Beginners' Guide to E-Commerce
Commerce Service Providers (CSP)
CSPs are business or web sites that provide ecommerce solutions.
Digital or Electronic Cash or E-cash or Ecash or Digital Money These
terms are also used interchangeably, and they refer to any of the
various methods that allow a person to purchase goods or services
by transmitting a number from one computer to another. The numbers
are issued by a bank and represent sums of real money. Digital cash
is anonymous and reusable. Unlike credit card transactions, the
merchant does not know the identity of the shopper.
Customers pay for merchandise by writing an electronic check that
is transmitted electronically by email, fax or phone. The "check"
is a message that contains all of the information that is found
on an ordinary check, but it is signed digitally, or indorsed. The
digital signature is encoded by encrypting with the customer's secret
key. Upon receipt, the merchant or "payee" may further
indorse by encoding with a private key. When the check is
processed, the resulting message is encoded with the bank's secret
key, thus providing proof of payment.
Various companies are selling Electronic Check software and services.
Electronic Wallets store your credit card numbers on your hard drive
in an encrypted form. You then make purchases at Web sites that
support that particular type of electronic wallet. By clicking on
a Pay Button, customers initiate a credit card payment via a secure
transaction enabled by the electronic wallet company's server.
Electronic Commerce or Ecom or Emmerce or EC
These terms are used interchangeably, and they all mean the same
thing - the paperless exchange of routine business information using
Electronic Data Interchange (EDI), email, electronic bulletin boards,
fax transmissions and Electronic Funds Transfer. It refers to Internet
shopping, online stock and bond transactions, the downloading and
selling of "soft merchandise" (software, documents, graphics,
music, etc.), and business to business transactions.
An extranet is an extension of a corporate intranet. It connects
the internal network of one company with the intranets of its customers
and suppliers. This makes it possible to create e-commerce applications
that link all aspects of a business relationship, from ordering
Disintermediation is the process of bypassing retail channels or
mail order houses and selling directly to the customer.
Hard Goods vs. Soft Goods
Hard Goods are items that exist in the real world, as opposed to
soft goods, which exist virtually or electronically. For instance,
an Internet merchant selling a book that is shipped to the customer
in a print version is selling hard goods; a merchant offering a
book for download in electronic format is selling soft goods.
High Risk Processors
High risk processors are financial institutions or companies that
that issue merchant status accounts to high risk businesses. They
offset their risks by charging higher transaction fees and higher
rates than to the traditional banks.
Immerce is the new term being used for commerce that is transacted
totally over the Internet.
A Merchant Account is a relationship between a business (i.e. a
merchant) and a merchant bank, which allows the retailer or merchant
to accept credit card payments from customers.
Microtransactions or Micropayments
Microtransactions are transactions of tiny amounts - a few cents
or a few dollars, typically made in order to download or access
graphics, games, and information.
Telephone Billing Systems
A very new approach, telephone transactions allow the customer to
purchase an item or service, and the amount will be billed to his
or her telephone bill.