Internet - The World Wide Web
E-Commerce Solutions

E-Commerce Solutions

Shopping Carts
As a customer browses around your online store, the first application you will need will be a shopping cart. This is just a cute name for a way to let customers surf around your site and click on several different products to purchase before actually filling out an order form with their address and credit card information. There are huge benefits to using shopping cart technologies. Without them, every time a person wanted to order a product he would have to select it then fill out his ordering information and complete the transaction. Want to purchase multiple items from the same Web site? Guess what, you now have to go back into the database, select the next item, and fill out that form all over again.

Shopping cart technology works much the way it sounds. Customers can select items and put them in a virtual shopping cart, then when they are ready to purchase they only need to fill out the ordering information form once. It saves time and makes the shopping experience less hassled.

The shopping cart relies on personalization technology by placing a cookie in the user’s cookie file and keeping a temporary database record on the server for the user’s current shopping excursion. Each time the user places another item in her shopping cart, the server is instructed to add that item to the user’s current list of products to be purchased in the database. Once a user completes the transaction or leaves the site, the shopping cart is deleted.

Checkout and Accepting Payment
The next step in the process is for the user to checkout with her purchase(s). For this she must input all of her shipping and billing information and upload her credit card number. But thanks to the shopping cart technology, this only needs to be done once!

Once the customer’s order and payment information have been uploaded to the server securely, it must be processed through your own order processing system. The credit card number needs to be authenticated and authorized by a credit card clearinghouse, just as it would be in your real store. Then the payment must be transferred into your bank account, called a merchant account.

To accept credit cards for online sales you first must have a “card not present” (or CNP) merchant credit card account. When a card is not present, you do not see the consumer or the card so transactions are inherently riskier.

Mostly it is a matter of assessing—and paying for—risk. The riskier your business is perceived to be by the credit card company and your business bank, the more you’ll have to pay in fees to be able to accept credit card payments. This was true for the mail and telephone order business a few years ago and it’s true for online businesses now. A new Internet business looks like a high-risk merchant to a lot of banks, and these new kids on the block can pay a premium to do business. As online shopping grows in popularity and Internet security gets tighter and tighter, the fees for transactions are slowly starting to come down.

In order to accept credit card transactions, you need to go to a bank that offers “card not present” accounts for online merchants. It may or may not be your own bank, but it’s a good place to start. The number of banks that offer CNP accounts increase every day.

Once you get a CNP account so that you can accept credit card payments, the next thing is to get a secure Web site. You’ll need to get software that allows you to set up a storefront and support real-time payments. If your site is being developed by a Web development firm, they will take care of this. There is a whole range of products and solutions from the very simple to the complex that handle building your site. On the financial side, if you are going it alone, you can talk to your own bank, read trade publications, and look online for various service and product solutions.

Electronic Cash
A number of companies have been trying out new payment models so that merchants and customers can handle electronic cash. In part, this is an answer to the need for micropayments. Micropayments are small payments, from a few cents up to about ten dollars, for items like pages of information, video or sound clips, low-cost programs, greeting cards, and the like. And in part, it’s simply a response to the effort to make the ability to purchase goods and services on the Web as varied and diverse as they are offline.

Two companies who are offering interesting approaches to the challenge of digital payments via electronic cash are CyberCash and Mercantile Bank. CyberCash offers CyberCoin electronic cash and PayNow electronic checks. Mercantile bank offers Ecash.

When you find something you want to buy for less than $10, suddenly credit cards are not feasible. That’s because the transaction fees the credit card companies charge merchants make it prohibitively expensive to use a card for such small amounts. That’s where electronic cash comes in.

To use CyberCoins, a customer initiates an electronic wallet by taking money from their checking account or advancing on their credit card and depositing it into the wallet. This process is called binding. Once the customer has money in his or her wallet, it’s simply a matter of paying via CyberCoin to any merchant who accepts it. No money moves online; the only thing that moves is information. It is called a notational system because CyberCoin makes a notation of the amount of money the customer has in the wallet and how much is spent. Because the money never leaves the banking system, this kind of electronic cash transaction is very difficult to break into.

For a merchant to set up an account to accept CyberCoins, it must set up a merchant account with a bank that allows the merchant to accept credit cards. It’s a good idea to have a card not present account anyway since so many people prefer to use credit cards online. Once you get a merchant ID and a terminal ID from this credit account, you can contact CyberCoin with those numbers. In parallel, you would receive the CyberCoin software to install on your Web server.

Mercantile Bank’s Ecash system works very differently from CyberCoin. With Ecash a customer in essence “mints” money right on his or her computer. Customers can even paste money into an e-mail and transfer it to friends and family as gifts.

For the customer, the first step is to fill out an application, either online or via regular mail, for a Mercantile Bank account. You must then deposit a sum of money into the account through normal means, just like starting any other kind of bank account. Once the account is opened, the customer gets an account ID and password. Then you must download the Ecash software, which authenticates the connections to the electronic bank, and the customer can download the Ecash right onto his or her computer’s hard drive via the software. The Ecash system acts like a virtual ATM, and the funds are downloaded directly to the customer’s hard drive. From there you can do what you wish with it. For example, you can go to an Ecash merchant, such as CDNOW, and the funds move from your hard disk to the CD-Now account. You can also transfer money directly from your hard drive wallet to someone else’s electronic wallet or e-mail money right to someone.

For vendors to accept Ecash, you need to go to the Mercantile Bank Web site, fill out the application, and download the software. It is roughly the same software a customer would use with some minor modifications that allow the merchant not just to receive money but to receive money as payment.

Fulfillment
After the order has been processed, it must be picked from your inventory and shipped to the customer.

* Source - Everything Online Business Book
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