Essay: Ecommerce payment systems

The roots of the State Bank of India lie in the first decade of 19th century, when the Bank of Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal was one of three Presidency banks, the other two being the Bank of Bombay (incorporated on 15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks were incorporated as joint stock companies and were the result of the royal charters. These three banks received the exclusive right to issue paper currency till 1861 when with the Paper Currency Act, the right was taken over by the Government of India. The Presidency banks amalgamated on 27 January 1921, and the re-organised banking entity took as its name Imperial Bank of India. The Imperial Bank of India remained a joint stock company but without Government participation.
 Pursuant to the provisions of the State Bank of India Act of 1955, the Reserve Bank of India, which isIndia\’s central bank, acquired a controlling interest in the Imperial Bank of India. On 1 July 1955, the Imperial Bank of India became the State Bank of India. In 2008 the government of India acquired the Reserve Bank of India\’s stake in SBI so as to remove any conflict of interest because the RBI is the country\’s banking regulatory authority.
 In 1959, the government passed the State Bank of India (Subsidiary Banks) Act, which made eight state banks associates of SBI. A process of consolidation began on 13 September 2008, when the State Bank of Saurashtra merged with SBI.
 SBI has acquired local banks in rescues. The first was the Bank of Behar (est. 1911), which SBI acquired in 1969, together with its 28 branches. The next year SBI acquired National Bank of Lahore (est. 1942), which had 24 branches. Five years later, in 1975, SBI acquired Krishnaram Baldeo Bank, which had been established in 1916 in Gwalior State, under the patronage of Maharaja Madho Rao Scindia. The bank had been the Dukan Pichadi, a small moneylender, owned by the Maharaja. The new banks first manager was Jall N. Broacha, a Parsi. In 1985, SBI acquired the Bank of Cochin in Kerala, which had 120 branches. SBI was the acquirer as its affiliate, the State Bank of Travancore, already had an extensive network in Kerala.
 The State Bank of India and all its associate banks are identified by the same blue keyhole logo. The State Bank of India wordmark usually has one standard typeface, but also utilises other typefaces.
 On October 7, 2013, Arundhati Bhattacharya became the first woman to be appointed Chairperson of the bank. [1]
SECTION-2-
E-COMMERCE
1.2.1 Concepts and reasons for the spread of E-commerce
 Concept of E-commerce
Electronic commerce, commonly known as e-commerce or eCommerce, is a type of industry where the buying and selling of products or services is conducted over electronic systems such as the Internet and other computer networks. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI),inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction\’s life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices, social media, and telephones as well.
Electronic commerce is generally considered to be the sales aspect of e-business. It also consists of the exchange of data to facilitate the financing and payment aspects of business transactions. This is an effective and efficient way of communicating within an organization and one of the most effective and useful ways of conducting business.
E-commerce can be divided into:
 E-tailing or “virtual storefronts” on websites with online catalogs, sometimes gathered into a “virtual mall”
 Buying or selling on websites and/or online marketplaces
 The gathering and use of demographic data through web contacts and social media
 Electronic data interchange, the business-to-business exchange of data
 E-mail and fax and their use as media for reaching prospective and established customers (for example, with newsletters)
 Business-to-business buying and selling
 The security of business transactions
For E-Business enterprises in the age of the Internet, electronic commerce is more than just buying and selling products online. Instead, it encompasses the entire online process of developing, marketing, selling, delivering, servicing, and paying for products and services transacted on internetworked, global marketplaces of customers ,products and services transacted on internetworked, global marketplaces of customers, E-Commerce refers to the use of the Internet and the Web transacts business. More formally, e-commerce is about digitally enabled commercial transactions between and among organizations and individuals. For the most part, this means transactions that occur over the Internet and the Web (Laudon\’s, 2010, P.403). Although most commercial transactions still take place through traditional retail channels, rising numbers of consumers and businesses are using the Internet for electronic commerce. Today, E-Commerce revenue represents about 5 percent of all retail sales in United States, and there is tremendous upside potential for growth (Loudon\’s, 2010, P.416).
 Definition of E-Commerce:
There are several points of view to define E-Commerce:
1. E-Commerce as a concept: “the implementation and management of commercial activities relating to goods and services by converting the data over the Internet or similar technical systems” (ديز ابأ, 2005).
2. E-Commerce (EC): “Is an emerging concept that describes the process of buying, selling or exchanging products, services, and information via computer networks, including Internet” (Turban & Others, 2002, P.4).
3. E-Commerce: “The ability to buy anything from anywhere at any time, which means the use of E-Commerce methods and techniques in the conduct of business transactions” (عوبرجو سلح, 2001).
4. E-Commerce: “It is the process of exchange something of value such as products, services, or information through electronic means, mostly the Internet”. Or: “Its Sharing business information, maintaining business relationships, and conducting business transactions by means of telecommunication networks” (Gupta, 2000, P.217).
Finally, from the above definitions we can deduce the online world defines E-Commerce:
\’\’Modern and progressing technological systems that create an open door for the sale and purchase of products and services and information through the Internet. \’\’
 Reasons for the spread of E-commerce
Can be said that there are a number of reasons have helped the spread of this trade at present and what is expected to be it increased in the near future, and these reasons are:
1- Development and great prosperity in the use of computers and
programs.
2- Expansion of the international telecommunications network (the Internet).
3- The application of international economic agreements and the resulting trade liberalization and the elimination of barriers.
4- Expansions in the use of plastic money (Card Visa Card, Master\’s staff). ( صبيح واخرون ,2003 P14 )
1.2.2 Importance ,benefits and limitations of E-commerce
 Importance of E-commerce:-
Where to take shape in that it is the way a distinct and unprecedented access to world markets, all in one time and with less expenditure, helping buyers and sellers to overcome the barriers of distance, access to distant markets, diverse and multiple, as it also helps overcome the barriers of time, and dealing with customers over the time, which is an application of a real idea of globalization, as it helps companies to follow modern manufacturing systems that are computer aided, as well as a gateway to export, where it passes all the barriers that limit the start of trade between nations. ( (ٙ(مكي ,2002.
 Benefits of E-commerce
 Benefits to Organizations
i. The benefits to organizations are as follows:
2. Electronic commerce expands the marketplace to national company can easily and quickly locate more customers, the best suppliers, and the most suitable business partners worldwide. For example, in 1997, Boeing Corporation reported a savings of 20 percent after a request for a proposal to manufacture a subsystem was posted on the Internet. A small vendor in Hungary answered the request and won the electronic bid. Not only was the subsystem cheaper, but it was delivered quickly.
3. Electronic commerce decreases the cost of creating, processing, distributing, storing, and retrieving paper-based information. For example, by introducing an electronic procurement system, companies can cut the purchasing administrative costs by as much as 85 percent. Another example is benefit payments. For the U.S. federal government, the cost of issuing a paper check is 430. The cost of electronic payment is 20.
4. Ability for creating highly specialized businesses.
5. Electronic commerce allows reduced inventories and overhead by facilitating “pull”-type supply chain management. In a pull-type system the process starts from customer orders and uses just-in-time manufacturing.
6. The pull-type processing enables expensive customization of products and services, which provides competitive advantage to its implementers. A classic example is Dell Computer Corp., whose case will be described later.
7. Electronic commerce reduces the time between the outlay of capital and the receipt of products and services
 Benefits to Consumers
1. Electronic commerce provides customers with more choices they can select Electronic commerce frequently provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.
2. In some cases, especially with digitized products, EC allows quick delivery.
3. Customers can receive relevant and detailed information in seconds, rather than days or weeks.
4. Electronic commerce makes it possible to participate in virtual auctions.
5. Electronic commerce allows customers to interact with other customers in electronic communities and exchange ideas as well as compare experiences.
6. Electronic commerce facilitates competition, which results in substantial discounts.
 Benefits to Society
a. The benefits of EC to society are as follows:
2. • Electronic commerce enables more individuals to work at home and to do less traveling for shopping, resulting in less traffic on the roads and lower air pollution.
3. • Electronic commerce allows some merchandise to be sold at lower prices, so less affluent people can buy more and increase their standard of living.
4. • Electronic commerce enables people in Third World countries and rural areas to enjoy products and services that otherwise are not available to them.
5. • This includes opportunities to learn professions and earn college degrees.
6. • Electronic commerce facilitates delivery of public services , such as health care, education, and distribution of government social services at a reduced cost and/or improved quality. Health-care services, for example, can reach patients in rural areas.
 Limitations of E-commerce :-
The limitations of EC can be grouped into technical and nontechnical categories.
 Technical Limitations of EC : –
a. The technical limitations of EC are as follows:
b. There is a lack of system security, reliability, standards, and some communication protocols.
2. There is insufficient telecommunication bandwidth.
3. The software development tools are still evolving and changing rapidly.
4. It is difficult to integrate the Internet and EC software with some existing applications and databases.
5. Vendors may need special Web servers and other infrastructures, in addition to the network servers.
6. Some EC software might not fit with some hardware, or may be incompatible with some operating systems or other components.
 Non-Technical Limitations of EC : –
Of the many nontechnical limitations that slow the spread of
EC, the following are the major ones
1. Cost and justification The cost of developing EC in-house can be very high, and mistakes due to lack of experience may result in delays. There are many opportunities for outsourcing, but where and how to do it is not a simple issue. Furthermore, to justify the system one must deal with some intangible benefits (such as improved customer service and the value of advertisement), which are difficult to quantify.
2. Security and privacy These issues are especially important in the B2C area, especially security issues which are perceived to be more serious than they really are when appropriate encryption is used. Privacy measures are constantly improved.Yet, the customers perceive these issues as very important,and, the EC industry has a very long and difficult task of convincing customers that online transactions and privacy are, in fact, very secure.
3. Lack of trust and user resistance Customers do not trust an unknown faceless seller (sometimes they do not trust evenknown ones), paperless transactions, and electronic money. So switching from physical to virtual stores may be difficult.
4. Other limiting factors. Lack of touch and feel online. Some customers like to touch items such as clothes and like to know exactly what they are buying.
5. Many legal issues are as yet unresolved, and government regulations and standards are not refined enough for many circumstances
6. Electronic commerce, as a discipline, is still evolving and changing rapidly. Many people are looking for a stable area before they enter into it.
7. There are not enough support services. For example, copyright clearance centers for EC transactions do not exist, and high-quality evaluators, or qualified EC tax experts, are rare.
8. In most applications there are not yet enough sellers and buyers for profitable EC operations.
9. • Electronic commerce could result in a breakdown of human relationships.
10. • Accessibility to the Internet is still expensive and/or inconvenient for many potential customers. (With Web TV, cell telephone access, kiosks, and constant media attention, the critical mass will eventually develop.)
1.2.3 Business models of E-commerce :-
There are nine major E-commerce models, as shown in table below No -1-. Creating an e-commerce solution mainly involves creating and deploying an e-commerce site. The first step in the development of an e-commerce site is to identify the e-commerce model. Depending on the parties involved in the transaction.
Table No -1-
“Nine Major E-Commerce Business Model”
BUSINESS CONSUMER GOVERNMENT
BUSINESS B2B C2B G2B
CONSUMER B2C C2C G2C
GOVERNMENT B2G C2G G2G
Source: (Haag &, Cummings, 2010, P.128)
 Business to Business (B2B):-
occurs when a business sells products and services to customers who are primarily other businesses. So, for example, when Gates Rubber Company sells belts, hoses, and other rubber and synthetic products to General Motors or any other manufacturer that needs those parts, this is B2B e-commerce. B2B e-commerce is where all the money is right now in the e-commerce world (Haag & Cummings, 2010).
Let us look at the same example of www.amazon.com. As you know, www.amazon.com is an online bookstore that sells books from various publishers including Works, O’Reilly, Premier Press, and so on. In this case, the publishers have the option of either developing their own site or displaying their books on the Amazon site (www.amazon.com), or both. The publishers mainly choose to display their books on www.amazon.com at it gives them a larger audience. Now, to do this, the publishers need to transact with Amazon, involving business houses on both the ends, is the B2B model.
 Business to Consumer (B2C):-
occurs when a business sells products and services to customers who are primarily individuals. You are no doubt familiar with this model of e-commerce. If you\’ve ever ordered a book on Amazon (www.amazon.com), purchased a CD from Circuit City online (www.ciruitcity.com), or ordered a movie from Netflix (www.netflix.com), you\’ve participated in B2C e-commerce. B2C e-commerce garners most of the attention these days in the popular media. B2C e-commerce is the model that fuelled the early growth of e-commerce in the 1990s. B2C e-commerce is very much a cut-throat environment, no matter what the product and service (Haag & Cummings, 2010). Website following B2C business model sells its product directly to a customer. A customer can view products shown on the website of business organization. The customer can choose a product and order the same. Website will send a notification to the business organization via email and organization will dispatch the product/goods to the customer.
 Consumer to Business (C2B):-
occurs when an individual sells products and services to a business. The C2B e-commerce model is a true inversion of the B2C e-commerce business model. In the B2C e-commerce business model, demand is driven by the consumer and supply is driven by the business. In C2B it is inverted; the consumer drives supply and the business drives demand. Many people have mistakenly lumps such sites as Piceline.com (www.piceline.com) into the C2B category. At Pinceline.com you, as a consumer, can set your price for items such as airlines tickets and hotel rooms, but you (as a consumer) still provide the demand and the airlines or hotel still provides the supply (Haag & Cummings, 2010).
 Consumer to Consumer (C2C): –
occurs when an individual sells products and services to another individual. C2C e-commerce usually takes place through an intermediary organization, such as eBay. eBay is a hybrid of both a B2C e-commerce site and a C2C e-commerce site. It is a B2C e-commerce site because it sells a service to you, that of giving you the ability to interact in the auctioning of items.(You pay eBay only if you\’re the seller, not the buyer). And it is really an intermediary supporting your engagement in a C2C e-commerce business model. That is, you use eBay to sell products and services to other consumers, and you use eBay to buy products and services from other consumers (Haag & Cummings, 2010).
 Business to Government (B2G):-
occurs when a business sells products and services to a government entity. Lockheed Martin, for example, generates almost 80 percent of its revenue by providing products and services to the U.S.Department of Defense (DOD). Lockheed Martin sells tactical aircraft, aeronautical research equipment, commercial satellites, government satellites, strategic missiles, naval systems, and IT equipment and services to the U.S. federal government. operations in order to improve efficiency, effectiveness, and service delivery (Haag & Cummings, 2010).
 Consumer to Government (C2G):-
occurs when an individual sells products and services to a government entity. In this model, an individual consumer interacts ,with the government. For example, a consumer can pay his income tax or house tax online. The transactions involved in this case are C2G transactions. This is very similar to the C2B e-commerce business model, except that the buying partner is a government entity, not a business. The C2G market is quite small, and, to say the least, unremarkable. While you cound services from individuals. For example, to sell products and services to the U.S. federal government, you must register yourself as a formal business within the Central Contractor Registration (CCR) system at www.ccr.gov (Haag & Cummings, 2010).
 Government to Business (G2B):-
occurs when a government entity sells products and services to businesses. There are several good examples within this e-commerce business model. The first is the Small Business Administration (SBA, atwww.sba.gov). In addition to providing small business loans (which do have an interest accruing), the SBA offers services in many areas such as surety guarantees, disaster assistance, ombudsman, and so on. Most of these services are free, to be sure, but some that involve financial baking and guarantees carry with them various fees and commissions (Haag & Cummings, 2010).
 Government to Consumer (G2C):-
refers to the electronic commerce activities performed between a government and its citizens or customers including paying taxes, registering vehicles, providing information and services, and so in. This particular model of e-commerce does not often fit well within the supply-and-demand notion. Again, supply is the first partner and demand is the second partner. In the B2C model for example, Amazon has the supply of books, movies, and other products, and you-as a consumer-provide the demand. In the G2C model, a government often provides citizens with the ability to interact with it electronically to achieve efficiencies. Paying your taxes is an example. You can file your taxes electronically and receive your refund (or pay additional taxes) electronically. The notion of supply and demand isn\’t particularly applicable in this site case (Haag & Cummings, 2010).
 Government to Government (G2G):-
refers to the electronic commerce activities performed within a nation\’s government. (It might also refer to the electronic commerce activities performed between two or more nation\’s governments including providing foreign aid) (Haag & Cummings, 2010).
1.2.4 The Characteristics of E-Commerce:-
 The Disappearance Paper Documents in Commercial Transactions:
Electronic transactions characterized that there are no paper documents reciprocal in transactions, since all of the correspondence between the parties to transactions conducted electronically without the use of any papers, which is consistent with the purpose of e-commerce is the creation of community transactions paperless, which raises the issue of electronic evidence and its impact as an obstacle for the growth of e-commerce (Al-Mutalqha, 2008).
 Inability to Identify Contractors:
The Internet provides business sector manage transactions efficiently from anywhere in the world, so that the center of company information can be found in any place without affecting the performance but may for this separation spatial between the parties of electronic transactions did not know all the information core from each other as in traditional commercial transactions, where one of them doesn\’t know the financial position and whether it has reached the age of maturity or minus eligibility (Al-Mutalqha, 2008).
 Products Delivered Electronically:
Internet allowed the possibility of delivery of some products electronically, such as computer programs, musical recordings, videos, books, papers and reports online, as well as some services such as consulting medical or engineering, which creates a challenge for the authorities where there is not yet agreed mechanisms for digital products subject to customs or taxes, as vendors that can be used to escape the payment of customs duties and taxes by not recording these transactions in the books of the official accounting (Al-Mutalqha, 2008).
 Absence of Direct Relationship between the Contracting
Parties:
Spin bargaining and negotiations between contract parties in the contract to agree on details of the contract to be concluded between them, may require the contract one session or several sessions until agreement on the terms and details of the contract, but in the decades of E-Commerce do not have a council held in the traditional sense, the seller may be in place and the buyer had put away the thousands of miles away, has a different time schedule as well as between buyer and seller place. The human factor as contracting agent E, which prompted some to suggest that E-Commerce have a negative impact on social relations between individuals as a result of the absence of intimate relationships between contractors, where everyone can get the essential needs of food, clothing and other through the Internet and even without leaving home (Al-Mutalqha, 2008).
 The Presence of the Electronic Mediator:-
The electronic mediator between contract parties is a computer and related network of international contacts that you move the expression electronically for each of the contracting parties at the same moment, in spite of separated spatially, usually the E-mail reached at the same moment to the other party, unless there has been a malfunction in the network or the collapse of it may not get the message or reach false or illegible, and may arise in the responsibility of Internet service provider for non-arrival of the message or it arrives late or arrive in time, but there by mistake or misrepresentation (Al-Mutalqha, 2008)
 Speed in the Completion of Business Transactions:-
E-commerce effectively Contribute in the completion of commercial transactions between the parties speedy as business transactions without the need to move the parties and having met in a particular place and in the provision of time and effort and money (Al-Mutalqha, 2008).
1.2.5 Requirements of E-Commerce:-
To become commerce available over the Internet in any society it is necessary to provide a suitable environment, as well as the requirements to achieve them. In this section we will deal briefly with these requirements in accordance with the following divisions: (Turban & Others, 2004).
 Electronic infrastructure: –
including supporting infrastructure of e-commerce and contract business dealings via Internet. Among the most prominent component of this infrastructure information and communication technology (ICT) sector and include the networks of telecommunications and telecommunications equipment, fax, fixed telephone and mobile, as well as computers and software applications and operating and support services, technical, and human capital used in business and e-commerce, as well as to the availability of productive sectors of information technology. These components provide an environment of electronic infrastructure which helps the spread of Internet use and create a suitable environment for Ecommerce. The spread of Internet access a major factor in e-commerce, because it serves as the channel email or market in which such transactions and commerce exchanges. The spread of the Internet depends on the availability of essential elements by the availability of personal computers and mobiles, and access to the Internet through knowing of user\’s numbers, participants and potential users of the Internet (Turban & Others, 2004).
 Legislation and regulations for E-Commerce:-
include legislation, laws and rules that fit with the nature of commerce via the Internet. These legislations represent legal and regulatory framework that ensures the continuation of E-commerce and protect the rights of the parties collaborating. Also provides the legal framework to create legal tools suited to the electronic transactions, such as the means of contracting over the Internet or via e-mail, and the conditions required for this, and solve conflict E-Commerce, whether in society or whether they are between parties in different countries, as well as dealing with the proof means of conflicting commerce parties via the Internet (Turban & Others, 2004).
 Availability human resources:-
This is a component of the success of e-commerce in any society; these include human resources professionals in IT and communication networks, the Internet and software applications related to commerce online. On the other hand e-commerce requires the so-called readiness mail (E- Readiness) any ready community desire to use and practice of commerce via the Internet. And the incidence of E-Readiness of a society through the development of the quality of the educational systems and expand opportunities for community members to make use of it to become a society with knowledge of technology culture, as well as to provide opportunities for institutions and educational institutions and schools to use information and communication technology, and adapting curriculum with technical knowledge (Turban & Others, 2004).
1.2.6 Risks of E-Commerce:-
From the risks that may faced e-commerce: (النعيمي, 2003)
1. Unreliability, especially in this type of commerce between unknown parties to each other and that doesn\’t have sufficient commercial fame.
2. Unsafe from piracy and intrusion in the global networks and what happen to these sites in order to steal information and access to the secret numbers of accounts and credit cards.
3. The presence of international espionage by some governments, large companies, multinational business, trade of some companies and individuals under the pretext of security reasons is to get the secrets of business deals and pass it to competitor\’s customers.
4. Swindling and fraud process that are practiced under known names and with a view to extortion and obtaining money from the shortest way.
5. Non-exist of binding laws and regulations for all countries in the world, andif found in some countries it is different in its legislation among them, and so, they are valid only in the country\’s legislature. Note that this type of commerce beyond the borders and geographical regions. Different regulations and international laws in the acceptance or non-acceptance in transactions conducted in electronic communication networks.
6. Lack of infrastructure needed by communication and information networks in all countries, making it the exclusive and monopoly to some countries in the world without the other.
7. The need to technical staff based on the management as well as the specialist staff in the management, which carries additional burdens.
8. The need to high level of risk, is well known that capital is coward by nature. So up to this date did not account for big significant capital.
1.2.7 E-Commerce Payment Systems
Several electronic payment systems have been developed to pay for goods electronically on the Internet. EPSs for the Internet include systems for digital credit card payments, digital wallets, accumulated balance digital payment systems, online stored value payments, digital checking, and electronic billing presentment and payment systems (Laudon\’s, 2010, P.427).
Types of Electronic Payment Systems:-
 credit card
A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder\’s promise to pay for them.[1] The issuer of the card creates a revolving account and grants a line of credit to the consumer (or the user) from which the user can borrow money for payment to a merchant or as a cash advance to the user.
There are two types of credit cards on the market today:
• Credit cards issued by credit card companies (e.g., MasterCard, Visa) and major banks (e.g. Is Bankasi, Ziraat Bankasi, Yapi Kredi, etc.)Credit cards are issued based on the customer\’s income level, credit history, and total wealth. The customer uses these cards to buy goods and services or get cash from the participating financial institutions. The customer is supposed to pay his or her debts during the payment period; otherwise interest will accumulate. Two limitations of credit cards are their unsuitability for very small or very large payments. It is not cost-justified to use a credit card for small payments. Also, due to security issues, these cards have a limit and cannot be used for excessively large transactions.
• Credit cards issued by department stores (e.g Boyner), oil companies (e.g. Shell) Businesses extremely benefit from these company cards and they are cheaper to operate. They are widely issued to and used by a broad range of customers. Businesses offer incentives to attract customers to open an account and get one of these cards.