areas of information
security.
Certain service, such as FTP, Archie & RPC are difficult to filter, for this reason,
they may be better accommodated by a firewall that implements the first policy.
The second policy is stronger and safer, but it is more restrictive for users.
Types of Firewall: Two types of firewalls
A) Static Firewall
B) Dynamic Firewall
Static Firewall: Static firewalls are generally pre-configured and they allow or deny the
access from the outside world by default. Default allows the inbound traffic, in such a
mechanism only the specified user will be denied access to the network of the enterprises.
In the default deny policy, only the specific users who display their authentication are
permitted to access the network.
Dynamic Firewall: The dynamic firewall uses allow and denial of services policy at the
network on the time basis.


Some service on the network may be allowed and other may be denied for a
specific time interval.
The configuration of such firewall is slightly more complex.
Now a day’s firewall can be implementing in two ways:1) IP packet screening routers.
2) Proxy Application Gateways.
1) IP packet screening routers:
 This is a traffic routing service placed between the network service
provider’s router & the internal network.
 The firewall router filters incoming packets to permit or deny IP Packets
based on several screening rules.
 It examines the source & destination addresses & port of incoming TCP &
UDP packet & denies or allows packets to enter based on a set of
predefined rules.
Page 36

Packet filter are inexpensive but relatively complex process.

It usually requires precise knowledge of network, transport and sometime
even application protocols.

Another problem with is packet filters is that they are susceptible to IP
spoofing; A tricky hackers can gain access to a corporate network by
changing IP address in packet headers to ones that are acceptable.
Public Internet
IP Packet screening router
Sample Screening Rules:

Protocols (TCP, UDP)

Source IP address (Domain.edu)

Target TCP port 80 (WWW only)
Secure firewall with IP packet screening router
Proxy Application Gateways:

A proxy server application gateway is a special server that typically runs on a
firewall machine.

Instead of directly talking to external WWW servers, each request from the
client would be routed to a proxy on the firewalls that is defined by the users.

The proxy waits for a request from inside the firewall, forwards the request to
the remote server outside the firewall, forwards the request to the remote
server outside the firewall reads the response & then returns it to the client.
Page 37
Public Internet
Web HTTP
Server
Secure subnet inside the
firewall security perimeter
FTP
Server
Proxy server on
the firewall
machine that
connect to the
external internet
Client
inside the
Firewall
Gopher
Server
Telnet
Server
USENET news
Server
Digital Signature: E-Commerce business transactions for authentication the digital
signature are used. The authentications refer the legal, financial & other document related
issues.
 Digital Signature is just like hand written signature which determined presence &
absence of authentications.
The digital signature consist of two parts
1. Signature in the document: Signer authentication
2. Document Authentication
Signer Authentication: A signature should indicate who signed a document, message or
record and should be difficult for another person to produce without authorization.
Document Authentication: A signature should identify what is signed.
 Sender can not remove the content of messages after signing it.
 The receiver can not do any change in the message.
Hash Function:
It is a formula that converts a message of a given length into a
string of digits called a message digest.
(Hash function  Message digest)
Working: X sends the message to Y
Encrypt
With sender’s private
key
X
Sender
Digital Signature
Y
Receiver
Page 38
1. Sender generates a message.
2. Sender creates a “Message digest” of the message by using Hash Function.
3. Sender attaches the digital signature to the end of the message.
4. Sender encrypts both message & signature with receiver’s public key.
5. Receiver decrypts entire message with own private key.
6. Receiver calculates the message digest using hash function.
(Receiver uses the same hash function as that of sender used, which was agreed upon
before hand)
Advantage: Unauthorized persons can access to the public key of X person, but can
not have his hash function, which makes the digital signature authentic.
Page 39
Types of E-Commerce or E-Commerce Transaction Model
Business to Consumer (B to C)
Business to Business (B to B)
Consumer to Business (C to B)
Consumer to Consumer (C to C)
Business to Consumer: B2C, E-Commerce offers consumers the capabilities to browse,
select and buy merchandise online from a wider verity of sellers and at better prices. The
B2C of electronic commerce transaction is ideally suited for the following type’s
merchandise.





Goods that can be easily transformed into digital format, such as book, music,
clips and videos and software packages.
Items that follow standard specification like printer. Ribbon, ink cartridge etc.
Highly rated branded items or items with return security: such as Compaq
computers, e-gadgets Sony etc.
Items sold in packet that can not be opened even in physical stores e.g. Kodak
film rolls.
Item that can be experienced online, such as music, videos etc.
Example: http:\\ www.dell.com , http:\\ www.mustafa.com.sg
How does B2C Work?
1.
2.
3.
4.
5.
6.
Customer identifies a need
Searches for the product or services
Selects a vendor and negotiates a price
Receives the products or services
Makes Payment
Gets services and warranty claims
Business to Business: B2B, electronic commerce facilitates inter-organizational
interaction and transaction. This type of E-commerce requires two or more business
entities interacting with each other directing, or through intermediary.
Application of B2B:
1.
2.
3.
4.
5.
Inventory Management
Channel Management
Distribution Management
Order fulfillment & delivery
Payment Management
Page 40
The B2B electronic commerce can be following type:
i)
Supplier oriented
ii)
Buyer oriented
iii)
Intermediary oriented
Supplier oriented:
A supplier sets up the electronic market place. Number of customer/buyer
business interacts with the supplier at its electronic commerce marketplace. Typically, it
is done by a dominant supplier in the domain of products its supplies.
Buyer oriented:
In buyer oriented electronic commerce, major businesses with high
volume purchases capacity create an electronic commerce marketplace for
purchases and gaining by starting a site on their own. The online e-commerce
marketplace is used by the buyer for placing request for quotations and carrying
out the entire purchases process.
Intermediately oriented:
In buyer oriented e-commerce, in the business to business context, a third
party set up the electronic commerce marketplace and attracts both the buyer and seller
businesses to interact with each other. The buyers and seller, both benefits from the
increased option in terms of pricing, quality, availability and delivery of goods.
Raw Material
Producer
Manufacturer
Distributor
Retailer
Consumer
B2C
B2B
Relation between B2B and B2C models.
Summary of E-Business Transaction Models
Model
B2C
Description
Sells products or services directly to consumers.
Example
amazon.com, autobytel.com,
eDiets.com, pets.com,
B2G
Sells products or services to other businesses or
bring multiple buyer & seller together in a central
marketplace.
Business selling to local, state and federal agencies.
C2C
Consumer sell directly to other consumers
ebay.com, inforocket.com,
baazee.com
C2B
Consumers fix price on their own, which businesses
accept or decline.
priceline.com
B2B
metalsite.com, verticalnet.com,
shop2gether.com
igov.com
Page 41
Consumer to Consumer (C2C)
C2C e-business model, consumers sell directly to other consumers via online classified
advertisements and auctions or by selling personal services or expertise online.
infoRocket.com, one of the first question and answer marketplaces, is driven by a person
to person auctions format.
Consumer to Business (C2B)
The C2B model can be described as a form of e-commerce where, the transaction,
originated by the customer has a set of requirement specifications and specific price for
merchandise.
Mobile Commerce
Mobile Commerce stands for electronic commerce made through mobile devices.
M-commerce is defining by following ways

“M-commerce is the use of mobile devices to communicate inform, manage &
entertain using text and data via a connection to public & private network”
(by Lehman brother)

“Business to consumer transaction conducted from a mobile device”
(by J.P. Morgan)

“Mobile commerce refers to any transaction with monetary value that is
conducted via a mobile telecommunications network”
(by Durlacher)
MobileInfo.com: Define m-commerce as “any electronic transaction of information
interaction conducted using mobile device and mobile networks (wireless or switched
public network) that leads to transfer or real or perceived value in exchange for
information, services or goods”
Typical Example of m-commerce:
1) Purchasing airline tickets
2) Purchasing movie tickets
3) Restaurant booking and reservation
4) Hotel booking & reservation
M-Commerce is currently mainly used for the sale of mobile phone, ring tones and games
as well as video and audio content, including full length music tracks.
Page 42
Other services include the sending of information such as cricket scores via SMS.
Currently



the
main
payment
methods
used
to
enable
m-commerce:
Premium-rate calling numbers.
Charging to the mobile telephone user’s bills or
Deducting from their calling credit either directly or via reverse-charged SMS.
Separating Mobile Commerce form E-commerce
Technology
E-Commerce
M-Commerce
Device
Personal Computer
Cellular phones, pagers
Operating System
Windows, Unix, Linux
Pocket PC, Palm OS.
Presentation Standard
HTML
HTML, WML, i-mode
Ms Internet Explorer,
Netscape Navigator.
TCP/IP & Fixed wire line
Internet
Nokia Browser, Ms Mobile
Explorer
GSM, GSM/GPRS,
TDMA, CDMA
Browser
Possessor Network
Mobile Computing Framework
1. Wireless delivery technology and switching methods
(Cellular, radio, paging, satellite and wireless LAN)
2. Mobile information access devices
(Laptop, notebook, other portable computers and mobile phones)
3. Mobile data internetworking standard & equipment
(No any interruption in between Bridge or Tunnels)
4. Mobile computing-based business application
(Inventory & Package tracking and retail point of sale)
(Most frequently mentioned include mail-enabled application &
Information or data services to mobile users.) )
Application of M-Commerce
Page 43
1. Goods: There can be two type of domain like business to business and business
to Consumer. For example a vendor can sale to consumer or to another vendor.
2. Service: Again services can be business to business and business to consumer.
For example a company can provide services directly to consumer or to another
company.
3. Information: Information services can be paid to consumers or to other
companies. The second aspect is advertising.
Business to Business
Business to Consumer
Goods
Shopping
Vending
Trading
Services
Information
Gaming and
Gambling
PaidInformation
Procurement
Trading
Ticketing
E-Cash
Banking
Discount and
Loyalty
Schemes
Limitations of Mobile-Commerce
1. Lack of consumer awareness about mobile commerce.
Advertising
Page 44
2. M-commerce operating system and platform (other software) is not as easy as
well as desktop software’s.
3. Weak processor
4. Limited memory
5. Tiny screens and poor resolutions
6. Typically to enter data entry.
Security Issues Pertaining to Mobile Commerce
1. To make the radio path as secure as the fixed network, this implies obscurity and
confidentiality to protect against eavesdropping.
2. To have strong authentication to protect the operator against billing fraud.
3. To prevent operators from compromising each other’s security, whether
unintentionally or because of competitive pressures.
On the other hand, a security process must not:
 Significantly add to the delay of the initial call set up.
 Allow for increased error rates, or error broadcast.
 Add unnecessary complexity to the rest of the system.
 Be-cost ineffective.
Page 45
Wireless Application: A Wireless is software that runs on a wireless device that
exchanges content over a wireless network. The actual wireless applications are
distinguish from one another based on the wireless devices, network, and application
families. This can be summarized as:





Web Phones: The most common device is the internet ready cellular phone,
which call a web phone. Most web phones work only when they have a network
connection. Newer advanced web phones can run application.
Wireless Handles: Another common devices, the wireless handheld, such as a
Palm, can also message and use a Micro browser.
Two way Pagers: A device used often in business is the pager. The most popular
is the two way pager because it lets you receive and send a message as well as use
micro browser.
Voice Portals: A recent advance is the voice portal, which lets you have a
conversation with an information service by using a kind of telephone or mobile
phone.
Communication Appliance: Such electronic devices are fitted with wireless
technology that can participate in the Internet. Example includes wireless
cameras, watches, radio, pens and many other devices.
WAP (Wireless Application Protocol): WAP provides web contents to small-area
display devices in mobile phones. The service providers format contents in the WAP
format. WAP was invented and is driven by WAP Farum- a group originally formed by
Nokia, Ericssin, Motorola and phone.com in 1997. WAP is a group specification that
offers a standard method to access Internet based content and services from wireless
devices such as mobile phones etc.
Wireless Technologies

Time Division Multiple Access (TDMA): TDMA is a digital transport that
divides the frequency range allotted to it into a series of channels. Each channel is
divided into time slots. Each conversion within that channel gets a time slot;
hence the term “division” in the name.

GSM- (Global System for Mobile Communication):- GSM is one of the most
popular mobile communication standards. It is the first digital cellular system to
be used commercially. GSM Communication uses cellular networks.
C1
C2
C5
C3
C6
C4
C7
Mobile communication using a cellular network
Page 46
GSM is a second generation (2G) communication standard. GSM provide integrated
services for voice and data. GSM cell phones require SIM (Subscriber Identity Module)
cards for their operation. SIM is a smart card that identifies the user terminal by inserting
the SIM card into the terminal, the user can have access to all the subscribed services
without SIM card, the terminal do not work. The three kinds of services delivered by a
GSM system are teleservices, supplementary services and bearer services.
Teleservices





Telephone/FAX
Voice full 13 kbps
SMS up to 160
Character
MMS-GIF, JPG
Video Text Access
Supplementary Services





Call Forward
Caller line ID
Call hold
Call Waiting
Call Charge
Advice
Bearer Services


Full Duplex
Synchronous &
asynchronous
General Packet Radio Services (GPRS): GPRS is a speed enhanced data transmission
services designed for GSM system. GPRS is a packet oriented service for mobile stations
data transmission and their access to the internet.
Code Division Multiple Access (CDMA): CDMA is used as multiplexing method in
many mobile telephony system. CDMA is an air link interface coding scheme, where in
multiple subscribers are granted access to the same radio frequency source by assigning
subscriber’s transmitted and received signals a spectrum- spreading code. A code
transmitter assigns a unique code to each wireless connection and then broadcasts its data
out on the channel simultaneously with all other connections.
The receiver is able to decode each conversation by deciphering the unique code assigned
to each connection.
Page 47
E-Commerce & Banking
Electronic Banking also known as electronic fund transfer (EFT), use computer and
electronic technology as a substitute for checks on paper transactions.
Electronic banking provides any time; anywhere access to cash through an automated
teller machine (ATM) or direct deposit of e-Cheque into your saving accounts.
Now, In current scenario, technology is changing between banks and their consumers.
In particular technology innovations have enabled the following capabilities:
1.
2.
3.
4.
Online delivery of bank brochures and marketing information.
Electronic Access to bank statements
Abilities to request the transfer of funds between accounts.
Electronic bill payment and presentations.
These online capabilities increase the facilities and speed of retail banking.
What is Mobile Banking?
Mobile Banking is a service that allows you to do banking transactions on your mobile
phone without making a call, using the SMS facility.
How is this different from making a call on my mobile phone or using Phone
Banking?
The difference between making a call on your mobile and sending a text message are as
follow:



You are not required to dial a number; you send a text message i.e. a coded
message to the SMS Centre of your Cellular Service Provider.
Bank does not charge anything for this service. However, the cellular service
provider may charge a nominal charge for the SMS facility.
In Mobile banking, you actually see your banking transaction on your mobile
phone screen as opposed to hearing a message through the phone.
How does mobile banking work?
Mobile banking works on the “Text Message Facility” also called the SMS that is
available on mobile phones. This facility allows you to send a Short Text Message from
your mobile phone instead of making a phone call.
All you need to do is type out a short text message on your mobile phone and send it out
to a pre-designated number. The response is sent to you as SMS message, all in the
matter of a few seconds.
Page 48
This message travels from your mobile phone to the SMS Centre of the Cellular Services
Provider, and there it travels to the bank’s system s. The information is retrieved and sent
back to you mobile phone via SMS Centre, all in a matter of a few seconds.
What is the Company ID in the Bill Pay message?
Company ID consists of 4 alphanumeric character, which are predetermined by the
company and help identify the bill.
Your Phone is now your bank!
When you dial in to Phone banking, a voice prompt will guide you through the various
transactions. You may also a talk phone banker, who will provide you with the required
assistance.
Avail of the following services via phone banking









Check your account balance
Enquire on the Cheque status
Order a Cheque book / Account Statement
Stop payment
Loan related enquires
Transfer funds between banks
Pay your bills
Report loss of your ATM/ Debit Card
Enquires about latest interest/Exchange rates
What can I do using Net banking?
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Manage you Demat Account
Create fixed deposits online.
Check your account balance
Enquire on the Cheque status
Order a Cheque book / Account Statement
Stop payment
Loan related enquires
Transfer funds between banks
Pay your bills
Report loss of your ATM/ Debit Card
Enquires about latest interest/Exchange rates
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Changing Dynamic in the Banking Industry
By using the electronic banking technology, banks have increased profitability. In the
past, the banking industry was chiefly concerned with assets quality and capitalization,
but now a day this is not enough.
Bank need to find new ways to increase revenue in a “mature market” for most traditional
banking services, a through understanding of this competitive environment is needed
before banks can determine their online strategy.
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Find different factors contribute to the new competitive
Changing consumer desires driven by online commerce
Optimization of branch networks in order to reduce costs.
Changing demographics trends and potential new consumer markets
New online economic products
Changing Consumer needs
Now a day Consumers like fast financial process with secured environment so that they
want e-services like:
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Online account related information
Online download account statement
Online transfer funds between account to account
Online Payment of bills & dues
Online purchasing & selling
online other services
Consumer Oriented Service
Consumer Life-Style Needs
Entertainment
Financial Services and information
Complementary Multimedia Services
Movies on demand, video cataloging,
interactive ads, Multi-user games, online
discussion
Home banking, Financial service, Financial
news
Essential Services
Home shopping, Electronic catalogs
Education and Training
Video conferencing, on-line database
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Home Banking Management
Home banking services are often categorized as basic, intermediate, and advanced.
Basic Services are related to personal finance: checking and savings account statement
reporting, round the clock banking with ATM fund transfer, bill payment, account
reconciliation, Stop payment request.
Intermediate services include a growing collection of home financial management
services, which include household budgeting, update stock values and tax return
preparation.
Advanced Services include stock and mutual fund brokerage or trading services,
currency trading, and credit & debit card management.
Management Issues in online banking
According to dynamic changing in banking industry, bank’s management has
resourcefulness and vision to connect the technology and give consumers with new
services & products on their satisfactory. Banks must deliver high quality products at the
consumer’s convenience with high tech personal and affordable services. Management
has to balance the five key values that increasingly drive consumer’s banking decisions:
Simplicity, Customized Services, Convenience, Quality & Price
Online banking will realize its full potential when the following key elements fall into
place:
1. The development of any interesting portfolio of product and services that are
attractive to consumer and sufficiently differentiated form competitors.
2. The creation of online financial supply chains to manage the shift from banks as
goalkeeper models to banks as gateways.
3. The emergence of low-cost interactive access terminals for the home as well as
affordable interactive home information services.
4. The identification of new market segments with unused needs such as the
willingness to pay for the convenience of remote banking.
5. The development of effective back-office systems that can support sophisticated
retail interface.
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E-Commerce & Retailing: Retailing includes all the activities involved in selling goods
as services directly to final consumer for personal, non business use.
A retailer or retail store is any business enterprises whose sale volume comes primarily
from retailing.
Any organization selling to final consumer.
Whether it is a manufacturer, whole seller or retailer is doing retailing. It does not matter
how the goods or services are sold (By person, mail, telephone, vending machine or
Internet) or where they are sold (in a store, on the sheet, or in the consumer’s home).
Almost every retailer is re-evaluating every aspects of its operation from customer
services to advertisement, merchandise to store design and logistics to order fulfillment.
Further more, reaching to the pressure of retailers, supplier and assessing technology
based solutions to drive down costs (Labour, delivery and production) and become more
efficient producers of goods.
Means e-commerce provide a gateway for retails business, now a days supermarkets, Big
Bazaar etc, are providing you a commercial website for retail selling.
Example: www.futurebazaar.com, www.giftmate.com
Online Mercantile Models
Online channels such as online services and the web are also impacting traditional retail
business models. In traditional model, the consumer went to the store and located the
product. In the online model, the retailer seeks out the consumer. The success of catalog
retailers demonstrates that a significant portion of customer has embraced the reverse
model: the retail going to the customer.
Retailers need to consider the following in developing a business model:
1. Product/Content Issues: What kinds of products are suited for online
retailing?
2. Software Interface Issues: What kind of futures will constitute an
effective interface? What features make it easy to find and select items for
online purchases?
3. Process Issues: What are the specific steps in the shopping process from a
consumer’s perspective? What kind of processes should companies
develop to fulfill orders efficiently?
4. Pricing Issues: How much will consumers be willing to pay for
convenience?
5. Payment Issues: What payment methods would consumers use for online
purchases?
Management Challenges in on-line retailing:
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1. Pay Attention to Product Description
2. Streamline Site Architecture
3. Consider Shopping Search
1.) Pay Attention to Product Descriptions
Most medium to large retailers will have a database of products, with product
descriptions that are substantially the same between products, or even between
competitors who sell products from the same manufacturer. Search engines are not
likely to index multiple pages with very similar content, and without something else to
differentiate a page from competitors, ranking for that product name will be difficult,
McGee said.
In fact, it's not likely that retailers want to rank for their exact product names, as found
in the product database. Most searchers are not entering a query for "Izod solid crested
pique polo," but will instead search for "Izod polo shirt," which would be a better
phrase to optimize a page for, he said.
"Product databases are not optimized for searchers. It's not hard to convince a client
that when we show them how many searches are being done for general terms, like
'polo shirt,' and how few are being done for the specific brand name in the database,"
McGee said.
2.) Streamline Site Architecture
Another challenge for some retailers is the lack of a text-based navigation system,
which leaves search engine spiders unable to access many of the products on a site.
While all sites should have a search box on their site, it cannot be the only way to
navigate the site, McGee said.
"At the very least, they need to have a directory or sitemap. But since many users like
to browse instead of search for specific products, they should consider adding
navigation to product category pages as well," he said.
That's not to downplay the value of a well optimized site search. On a large-scale ecommerce site, visitors will head for the site search box about half the time, by some
accounts. In addition, many SEO experts agree that generating reports from site search
can show the retailer searcher intent and help optimizing pages for certain keywords,
both for internal site search and for external search engines.
In addition to on-site SEO, retailers should follow the same strategies as other sites to
get inbound links to their sites -- such as by providing informational content worth
linking to. This can be done with specific sections of the retailer’s site, new mini-sites
Page 53
or blogs. Retailers should also consider tagging their product images with relevant
keywords and making them available to spiders to they'll be found in image searches.
3.) Consider Shopping Search
Another tactic to increase traffic and inbound links is to take advantage of shopping
search engines. By showing up in the many places shopping search engines display
their results, retailers are increasing their exposure. And since many retailers are
currently not taking advantage of these listings, this exposure will give those retailers
that do a competitive advantage, if only for a short time.
The top five shopping search engines each had more than 20 million unique visitors in
December 2006, according to comScore and self-reported numbers. Yahoo Shopping,
and CNET topped 30 million unique visitors, followed by Price Grabber,
Shopping.com and Shopzilla. NextTag and MSN Shopping added a combined 24
million more unique visitors, bringing the total unique visitors to the top 7 shopping
search engines to 163 million last month.
Electronic Data Interchange: EDI is defined as the inter-process communication
(Computer Application to Computer Application) of business information in a
standardized electronic form.
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In short, EDI communicate information pertinent (Appropriate) for business
transactions between the computer systems of companies, government
organization, small business and banks.
Using EDI, trading partners establish computer to computer links that enable then
to exchange information electronically.
EDI enables retailers and venders to place orders and pay bills electronically,
reducing time & the expense of paperwork.
The primary advantage of EDI to business is a considerable reduction in
transaction costs by improving the speed & efficiency of filling orders.
EDI can be used to electronically transmit documents such as purchases orders, invoice,
shipping notice, receiving advices, and other standard business correspondence between
trading partners.
EDI may be most easily understood as the replacement of paper-based purchases order
with electronic equivalent. Essential of EDI are 
1)
2)
3)
4)
An electronic transmission medium (VAN, Internet)
Structured formatted message based on agreed standards
Relatively fast delivery
Direct communication between application
Benefits of EDI
Two categories of benefits 
1) Direct Benefits
2) Strategic Benefits
Direct Benefits:
1.) Since the transfer of information form computer to computer is automatically,
there is no need to re-send again and again, data is only entered at the source.
2.) Cost of processing EDI documents is much smaller than that of processing paper
documents.
3.) Customer service is improved. The quick transfer of business document & marked
decrease in error allow orders to be fulfilled faster.
4.) Information is managed more effectively.
5.) There is improved job satisfaction among data entry.
6.) EDI can also reduce postage bills.
In short, EDI reduce operating costs, administrative errors and delivery delays.
Strategic Benefits:
1.) Customer relations are improved through better quality & speed of service.
2.) Competitive edge is maintained & enhanced.
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3.) Reduction in product costs can be achieved.
4.) Business relations with trading partners are improved.
5.) More accurate sales forecasting & business planning is possible due to
information availability at the right place at the right time.
E-mail versus EDI
E-mail
EDI
1.
Structure of E-mail is simple & easiest
The structure of EDI is more complex.
way of sending & receiving mail via an
comparing e-mail.
network communication
2.
Either at the sending end or at the There is typically no human involvement in
receiving end, the data are composed by, the processing of the information, as the
reply by or interpreted by humans
interface has software to software
3.
EDI must follow the some EDI standard
In e-mail there is no need of any specific
without EDI standards transact between
standard to which users have to follow.
trading parties not take place.
4.
The message is compared by a human The interchange is composed by one
and/or a replay is composed by a human software for interpretation by another
and/or interpreted by a human
software.
5.
It is not provided much security features EDI provides security aspects to its
a the EDI documents provides
customers by providing some legal issues.
6.
7.
To use this features of internet the users
have not need any complex information.
They use it by only receiver & self email ID address.
No any third party verification no any
legal aspects, no any authentication are
needed to the user for sending the data
or receiving the data.
EDI is based on four layer architecture & at
each layer there is variety of services
provided.
EDI provides security,
authority on data.
Architecture of EDI: The architecture of EDI is divided into four layers.
1) Application Layer
2) Standard Translation Layer
3) Transport Layer
confidentially,
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4) Physical Layer
Application Layer
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First layer of EDI defines the business applications that are used by EDI.
This layer of EDI translates business application into request for quotation,
purchases orders, acknowledgment & invoices.
For every company this layer is specific & also for the software that company
uses.
By this layer of EDI the companies form are change into more specific format &
then it may be send to various partners of the companies. The trading partners of
the company have a several software applications to handle all forms aspects.
To achieve all above activities the company must follow the EDI standards.
Examples of EDI Standard are XIZ, ANSI, and EDIFACT etc.
If the sender & receivers of company want to exchange some files then requires a
compatible standards of EDI.
Standard Translation Layer
This layer of EDI architecture defines the structure of business form & some content,
which are related with the application layer.
This layer of EDI has no mean without application layer so we can say that EDI
applications & standard are interlinked.
For Ex. – EDIFACT, ANSI X12 business form standards.
Transport Layer
This layer correspondent closely with the non-electronic activity of sending a business
form from one company A to company B. The business form could be sent via regular
postal services, registered mail or private carrier.
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EDI documents are exchanged rapidly over electronic networks using the existing
e-mail program & infrastructure.
EDI document transport is more complex then simply e-mail message or sharing
files through a network, a modem, or a bulletin board.
EDI documents are more structured than e-mail.
Physical Layer
This layer defined the component communication path for EDI data transaction.
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What ate the structure of e-commerce supported EDI in which information can
be build & what are the communications established over which EDI data
transfer from one consumer to another consumer.
Information
/Data
Information
/Data
Internal
format
Conversion
Internal
format
Conversion
EDI
Translator
EDI
Translator
EDI envelope
for document
messaging
EDI envelope
for document
messaging
Modem
Internet
&
VAN
How EDI works
How EDI works
Modem
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1. Preparation of Electronic Documents: The first step in the sequence of EDI is the
collection of information and data. In the case of companies who already use computer to
issue their documents like purchases orders, they may already have some sort of database
which stores those information then they can start with the next step described below.
2. Outbound Translation: The next step is to translate the electronic file or database
into a standard format according to the specification of the corresponding document. The
resulting data file should contain a series of structured transactions related to the
purchases order for example. If more than one company is involved in the particular
transaction, individual files should be produced for each of them.
3. Communication: Then the computer should connect and transmit through (VAN)
automatically, those data files to the prearranged. The VAN should then process each file
and route to the appropriate electronic mailboxes according to the destination set in the
file.
4. Inbound Translation: The destination of company should be able to retrieve the file
from their electronic mailboxes in a constant period, and then reverse the process by
translating the file from the standard format into the specific format required by the
company application software.
5. Processing the electronic documents: The internal application system of the
destination of company can process the received documents now. All the resulted
documents corresponding to the received transaction should use the same process or steps
to transmit back to the transaction originator. The whole cycle of the electronic data
interchange can then be completed.
EDI Standards:
The need of defining standard is clear in order to assuring the success of EDI. It is
because the EDI relies on the use of standard structure and interpretation of electronic
business transaction to perform the interchange of data between all trading partners, so
errors can be reduced in the transmission of data regardless the computer system
involved.
There are two major standard widely used today which defined the syntactical
requirement for a wide variety of EDI transaction types. Virtually, almost any business
needs can be addressed within those standards. They are briefly described in below.
1) ANSI ASC X12 Standard
2) United Nations EDITFACT Standard
ANSI ASC X12 Standard: In 1979, The American National Standard Institute (ANSI)
chartered a new committee called the Accredited Standards Committee (ASC) X12 to
develop uniform standards for cross-industry electronic communications. It provide
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guideline and rules for EDI on how the data should be structured, what documents
should be transmitted electronically.
The X12 standard defines a set of documents, which is referred as transaction sets, for a
wide range of business transaction forms. Each transaction set is given a numeric code
which is similar to the way in most of paper forms where forms numbers are assigned.
Example:
Transaction Set
850
810
Document Title
Purchases Order
Invoice
Specification No.
X12.1
X12.2
United Nations EDIFACT Standards: Many Companies are required to participate in
the international market and exchange electronic data over different countries. Obviously,
there is a need to extent the EDI in a global basis. With the concerns of this, general
authority of UN/EDI.
The EDIFACT (Administrations, Commerce, and Transport) standards development is
responsible by two groups of organizations. The syntax and the data dictionary are done
by the international Standard Organization (ISO).
Financial EDI (FEDI): FEDI is typically setup between banks and their corporate
customers allow the bank receive payment authorizations from payer