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Online Transactions

Operationally, one may visualise three stages involved in online transactions. Firstly, the pre-purchase/sale stage including advertising and information seeking; secondly, the purchase/sale stage comprised of steps such as price negotiation, closing of purchase/sales deal and payment; and thirdly, the delivery stage which can be observed from the above Figure that, except the stage relating to delivery, all other stages involve flow of information. The information is exchanged in the traditional business mode too, but at severe time and cost constraints. In faceto- face interaction in traditional business mode, for instance, one needs to travel to be able to talk to the other party, requiring travel effort, greater time and costs. Swapping of information through the telephone is also unmanageable. It needs synchronization of both the parties for exchange of information orally. Information can also be transmitted by post, but it becomes a time consuming and expensive procedure. Internet walks in as the fourth channel that is free from most of the problems referred above. In the case of information-intensive products and services such as software and music, even delivery can take place online.

Registration: Before doing online shopping, one need to fill up a registration form with the online, which imbibes that you hold an 'account' with the online vendor. Amidst various details 'password' is one of the vital sections relating to your 'account', and 'shopping cart' and it is duly protected, failing which, anyone can login using your name and shop in your name. This may prove to be troublesome.

Placing an Order: Shopping cart would be provided for you to pick and drop the items into it. Shopping cart can be defined as an online record of what you have picked up while browsing the online shop similar to a physical shop wherein you can put in and take items out of your cart, that will help you to make sure what you want to buy and can 'checkout' and choose your payment options.

Payment Mechanism: The above figure clearly states that payment for the purchases through online shopping may be done through several methods:
  • Cash-on Delivery (CoD): As the name suggests, payment for the goods ordered online may be paid in cash at the time of physical delivery of goods.
  • Cheque: As an alternate option, the online vendor might arrange for the pickup of the cheque from the customer. On realization of the cheque, delivery of goods may be made.
  • Net-banking Transfer: Customers are provided with the facility of electronic transfer of funds over the internet. In this case, the buyer can transfer the amount towards the transaction to the goods to the account of the online vendor which will enable him to proceed to arrange for the delivery of goods.
Buying/Selling Process
Credit or Debit cards are commonly referred to as 'plastic money'. These cards are the most extensively used medium for online transactions. In fact, more than 95 per cent of online transactions are affected with a credit card. Credit card permits its holder to make purchase on credit. The amount due by the card holder to the online seller is paid by the credit card issuing bank, which in turn transfers the amount utilized in the transaction to the credit of the seller. Buyer's account is debited, who enjoys the liberty to repay the amount in monthly installments and at his convenience. Debit card permits its holder to carry out purchases through it to the degree of the amount lying in the respective account. As the transaction is made, the amount due as payment is immediately deducted vide electronic transfer from the card. In order to accept credit card as an online payment type, the seller has to secure a means of collecting credit card information from its customer. Payments effected through credit cards are processed either manually, or through an online authorisation system called SSL Certificate (see box on, History of e-commerce).

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