Prof. Edward Moskal (Saint Peter's College)
Service: Web software
that runs some of the main functions of an online
storefront such as product display, online ordering, and inventory
management. The software works in conjunction with online payment systems
to process payments.
Service Providers (CSP): CSPs are business or web sites that
provide ecommerce solutions.
Electronic Cash or Ecash or Digital Money: These terms are used
interchangeably. They refer to any of the various methods that allow a
person to purchase goods or services by transmitting a number from one
computer to another. The numbers are issued by a bank and represent sums of
real money. Digital cash is anonymous and reusable. Unlike credit card
transactions, the merchant does not know the identity of the shopper.
Certificate: An attachment
to an electronic message used for security
purposes. The most common use of a digital certificate is to verify that a
user sending a message is who he or she claims to be, and to provide the
receiver with the means to encode a reply.
Checks or "Cheques": Customers pay for merchandise
by writing an electronic check that is transmitted electronically by email,
fax or phone. The "cheque" is a message
that contains all of the information that is found on an ordinary check,
but it is signed digitally, or indorsed. The digital
signature is encoded by encrypting with the customer's secret key. Upon
receipt, the merchant or "payee" may further indorse by encoding
with a private key. When the cheque is processed,
the resulting message is encoded with the bank's secret key, thus providing
proof of payment.
Wallet: Electronic Wallets store your
credit card numbers on your hard drive in an encrypted form. You then make
purchases at web sites that support that particular type of electronic
wallet. By clicking on a Pay Button, customers initiate a credit card
payment via a secure transaction enabled by the electronic wallet company's
Commerce or EC: These
terms are used interchangeably, and they all mean the same thing - the
paperless exchange of routine business information using Electronic Data
Interchange (EDI), email, electronic bulletin boards, fax transmissions and
Electronic Funds Transfer. It refers to Internet shopping, online stock and
bond transactions, the downloading and selling of "soft
merchandise" (software, documents, graphics, music, etc.), and
business to business transactions.
Extranet: An extranet is an extension
of a corporate intranet. It connects the internal network of one company
with the intranets of its customers and suppliers. This makes it possible
to create e-commerce applications that link all aspects of a business
relationship, from ordering to payment.
Disintermediation: Disintermediation is the
process of bypassing retail channels or mail order houses and selling
directly to the customer.
Hard Goods vs Soft Goods: Hard Goods are items that exist in the real world, as
opposed to soft goods, which exist virtually or electronically. For
instance, an Internet merchant selling a book that is shipped to the
customer in a print version is selling hard goods; a merchant offering a
book for download in electronic format is selling soft goods.
risk processors (or brokers) are financial institutions or companies that
issue merchant status accounts to high risk businesses. They offset their
risks by charging higher transaction fees and higher rates than traditional
banks do. However, the initial outlay of cash that you will be required to
put up is usually much less than the large deposits required by traditional
banking institutions. Some brokers may offer other added features such as
shopping cart software, web site templates, forms
or secure lines for ordering.
Immerce: Immerce is the new term being used for
commerce that is transacted totally over the Internet.
Account is a relationship between a business (i.e. a merchant) and a
merchant bank which allows the retailer or merchant to accept credit card
payments from customers. Depending on the country involved, banks or
financial institutions could have stiff requirements and regulations
regarding the issuing of a merchant account. Many small or home based
businesses report that they have great (sometimes insurmountable) difficulties
acquiring Merchant Status. If Merchant Status is obtained, the merchant
then rents or buys special software that is used to process the
transaction. In some cases, depending on the bank and depending on the type
of business that you are operating, you will also need to purchase or rent
a piece of hardware known as a processing terminal. An Internet Merchant Account
is a special account that permits the acceptance of credit cards online.
Transactions are processed online, in real time. While the customer waits,
the system checks the credit card to be sure that it has not been reported
stolen, has not expired, and is listed to the same address that the
customer has given. If the card is approved, the customer and the merchant
are both automatically notified that the sale has transpired. This type of
account is a stricter banking relationship than one involving face-to-face
transactions. Web transactions do not gather signatures from purchasers and
therefore there is a higher risk of fraud. Merchant Brokers specialize in obtaining
credit card accounts for online businesses. Brokers charge a setup fee and
lease or sell the software and hardware as needed. Expect to pay a discount
rate, which is the percentage you pay for each transaction processed, as
well as various other charges that differ among services. If obtaining a
merchant account through a traditional bank is proving to be a problem,
merchant brokers are a good alternative.
Microtransactions or Micropayments: Microtransactions are transactions of tiny
amounts - a few cents or a few dollars, typically made in order to download
or access graphics, games, and information.
RSA Encryption: A public-key encryption technology developed by RSA Data
Security, Inc. The acronym stands for Rivest, Shamir, and Adelman, the
inventors of the technique. The RSA algorithm
is based on the fact that there is no efficient way to factor very large
numbers. Deducing an RSA key, therefore, requires an extraordinary amount
of computer processing power and time.
Shopping Chart: A shopping cart is a piece of software
that acts as an online store's catalog and ordering process. Typically, a
shopping cart is the interface between a company's web
site and its deeper infrastructure, allowing consumers to select
merchandise; review what they have selected; make necessary modifications
or additions; and purchase the merchandise.
SSL Encryption: Short for Secure Sockets
Layer, a protocol
developed by Netscape for transmitting private documents via the Internet.
SSL works by using a private key
to encrypt data that's transferred over the SSL
connection. Both Netscape Navigator and Internet Explorer support SSL, and many web
sites use the protocol to obtain confidential user information, such as
credit card numbers. By convention, URLs
that require an SSL connection start with https: instead of http:.
Smart Card: A small electronic device
about the size of a credit card that contains electronic memory, and
possibly an embedded integrated circuit (IC). Smart cards containing
an IC are sometimes called Integrated Circuit Cards (ICCs).
Telephone Billing Systems: A very new approach, telephone
transactions allow the customer to purchase an item or service, and the
amount will be billed to his or her telephone bill. To date, this is being
used for soft items such as downloads, time measured services (i.e. time
spent at a Web site) or for making charitable donations online.