Electronic Commerce, Ecommerce, Network and Internet Payment part 2

Posted by arlene

Information Process

A merchant site that accepts electronic payments must include the following processing functions: (1) promotion; (2) welcoming; (3) payment; and (4) back-office.

Promotion

Successful implementation of a merchant site depends on a variety of factors, including site promotion. This can be done through fliers sent to the client or through fidelity programs. The promotion server can use push or pull technologies. As the name implies, push technology is quite aggressive. Once clients have indicated their preferences, intelligent agents scour the virtual catalogs and inundate the users with propositions that appear instantaneously on their computer screens. In contrast, spun technology leaves the choice of the instant, the type, and the quantity of the information to the user.

Most of the products are available at no cost to the user; the production costs are covered by the publicity that appears in the form of animation at one of the corners of the screen. It is important to note, however, that the automatic upgrade of this software can cause a security breach in desktops.

Welcome

Welcoming the client is the role of the Web server or portal, which is the first contact between the user’s browser and the site and which is responsible for security and encryption of the transaction. Site administration covers the aesthetics of the virtual storefront and the update of the information. The idea is therefore to conceive, design, and implement pages that link merchandise catalogs with multimedia databases (text, sound, speech, images). New browsing tools should be able to offer new, user- friendly interfaces. Three-dimensional navigation, for example, or methods to construct virtual reality may help reproduce remotely the tactile and visual sensation: associated with physical manipulation of the articles displayed.

Payment

After attracting the potential clients, a user-friendly site should allow users to pa) for their purchases in the simplest possible manner by accepting the customers’ choices for the different online payment methods. Obviously, the technology used should minimize the operating costs without sacrificing the security of the exchanges. The payment server is often hosted by a financial institution; its function is to convey the purchase orders into financial flows destined to banks.

Several suppliers offer electronic commerce servers for business-to-business communications or for business-to-consumer transactions. Others have designed their products to support virtual shopping malls. Depending on the design, different modules are used to handle the multiple aspects of the commercial process: catalog design and editing, financial information processing, etc.

Terminals for collecting electronic payments can be general computers with the appropriate software or specialized machines, such as point-of-sale readers. Independent of their type or the network architecture that binds them together, these terminals can function with or without interrogating the verification centers at each transaction.

In the future, the terminals may be replaced with NCs (network computers). The intent is to simplify the procedures for operation, administration, and maintenance, thereby reducing the cost of total ownership. The collaboration between France Telecom and IBM to develop an end-point terminal combining the function of the Internet and the Minitel follows the same path.

For the large-scale use of smart cards as electronic means of payment, an infrastructure is needed with the following components:

• Low-cost card readers that resist physical intrusions and include security modules
• For rechargeable cards, a network of recharging points that can verify the identity of cardholders and, by remote queries to the banking system, their creditworthiness
• A secure telecommunication network to protect the financial exchanges

Back-Office Processing

In the case of physical goods, the server must complete all the tasks of order taking, including management of the inventory and delivery. In a field where the rate of technology displacement is extremely high (for example, the distribution of computer accessories), the logistical system should be impeccably tied to the enterprise information system. Too large an inventory or an accelerated depreciation can direct fatal blows and is the reason many distributors have forged alliances with their suppliers to assemble the equipment only after an order has arrived.

The anticipation of customer demand based on customer behavior is a legitimate endeavor that relies on various techniques for processing large databases, their analysis, and the extraction of indications through data mining. Thus for some operators of electronic payment systems, payment is merely a passage point on the way to exploitation of demographic and behavior information collected during online registration or after purchases. One of their objectives is to anticipate individual purchases by directing promotional offers to a subpopulation of individuals who are assumed to be interested. It is this type of approach that may be problematic when protection of privacy is of concern.

In either case, even though the details of the operation and the content of the various databases may differ, the database server should be able to retrieve details on the merchandise, the orders, the invoices, and the clients. It should be possible to sort and reorganize the data, particularly multimedia data, available from different suppliers. The coherence and the update of the site should also be checked regularly. Cash flow management occupies an important part of electronic commerce because of the large number of transactions and the high speed at which transactions take place around the clock. Therefore, the server should be able to exchange financial information with the banks and make rapid verification and account reconciliation to maximize the investment of available funds.

In the case of smart cards, the back-office operations may also include additional functions such as cardholder authentication, applications using the certificates signed by the certification authority, and the addition and deletion of applications in multiapplication cards.

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