Babu Ram Dawadi. E-Business The Internet is a powerful channel that presents new opportunities for...
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Transcript of Babu Ram Dawadi. E-Business The Internet is a powerful channel that presents new opportunities for...
E-Business
The Internet is a powerful channel that presents new opportunities for an organization to:Touch customersEnrich products and services with information
Reduce costs
E-BusinessBusiness Model: set of planned activities
designed to result a profit in a market place.
Business plan: document that describes a firms business model
How do e-commerce and e-business differ?E-commerce – the buying and selling of goods and
services over the Internet
E-business – the conducting of business on the Internet including, not only buying and selling, but also serving customers and collaborating with business partners
E-commerce business model: aims to use and leverage the unique qualities of internet and web
Business-to-Business (B2B)
Electronic marketplace (e-marketplace) – interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activities
Business-to-Consumer (B2C)Common B2C e-business models
include:e-shop – a version of a retail store where customers can shop at any hour of the day without leaving their home or office
e-mall – consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shops
Business types:Brick-and-mortar business: operates in a
physical store without an Internet presence.
Pure-play (virtual) business - a business that operates on the Internet only without a physical store. Examples include Amazon.com and Expedia.comClick-and-mortar business
Click-and-mortar business – a business that operates in a physical store and on the Internet
Consumer-to-Business (C2B)
Priceline.com is an example of a C2B e-business model
The demand for C2B e-business will increase over the next few years due to customer’s desire for greater convenience and lower prices
Consumer-to-Consumer (C2C)
Online auctionsElectronic auction (e-auction) - Sellers and
buyers solicit consecutive bids from each other and prices are determined dynamically
Forward auction - Sellers use as a selling channel to many buyers and the highest bid wins
Reverse auction - Buyers use to purchase a product or service, selecting the seller with the lowest bid
Consumer-to-Consumer (C2C)
C2C communities include:Communities of interest - People interact with
each other on specific topics, such as golfing and stamp collecting
Communities of relations - People come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiasts
Communities of fantasy - People participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan
E-Business Benefits and ChallengesE-Business benefits include:
Highly Accessible - Businesses can operate 24 hours a day, 7 days a week, 365 days a year
Increased Customer Loyalty - Additional channels to contact, respond to, and access customers helps contribute to customer loyalty
Improved Information Content- In the past, customers had to order catalogs or travel to a physical facility before they could compare price and product attributes. Electronic catalogs and Web pages present customers with updated information in real-time about goods, services, and prices
Increased Convenience - E-business automates and improves many of the activities that make up a buying experience
Increased Global Reach - Businesses, both small and large, can reach new markets
Decreased Cost - The cost of conducting business on the Internet is substantially smaller than traditional forms of business communication
E-Business Benefits and Challenges
E-business challenges include:Protecting consumersLeveraging existing systemsIncreasing liabilityProviding securityAdhering to taxation rules
E-Business Benefits and ChallengesThere are numerous advantages and
limitations in e-business revenue models including: Transaction feesLicense feesSubscription feesValue-added feesAdvertising fees
Case7-Eleven’s Dream Team 7-Eleven Japan has integrated its online
site 7dream.com with its physical stores
Through the 7dream.com Web site, 7-Eleven Japan enables consumers to choose from an online assortment of 100,000 products which are picked up from one of 8,400 store locations
Payments, Protocols and Related IssuesSET Protocol is for Credit Card Payments
Electronic Cash and Micropayments
Electronic Fund Transfer on the Internet
Stored Value Cards and Electronic Cash
Electronic Check Systems
Security requirements
Payments, Protocols and Related Issues (cont.)
Authentication: A way to verify the buyer’s identity before payments are made
Integrity: Ensuring that information will not be accidentally or maliciously altered or destroyed, usually during transmission
Encryption: A process of making messages indecipherable except by those who have an authorized decryption key
Non-repudiation: Merchants need protection against the customer’s unjustifiable denial of placed orders, and customers need protection against the merchants’ unjustifiable denial of past payment
Security SchemesSecret Key Cryptography (symmetric)
Scrambled Message
Original Message
Sender
InternetScrambled Message
Keysender (= Keyreceiver)
Encryption
Original Message
Receiver
Keyreceiver
Decryption
Electronic Credit Card System on the InternetThe Players
Cardholder
Merchant (seller)
Issuer (your bank)
Acquirer (merchant’s financial institution, acquires the sales slips)
Brand (VISA, Master Card)
Credit Card paymentStep 1: customer sends a purchase order with an
encrypted credit card number (encrypted with credit card company’s bank’s key)to the merchant.
Step 2: the merchant send the amount of purchase with the customer’s credit card number (encrypted) to the credit card company’s bank. The bank decrypts the card number, authenticates signature and check credit balance on the card
Step 3: if it is ok, it checks with credit card company to see if card is ok
SET Protocol….Step 4: credit card company OKs the transaction and
signs it showing customers transaction details in customer account
Step 5: the bank when it receives the signed authorization from the credit card company sends a message to the merchant to honour the purchase order and credits the merchant account by appropriate amount
Step 6: the merchant accepts customer’s purchase order and informs him about delivery details
Step 7: at the end of the month the credit card company sends a consolidated bill to the customer
Merchant
Customer
BankCredit Card Company
Step 1: Send P.O.
Step 2: check C.C. and signature
Step 3: C.C. OK?
Step 4: OK
Step 5: OK transaction And Merchant credit account
Step 6: Delivery Details
Step 7: Bill to Customer
Electronic Fund Transfer (EFT) on the Internet
An Architecture of Electronic Fund Transfer on the Internet
InternetPayer
Cyber Bank
Bank
Cyber Bank
Payee
AutomatedClearinghouse
VANBank
VAN
PaymentGateway
PaymentGateway
Financial EDIIt is an EDI used for financial transactions
EDI is a standardized way of exchanging messages between businesses
EFT can be implemented using a Financial EDI system
Safe Financial EDI needs to adopt a security scheme used for the SSL protocol
Extranet encrypts the packets exchanged between senders and receivers using the public key cryptography
Electronic Cash and MicropaymentsSmart Cards
The concept of e-cash is used in the non-Internet environment
Plastic cards with magnetic stripes (old technology) Includes IC chips with programmable functions on
them which makes cards “smart” One e-cash card for one application Recharge the card only at designated locations,
such as bank office or a kiosk. Future: recharge at your PC
e.g. Mondex & VisaCash
Smart Cards
• Smart card processors hold more information than credit card magnetic strips– Store credit-card numbers, contact information, etc.
– Contact smart cards
• Placed in smart-card reader for information transfer– Contactless smart cards
• Antenna enables information transfer
• Faster than contact smart card
• Security– Password protection
– Security designations assigned to information
– Encryption
Smart Card Example -- Mondex
• Smart-card-based, stored-value card (SVC)• Subsidiary of MasterCard• Secret chip-to-chip transfer protocol• Value is not in strings alone; must be on Mondex
card• Loaded through ATM
– ATM does not know transfer protocol; connects with secure device at bank
• Spending at merchants having a Mondex value transfer terminal
Mondex Makes Shopping Easy
Shopping with Mondex
Adding money to the card
Payments in a new era of electronic shopping
Paying on the Internet
Electronic MoneyDigiCash
The analogy of paper money or coins Expensive, as each payment transaction must be
reported to the bank and recorded Conflict with the role of central bank’s bill
issuance Legally, DigiCash is not supposed to issue more
than an electronic gift certificate even though it may be accepted by a wide number of member stores
Stored Value CardsElectronic Money (cont.)
No issuance of money Debit card — a delivering vehicle of cash in an
electronic form Either anonymous or onymous Advantage of an anonymous card
the card may be given from one person to another
Also implemented on the Internet without employment of an IC card
Smart card-based e-cashCan be recharged at home through the InternetCan be used on the Internet as well as in a non-
Internet environment
Ceiling of Stored Values To prevent the abuse of stored values in money
laundryS$500 in Singapore; HK$3,000 in Hong Kong
Multiple CurrenciesCan be used for cross border payments
Electronic Money (cont.)
Contactless IC Cards
Proximity CardUsed to access buildings and for paying in
buses and other transportation systemsBus, subway and toll card in many cities
Amplified Remote Sensing CardGood for a range of up to 100 feet, and can be
used for tolling moving vehicles at gatesPay toll without stopping (e.g. Highway 91 in
California)
Electronic Checkbook
Electronic Check Systems (cont.)
Counterpart of electronic wallet To be integrated with the accounting information
system of business buyers and with the payment server of sellers
To save the electronic invoice and receipt of payment in the buyers and sellers computers for future retrieval
Example : SafeCheck Used mainly in B2B
Five Security Tips Don’t reveal your online Passcode to anyone. If
you think your online Passcode has been compromised, change it immediately.
Don’t walk away from your computer if you are in the middle of a session.
Once you have finished conducting your banking on the Internet, always sign off before visiting other Internet sites.
If anyone else is likely to use your computer, clear your cache or turn off and re-initiate your browser in order to eliminate copies of Web pages that have been stored in your hard drive.
Bank of America strongly recommends that you use a browser with 128-bit encryption to conduct secure financial transactions over the Internet.