complete notes till date

8/7/2019 complete notes till date

1/25

Chapter:1 Introduction to Electronic Commerce

1) Commerce:-

Buying & selling of goods, services & information is called as commerce

2) Electronic- Commerce:-

Business transaction that takes place via telecommunication networks ie., television,internet, telephone, mobiles, P.D.A, bill boards, news papers & wireless media like radio.

It is a modern business technique that not only deals with buying & selling but also dealswith,

Needs of Organization. Fulfillments of customer needs.

Redetection market.

3) Architecture (or) Frame work of E~Commerce:-

1


2/25

E-Com applications will be built on the existing technology infrastructure of computers, communicationnetworks forming a information super highway. Building of any business stands on 2 main pillars.

Business Policies: Public, legal & private policies.

Technical Standards: electronic documents, Multimedia & network protocols.

Information Superhighway:-

Making of proper communication channel between the customer & theseller is called as information super highway or I-WAY.

Ex* tv, net, telephone, pda.

Multimedia content and network publishing

for creating a product promotion seller have to create advertisements. For

doing that images, text, videos, holograms, graphics, numeric data animations & audio files are to bedeveloped that can make proper multimedia.

Messaging and information distribution:-

as means of sending and retrieving information the customer may need tocommunicate with the seller regarding various doubts so we need to make a channel of communication fromcustomer to the seller..

Ex* internet , telephone, tool free numbers

Common business servicesBuying and selling process transaction are to be clear to the customer &

seller. So we need to explain all the details about mode of product transfer, money payment system, time forproduct delivery, warranty. E.c.t..,

The two pillars supporting all e commerce applications and infrastructure are just as indispensable:

Public policy to govern such issues as universal access , privacy and information pricing.

Technical standards to dictate the nature of information publishing, user Interfaces and transport in theinterest of compatibility across the entire network.

The I-way must be mesh of interconnected data highway of many forms Like telephone wires, cable TVs ,radio based wireless- cellular and satellite and the nature of vehicular traffic is important .

2


3/25

Multimedia:-

Multi media storage servers and e-commerce applications

Ecommerce uses robust servers to store and distribute large amount ofdigital content to consumers and these servers capable of handling various contents including books .newspapers , movies ,games and x-ray images. Digital technology mass storage which is feasible and lesscost.

client server architecture for electronic commerce

In this model allows the client to interact with the server through a requestreply sequence governed by a paradigm called message passing.

3


4/25

Video servers and electronic commerce :

Video servers are important link between the content providers (entertainment/media)and transport providers(telecommunication/videos/cable operators). The video servers tackle thesimultaneous overlapping supply problem that arises when providing on demand services to large numbersof homes. All video servers need not be hardware based.

Information delivery/ transport and Ecommerce applications

Transport providers are telecommunications , cable, wireless industries, computernetworks including commercial networks like CompuServe and public network like Internet.

The various transport routes:

Information transport providers Information delivery methods

1.Telecommunications long-distances , local lines2. Cable television coaxial cable, fiber optic3.wireless communications cellular &radio network, paging Systems4. Computer based online companies internet , commercial online service providers computer based onlinecompanies: these providers are dial up linkage of lower bandwidth when compared to telecom and cable highways. Various providers like Prodigy, CompuServe .

Consumer access devices: These are devices which can provide access to informationand they are videophones, PCs, PDAs and television capable of handling two way

communication , cellular phones , mobile and portable computers

Information consumers Access Devices

1.Computer with audio &video PCS/ LAPTOPS, CDROMSCapabilities2. Telephone devices video phone3.consumer electronics television+ set-top box4.PDAs voice driven computing, software agents

4


5/25

ELECTRONIC COMMERCE CONSUMER APPLICATIONS:

Consumers desires are difficult to predict, pinpoint in electronic markets whose shape, structure andpopulation are still in the early stages. Need envisioned include entertainment on demand ,video on demand,games on demand, home shopping networks .

Consumer applications and social interactions:TVs before 1945 no one have in USA. Bt 1960 86% house hold did using it and in1940 only 40% people usedtelephone after that in 1980 95-98% of people are using now .Social revolutions are bearing on theecommerce applications example radio trends and television talk shows can be seen in the online newsgroups. Social interactions are promoted by introduction of 800 tool free service in 1968. by1993 AT&T s800s number business uses 40% of total call made- some 12billion 800calls. The four major 900 services arefax back , interactive, recorded sports score, financial services.

What are consumers willing to spend ?

The study of economist noted that consumers already spent 30% for advertising costs To pay for freetelevision. Network operators could target consumers with advertising and privacy issues not easily resolved.consumers will be prefer to spend less cost frothier business rather then spending more.

Delivering products to customers :

Ecommerce should be distributed for example Blockbuster video its traditional distribution through storescould become obsolete is actively exploring electronic media as a distribution channel ,blockbuster knowswhat consumer want in entertainment . Blockbuster research shows that the typical consumer:

1.spends 1000 for month on home video expenditures2.wants to go video shop and select3. is on a limited budget4. has time to kill.

Consumer Research and Electronic commerce

Evaluating a customer preference is uncertainty in electronic commerce . example Interaction television-survey by Chilton research services and CBS News suggest that some degree of consumer and willingness topay less than $20 a month for a selection of interactive television services. A poll of 1000 adults found 63 %interested interactive television service of that 685% use news channel .A CNN consumer opinion about interactive TV yields the following :* 46% willing to pay personalized news summaries on interactive television* 39% want to video phone calls* 63% pay for movies on demand*41% that it will be confusing to use.

ELECTRONIC COMMERCE ORGANIZATION APPLICATION:

Changing Business Environment:

The traditional business environment is changing rapidly as customers and businessseek flexibility to change trading partners , carriers and networks at will .The company

5


6/25

can increase business communications , to help expand market share and to

maintain long term visibility in to days business environment. The I way willallow business to exchange information among constantly changing sets of customers andsuppliers and researchers in government and academia on a global.Inter-networking whether internally or externally with customers and business partners

can be useful tool to time based competitive business. Internetworking via publicnetwork provide a path ways to conduct ecommerce between trading partners ,supportcollaboration with partners who can apply needed capabilities and stay close to thecustomer.In general firms utilize consumer and market research to form the assumptions thatshape its strategy , dictate its decisions about what to do and what not do.

The reaction to numerous business pressures are given in the below figure:

Marketing and Electronic Commerce:

Electronic commerce is forcing companies to rethink the existing way of doing target

Marketing and relationship marketing and event marketing (setting up virtual boothWhere interested people come and visit.Interactive marketing performed via interactive multimedia catalogs that give same lookAnd feel as a shopping channel. A CUC is a shopping service that maintains detailedInformation about 250,000 products and it is services by dialing 800 number andSpeaking to a live person we can consult computer database.

6


7/25

Inventory Management and organizational applications:

The adoption of computerized paperless operations to reduce trading costs andfacilitate the new business processes. In the manufacturing industry they are known asjust-in-time inventory systems , in retail industry they are quick response programs andin transportation industry they are consignment tracking systems.

Just in time manufacturing :It is viewed as integrated management systemsconsisting of a number of different management practices dependent on thecharacteristics of specific plants.The following management practices associated with JIT systems are :Focused factory , reduced setup times, group technology , total productive maintenance,uniform workload . JIT purchasing, total quality control. To achieve JIT savingsmany large corporations have installed private communication networks.Quick Response Retailing :

Quick response is a version of JIT purchasing tailored for retailing. To reduce the riskof out of stock retailers are implementing the QR systems. It provides for a flexibleresponse to product ordering and lowers costly inventory levels. QR retailing focuses

on market responsiveness while maintaining low level of stocks.It creates a closed loop encompassing the retailer , vendor , consumer chain, and asconsumers make purchases the vendor automatically orders new deliveries from theretailers through its computer network. figure below gives the various steps of QRchain.

Supply Chain management :Supply chain management (SCM) is also called extending which means integratingthe internal and external partners on the supply and process chain to get raw materialsto the manufacturer and finished products to the consumer. Most of the companies failsbecause lack of integration due to fragmented supply chain management.

7


8/25

Supply Chain management ( SCM ) have various functions:

1.Supply chain management: The goal is to reduce the num the number of suppliersand get them to become partners in business in a win / win relationship.2.Invetory management: Its goal is to shorten the order-ship-bill cycle.3. Distribution management: Its goal is to move documents related to shipping.

4.Payment management: The goal is to link the company and the suppliers anddistributors so that the payment can be sent and received electronically.5. Financial management: The goal is to enable global companies to mange theirMoney in various foreign exchange accounts.6. Sales for productivity : its goal is to improve the communication and flow ofinformation among the sales , customer and production functions

The business process models are divided into two types:

1.Merchantiles model from the Consumer perceptive2.Merchantiles model from the Merchantiles perceptive

1.Merchantiles model from the consumer perceptive :This model consists of seven different activities that can be grouped into Three differentPhases:.1. Pre purchase phase

2. Purchase consummation phase

3. Post purchase interaction

8


9/25

1. pre purchase phase : It includes search and discovery for a set of products in thelarger information space capable of meeting customer requirements and productselection from the smaller set of products based on attribute comparison.In general consumer are categorized into 3 types:

a) Impulse buyers - who purchase products quicklyb) Patient buyers who purchase products after making some comparisons

c) Analytical buyers- who do substantial research before making the decision topurchase products or services. In fact marketing researchers have isolated severaltypes of purchasing.

Specifically planned purchases : The need was recognized on entering thestore and the shopper bought the exact item planned.

Generally planned purchases: The need was recognized but the shopperdecided in-store on the actual manufacturer of the item to satisfy the need.

Remainder purchases: The shopper was reminded of the need by some store

9


10/25

influence.

Entirely unplanned purchases: The need was not recognized entering the store

The Consumer Information Search Process :Information search is defined as the degree of care , perception and effort directed

toward data related to the decision problem. It is of two types.1.The organizational search process:

It can be viewed as process through which an organization adapts to change in itsexternal environment as new suppliers, new products , new services.In general it is an activity designed to balance the cost of acquiring information withthe benefits of improved final decisions . This process can be determined in partby market characteristics.2.consumer search: need to examine how particular aspects of the buyerssituation and the shopping experience that is being sought affect the search process.

2. purchase consummation phase :- It includes mercantile protocols that specify the flow of information and documents

associated with purchasing and negotiation with merchants for suitable terms likeprice , availability and delivery dates.-The buyer and seller must interact to provide mercantile transaction.-Mercantile transaction is the exchange of information between the buyer and sellerfollowed by necessary payment.It requires the following transactions.

a. Buyer contacts to purchase product or service and it performed through online -www, email ,b. Vendor states pricec. Buyer and vendor may or may not engage in negotiation.d. if satisfied buyer authorizes payment to the vendor

e. vendor contacts his her billing service to verify it.Merchantiles process using Digital Cash:It includes the following protocol.

a. Buyer obtains anonymous electronic cash from the issuing bank.b. Buyer contacts the seller to purchase or buy a product.c. Seller states the price.d. Buyer sends the e-cash to the sellere. Seller contacts his bank to verify the validity of the e-cash.f. Bank gives positive signal to the seller after ensuring authenticationg. Seller delivers the product to the buyer.h. Customer gets the product delivery.

3. Post Purchase Interaction Phase :It includes Customer service and support to address customer complaints, productsreturns and product defects.In this we have three issues:1.Inventory issues:2.Database access and Compatibility issues3.Customer service issues.1.Inventory issues:

10


11/25

To serve a customer properly company should inform the right way when an itemis ordered and sold out.2.Database access and Compatibility issues:

The customer can access required data from the large amount of informationmanaged by the vendors. It is supported to the customer in the information super

highway.3.Customer service issues:Here customer questions about the product and other details in their mind regardingto product can be resolved.

2.Merchantiles model from the Merchantiles perceptive :

It consists of eight different activities that are grouped into three phases:1.Presale phase2. Product service / delivery3. Post sale interaction phase

1.Presale phase :

It consists of two activities namelya) Customer enquiry and order planning and order generationb) Cost estimation and price of product servicesa) Customer enquiry and order planning and order generation:

Once the merchant receives the order enquiry they need to plan the products bysales forecast with the help of people close the customer either in the sales forceor in the marketing group at company level and at the same time a group of inmanufacturing function details.

A capacity plan that specify how much money spend , how many people will be

hired and how inventory will be created.Order planning leads to order generation and orders are generated by differentways like sales force broad cast, sends emails to customers , create www webpages etc.

b) Cost estimation and price of product services :

pricing is the bridge between the customer needs and company capabilities.

Company does not understand how to execute order based pricing in onlinemarkets.

Pricing at individual order levels depends on understanding the value to the

customer. Although order based pricing is difficult to work that requiresmeticulous thinking and deliberate execution.

2. Product service / delivery :It consists of four activities:a)order receipt and entryb)order selection and prioritizationc) order schedulingd)order full fillness and distribution

11


12/25

a)order receipt and entry :

After acceptable price code the customer enters the order receipt and entry

phase of order management cycle(OMC).This was under the purview of departments title customer service , order entryAnd the inside sales desk. These departments are staffed by customerservice representatives.b)order selection and prioritization :

The customer service representative are responsible for choosing whichorders to accept and which orders to decline. In fact all customer orders are

12


13/25

created equal but some are simply better than others.

The desirable orders are those that fit the capabilities and offer healthycompany put efforts into order selection

link it their business strategy to make more money regardless of productioncapacity. company gain by order prioritization.

c) order scheduling :In this phase , the prioritized orders get started into actual production orOperation sequence. It is difficult because various functional departments likemarketing , sales , customer service and production.

Due to this differentiation they may have conflicting goals. compensationsystems and communication between the systems is not existent.Example : The customer service reporting to sales department they mayseparated from physically( long distances) or production scheduling whichReports to manufacturing unit which is far away.d)order full fillness and distribution :

Here actual service /product is made where details vary from industry to

industry And it involves order fulfillment that requires multiple functions inmultiple locations.

The different parts of the order may be created in different manufacturingunits and are merged at another site.

3.Post sale interaction phase :It consists of two different activities namely:a. Order billing and account payment managementb. Customer services and supporta. Order billing and account payment management:

After the product distribution , billing is handled by the finance staff whoview their job is getting the bill out efficiently , collectively and quickly.

Billing is designed to ensure the needs and interests of the company but notthe interest of the customers.b. Customer services and support :

It plays an important role in the company profit equation.

It includes elements like physical installation of products ,repair , maintenanceand Customer training and equipment upgrading and disposal

ELECTRONIC PAYMENT SYSTEMS:Electronic payment system are used in banking ,retail, online government.Organizations are motivated by the needs of deliver products and services of efficientlywith less cost and provide higher quality of services to the customers.

Electronic funs transfer (EFT): It is introduced in early 1970s.

It is defined as any transfer of funds initiated through an electronic terminal orcomputer or magnetic tape so as to order , instruct or authorize a financialinstitution to debit or credit an account.Electronic funs transfer (EFT ) work divided into three categories :

1.Banking and Financial Systems

* large scale / whole sale payments

13


14/25

* small scale / retail payments* Home banking2. Retailing payment systems

* credit cards* private label credit /debit cards

*charge cards example: American express3. Online payment systemIt is further divided into two types which are as followsa) Token based system

* e-cash* e-check and Digi cash* net cheques and smart cardsb) Credit card system

* encrypted credit card* third party authentication or authorization numbersDIGITAL TOKEN BASED ELECTRONIC PAYMENT SYSTEMS

Electronic token is a form of electronic cash or money or cheque.

This tokens are designed as electronic analog of various forms of paymentsbacked by bank or financial institution .1. Cash or real-time :

In this transactions are settled with exchange of electronic currency (e cash)2. Debit /pre paid :

In this , users pay in advance for privilege of getting information or service.3. Credit or post paid :

In this users need not pay in-advance but getting the total service.The server authenticates customer and verifies with bank fund or adequatebefore service.

Example : credit card , debit cardThe following view points are evaluated for the payment instrument inelectronic commerce :

1. The nature of transaction for which the instrument is designed.2. The means of settlement used tokens are backed by cash , credit , e-cash etc3. Approaches to the security and anonymity4. The question of risk at what time occurs , tokens suddenly become worthless andcustomer have currency that no body will accept.

Electronic cash (E-Cash) :- It combines the computerized convenience with security and privacy that

improves on paper cash.- It makes an alternative for payment over the internet.- It replaces the cash as principle payment vehicle in consumer oriented electronicpayment system.a) Properties of e-cash:

It has the following four properties :i) Monetary valueii) Interoperability

14


15/25

iii) Retrievabilityiv) Securityi) Monetary value :It must be backed by either cash or currency , bank authorized credit or bankcertified cashiers check.

ii) Interoperability :E-cash exchangeable as payment for the other e-cashes or goods or services.iii) Retrievability :It must be storable and retrievable means that the remote storage and retrievalwould allow to exchange electronic cash(e-cash).iv) Security :e-cash should not be easy to copy or tampered while being exchanged.

b) E-Cash in Action:

It is based on cryptography system called digital signature Method.

This method involves a pair of numeric keys that work in tandomone for encoding and other key is used for decoding .

The encoded message within one numeric key can only be decodedwith other Valid numeric key and none other.c) Purchasing E-Cash from Currency Server:

- E-Cash purchased an online currency server ( bank).It involves the following two stepsi) Establishing of an accountii) Maintaining enough money in that account.- E-Cash transactions in which multiple customers (internationally ) have accountWith central online bank , so that they can do international currency transactionsLike foreign services as well as local services etc.- The customer use the electronic cash software on a computer to generate a random

Number which serves as note.- It can be exchanged for debited transaction ,the bank issue its private key toDigitally sign the note for amount to be requested and transmitted the note backto the customer.- The new currency server is issuing a bank note with a serial number and a dollar.

Risk operations and e-cash :It is performed by imposing constraints like limits on e-cash

Time limit : means that over a given time period electronic money is valued

How much can be stored on and transformed by electronic money.

The number of exchanges that can takes place before a money needs to be redeposited with a bank.

The number of cash transactions that can be Made during a period of time .

Business issues and E-cash :E-cash full fills two main functions with respective to business.1. As a medium of exchange2. As a store of value1. As a medium of exchange :

It is used as digital money (cash) as medium of exchange by moving monetary clients

15


16/25

quickly and by effecting instant credit and viabilities that characterize todays business2. As a store of value :

E-Cash had to be convertible into legal tender on demand , then every unit there wouldbe unit of cash reserved in the real economy.ELECTRONIC CHECKS

They are designed to accommodate many individual and entities that might prefer topay on credit or other than cash.

From the above diagram the buyer must register with a third party accounting serverbefore they are able to write electronic check.

-The accounting server acts as billing a servicing and the registration processdepends on the accounting server , they may require a credit card or bank accountdetails to back the checks .-Once the customer registered a buyer can contact seller goods and services tocomplete a transaction .The buyer sends the check to the seller for a certain amount ofmoney.-These checks may be sending using email or other transport.-When deposited the check authorize transfer of account balance from the current

16


17/25

against the check was drawn to the account.-Accounting server authenticates digital signature on the check using the keymethod of cryptographic algorithm.E-Check have the following advantages:

They work same as traditional checks , thus simplifying customer education.

It is well suited for clearing micro payments.It creates float and availability of transaction cost.

Financial risk is taken by accounting server so easier acceptance.Another check called netcheque was developed by Information science institute(ISI)by Clifford Newman.It include software for writing and depositing checks independent of other applications.The API will provide common functions to be called as automatically when with othertransaction functions

Smart cards and electronic payment systems:1.Smart cards are credit and debit cards which are enhanced with micro processors

capable of holding more information then the traditional magnetic chips.2. Smart cards technology widely used in countries like Germany and Japan andFrance to pay public transportation , phone calls etc.3. Smart cards are basically of two types:

a. Relationship based smartcardb. Electronic purses and debit cardsa. Relationship based smartcard :

It is an enhancement of existing card service or the addition of newservices that a financial institutions delivers to its customers via chipbased or other device.

The new service includes access multiple accounts , value added

market programs etc.The enhanced credit card store more information of card holder likebirth date , personnel shopping preference and other his own details.Advantages or use of smart cards :

The following are the advantages of the smart cards:i ) It is used to access multiple accounts like credit , debit and stored value fore-cash on one card or on electronic device.ii) It performs different functions like cash access , bill payment , balanceenquiry etc.iii)It is used as to access multiple account located at different locations byusing multiple device types like PDA ,PC , screen phone and an ATM.

b. Electronic purses and debit cards :It is a wallet sized smart card embedded with programmable micro chipthat stores some of money for people to use instead of cash.

It works in the following manner of activities are performed in it.After the purse is loaded with money at ATM it can be used to pay for thevending machine need only verify that a card is authenticate or not and thereis enough money or not.

17


18/25

The value of purchase deducted from the balance on the card and in thevending machine. The remaining balance in the card is displayed by ATMon the screen.

The amount in the purse is empty then it can be filled with more money.

Smart Card Reader And Smart Phones :

Smart card readers are used to communicate with the chip on the smart card.In addition to reading from and writing to smart cards these devices can alsosupport different key management methods.

Some smart card readers combines the elements of PC, POT , phone and soon.

Some Smart card readers have the display features of two lines X 16Characters display that shows the both prompt and response entered by theuser.

It can communicate full range of bandwidth.

Smart card readers can be customized for specific environments like cprogram operating system which used to create and modify applicationswith full devised security function.

To promote Smart card readers usage a smart card forum is to be maintainedby a group of 300 companies and government agencies drawing up toprovide common specifications to the multiple applications to the smartcard users.

Smart phones :

These have the features of smart card readers with additional features offour lines screen , phone key pad , and menu prompt to do transactions andmagnetic strip card readers for storage.

Credit Card based Electronic payment systems:

Credit card payment on line network divided into three basic types:1.Payments using Plain credit card details2. Payments using encrypted credit card details3.Third party processors and credit cards details1.Payments using Plain credit card details :

In this type of payment the plain credit cards transactions are performed.The exchange of unencrypted credit cards over a public network like telephone orinternet.2.Payments using encrypted credit card details:

In this type of payment the encrypted credit cards transactions are performed.

18


19/25

encrypt your credit card before sending them out.

following operations are performed on the secure credit card.

Customer presents his / her credit card information to the merchant.

The merchant validates the customer identity is the owner of the credit card.

The merchant relays credit card charge information and signature to its bank.

The bank or the processing party replays the information to the customersbank for authorization approval.

The customers bank returns the credit card charge authentication andauthorization to the merchant

3.Third party processors and credit cards details :

In this consumers register with a third party on the internet to verifyelectronic micro transactions. It use various mechanisms with attribute ofelectronic tokens.

It differs from electronic tokens in TWO aspects:

a. they depends on existing financial instruments

b.They require online involvement of more then one party at a time.

The companies who providing third party payment services on the internetare: 1. First virtual ( www.fv.com) and

19


20/25

2.open market ( www.openmarket.com )The online third party processors (OTPPS) created a six step process to

buy information on line.

1. The consumer acquires an OTPP account number by filling outregistration form.2. to buy anything online , the consumer requests item from the merchant byquoting his OTPP account number.

20


21/25

3. The merchant payment contacts the OTPP payment server with thecustomers account number.4. The OTPP payment server verifies the customers account number for nthevendor and check for sufficient funds.5. the OTPP sends (the payment server) electronic message to the buyer by

using automated message from www or sent by OTPP server or sent bysimply email .6. If the customer payment server gets yes from the customer then themerchant is informed and customer is allowed to do the transaction.OTPP server has two servers namely :a. Merchant server and b. payment server- With the payment server user may can make account then by using clientbrowser a user server by clicking online payment URL.- The online payment URL encodes the following information to the status ofpage duration it specifies how long customer gets access to the target URL.- This payment URL send the above data is to the payment server.

-The merchant runs an HTTP server that is modified to access URLS.It should includes the business pros and cons

Record keeping with credit cards my leads to disputes and mistakes in billings.The complexity of credit card processing takes place as a potential bottleneckdue to high volume of the network traffic and card transaction traffic etc.Encryption and transaction speed must be balanced.Infrastructure for online credit card processing:

They are includes the following: They are EFT networks , credit cardassociation , software developers , bill Payment companies and telephonecommunication providers.RISKS AND ELECTRONIC PAYMENT SYSTEMS:

They are three major risks occurs in payment systems , they are as follows:1. Mistake or fraud2. Privacy issues3. Credit card risks1. Risks from mistakes and disputes:

By virtually electronic payment systems need some ability to keep automaticrecords for the transaction.The various features of automatic records are permanent storage , paymentdatabase system , data transfer to bank and payment makes etc.The need of record keeping is conflicts with the transaction anonymity of cash2.Privacy issues are managing information privacy:The e-payment system must ensure and maintain privacy. Users must beassured that knowledge of transaction will be confidential and limited to theonly parties not for others.Privacy must be maintained against eavdroppers on the network andagainst unauthorized insiders.All details of consumer payments are aggregated and are given privacy.3. Managing Credit Risks :

21


22/25

Credits are systemic risk is major concern in net settlement systems because abanks failure to settle its net position could leads to chain reaction of bankfailures.So that the digital central bank must develop policies to deal with this possibilityThe central bank can guarantee on settlement and removes the risks from the

net system.

ELECTRONIC DATA INTERCHANGE (EDI) :EDI is the electronic transfer from one computer to another computer process able datausing agreed standard to structure the data.Example EDI transaction EDI handbook etc.EDI is developed in 1960s means of accelerating the movements to shipments andtransportation.It is aimed at forcing boundary less relationship that means it bringing down theboundaries that restrict how they interact and do business each other.Layered architecture of EDI is shown below:

EDI Semantic layer Application level servicesEDI Standard layer EDIFACT business form standards

ANSI X12 business form standards

EDI transport layer Email and X.435 ,MIME

POINT TO POINT,

FTP ,TELNET,WWW,HTTP

Physical layer Dial up lines, internet ,I-way

1.EDI Document standard layer :

1.It specifies business form structure and to some extent influence content seen at theapplication layer.Example: purchase order name field x12 standard might be to hold 50 characters and 75

characters field produced name truncating during translation from application layer todocument standard layer.2.EDI Transport layer :

It corresponds with non electronic activity of sending business from one company toanother company .It can send using postal service ,registered mail and certified mailand email etc.Generally EDI transport layer chooses email As the carrier services.3.EDI Physical layer : It describes the physical devices which involved in transaction.They use various devices like dial up systems ,internet ,I-WAY,EDI in Action :

Edi has been used in the procurement function to steam-line the interaction between the

Buyer and seller .the other uses for EDI are universities use EDI to exchange transcriptsquickly.Automatically units uses EDI to transmit large complex engineering design created onthe specialized computers.Large multinational companies use EDI to send online price catalogs to customersListed products , prices ,discounts and terms.The EDI Transaction for a purchase ,shipment and payments are as follows :

These are the various steps as follows:

22


23/25

1.Buyers computer sends purchase order to sellers computer2.Sellers computer sends purchase order confirmation to buyers computer3.sellers computer sends booking request to transport companies computer.4.Transport companies computer sends booking confirmation to sellers computer5.sellers computer sends advance ship notice to buyers computer.

6.Trnasport company s computer sends status to sellers computer.7.buyers computer sends receipt advice to sellers computer.8.Sellers computer sends invoice to buyers computers.9.Buyers computer sends payment to sellers computer

In short . a firm adopting EDI as fast , inexpensive and safe methods of sending invoicesand purchase orders , custom documents , shipping notices etc.EDI used as a strategic tool that enhances completeness of companies involved.It speed ups business processes.

Tangible benefits of EDI are:It has the following benefits:

1.Reduced paper based system: It does not require any paper related supplies and othermodes of things. It uses Inexpensive manner of system.2.Improved problem resolution and customer services: EDI minimize the time ,companies spend to identify and resolve inner business problems.Example : some problems comes from data entry errors.3.Improve service by quick transfer of business documents

4.expanded customer supply base /supplier base:Many large manufactures and retailers with the necessary clout are ordering theirsuppliers to institute an EDI program. Like to get order from unknown company andbuild bridges to other companies .it evaluates new products .2.EDI APPLICATION IN BUSINESS :

It involves the various of applications in business , they arei. International Trade and EDI and ii.The components of international tradeiii. The customs and international trade and iv. The logics of transport.The below diagram describes the various processing of operations involved inThe design of product.

23


24/25

3.EDI :LEGAL ,SECURITY ,AND PRIVACY ISSUES

24


25/25

complete notes till date

Documents

Transcript of complete notes till date