Electronic Commerce

Definition

Electronic commerce involves the conduct of economic transactions through electronic means. For example, this includes the purchase and sale of products and services, the advertising of merchandise, and the electronic transfer of funds. E-commerce provides potential cost-savings and efficiency gains for businesses as it reduces the importance of having visible and physical infrastructure. This includes, for example, office buildings, show rooms, warehouses, sales people, and customer service staff. Therefore, geographic limitations, namely distance and different operating hours, have no longer become obstacles in operating businesses.

Equipment in Doing E-Commerce

Information technology equipment supporting e-commerce includes telecommunication, computer and database systems. Telecommunication systems may be generally basic, including the telephone, facsimile, radio and television. The Internet, however, has provided international connections. Based on open standards, it has become the network of networks. Its other name, the World Wide Web, originates from its unique hyperlink function. This permits fast access to different webpages or websites located on the Internet. In addition, the network also enables pictures, sound, different foreign language texts, and real-time correspondence to be communicated. Electronic information may also be stored and reused again. Thus, its application and adoption by Internet-based businesses has been wide spread in a short period of time.

E-Commerce is used to communicate with customers at various levels, such as business-to-customer, business-to-business, business-to-government, and others. The content used in communication covers 4-5 main areas as the following:

Sales - advertising, product displas, price quotes, purchase orders, and price calculations
Payment - payment means agreement, money transfer orders, bank account information, and new forms of digital money
Transportation - delivery notice, transportation costs, contact point and tracking system
After-Sales Service - internal company communication such as accounting system, warehouse, purchasing system, and after-sales customer service

Role of the Public Sector in E-Commerce

Due to intense competition among Internet-based businesses, for which information is in electronic form and where trading partners may not have known or communicated with each other before, the public sector has provided several important supporting factors. This includes a national e-commerce strategy that seeks to prevent the country from being in a disadvantaged international trading position, a good and adequate telecommunications infrastructure, a law supporting trading information and evidence that are in paperless form, and an information security system for computer and payment networks.

Security in E-Commerce

Security systems are perhaps the most prominent topic in e-commerce. Security technologies have taken the form of public keys, which has an entity guaranteeing the validity of such keys called a Certification Authority (CA). This system is based on mathematical principles which calculates the message codes between the sender and receiver in an exclusive manner. This permits the messages to have authentication, confidentiality, integrity, and non-repudiation. In other words, this is called an electronic signature.

Payment in E-Commerce

Research results suggest that 70 per cent of business-to-business transactions are mainly debit-based payments in commercial banks, while 65 per cent of business-to-consumer transactions use credit cards payments.
In Thailand survey results of consumers ordering products on the Internet suggest that 40-60 per cent use credit cards, while 40 per cent use account-based money transfers which include direct debit, debit cards and fund transfer payments.
The following development guidelines are aimed at creating confidence for payment systems on the Internet.
1. Internet banking services and/or payment gateway businesses will be based on hyperlinks between the websites of banks and businesses. Banks will be able to process the data received and debit customer accounts accordingly, or forward inter-bank funds transfer orders that have standardized security measures.
2. For micro payments like digital money that are embedded in smart cards or on computers, better security systems may be developed as compared to debit and credit card systems. This has been an interesting and suitable technological trend.