SS 3 First Term

Learning Objectives

• Define electronic commerce and name its types.
• Describe the parts of a website used for buying and selling.
• Explain how payment is made safely online.
• State the benefits and the risks of electronic commerce.

Meaning and Types of Electronic Commerce

Electronic commerce is the buying and selling of goods and services over the internet. It includes the whole process, from a customer finding a product to the payment being made and the goods being delivered.

Electronic commerce is divided by the parties involved. Business to business is a business buying from another business, such as a shop buying stock from a supplier. Business to consumer is a business selling to an individual, which is the most common type. Consumer to consumer is one individual selling to another, such as a sale of used books.

Business to government is a business dealing with government online, such as a company filing tax online. Government to citizen is a citizen using a government service, such as the national identification number. Electronic commerce also includes services, where nothing physical is delivered, such as streaming a film or using an online banking service.

Electronic commerce includes the whole transaction from finding the product to the delivery, not only the payment.

Parts of a Website Used for Trading

A website used for trading has a home page, a catalogue or product page, a shopping cart, a checkout page, an account area, a payment page and a delivery or confirmation page. Each part has one job.

A shopping cart holds the items chosen before payment. The checkout collects the delivery details and the payment details. A payment page should show the amount to be paid before the payment is taken, so that the customer can check it.

A customer account area holds the order history and the saved delivery details. A secure payment page shows evidence that the connection is encrypted. A confirmation message or email tells the customer that the order has been received, and gives a way of tracking it.

Making Payment Safely

There are three ways to pay online. A cash on delivery arrangement means the customer pays when the goods arrive. A cheque by post is used for large purchases from a distance. An online payment is made by card, by bank transfer or by a mobile money wallet.

The most common method in Nigeria is transfer to a bank account or payment through a mobile money or payment service. The customer should check the account details carefully and confirm the amount before sending, and the seller should confirm receipt before releasing the goods.

Safe payment depends on three things. The connection should be encrypted, shown by https in the address bar. The site should be one the customer knows and trusts, checked by typing the address rather than following a link in a message. Personal details such as a card expiry date must never be given to a caller who telephones.

Giving a card expiry date to someone who telephones is never required by a genuine bank.

Phishing means a method of tricking a customer into giving payment details.

Benefits and Risks

The benefits to the customer are that goods can be seen and compared at any time, buying is faster, delivery reaches areas with no shop, and the price is often lower because the seller has no shop rent. The benefits to the seller are a wider market, lower cost, orders that arrive at any hour, and a record of every sale.

The risks to the customer are that the goods may not be as described, the payment may go to a dishonest seller, a card may be used fraudulently, and a password given to the wrong site may be stolen. The risks to the seller are a card being used fraudulently, a customer refusing to accept a delivery, and a site being attacked.

The risks are reduced by a good password, by checking the seller before paying, by keeping a record of the transaction, and by reporting a problem to the bank or the platform as soon as it occurs.

A website reached by https protects the transaction in transit, but it does not prove that the seller is honest.

Electronic Payment Systems

Cards are the most common instrument. A debit card takes the money from an account immediately. A credit card allows a debt to be built up, which must be repaid with interest. A prepaid card holds a fixed amount that is reduced as it is used.

Digital wallets store payment details securely and pay at the checkout with one confirmation, so the card number is not entered on the website of the seller. Bank transfers are widely used in Nigeria, and a merchant account gives a business a unique account number for receiving payments.

A point of sale terminal and a mobile point of sale device allow a trader to accept a card or a transfer without the customer coming to the shop, which is how many small traders now sell.

A credit card builds up a debt, while a debit card takes the money from an account at once.

Practical Work

1. Visit three online shops and list the pages each one provides, from the home page to the confirmation page.
2. Identify the payment methods offered by each shop and note which are available in Nigeria.
3. Explain in writing the three checks to make before paying for goods online.
4. Distinguish between a debit card, a credit card and a prepaid card, giving one use of each.
5. Compare the price of one item on two websites and state the extra costs that may apply.
6. Write a list of five benefits and five risks of electronic commerce.

Scenario-Based Questions

1. A customer is asked for a card expiry date by someone who telephones and gives a bank name. Explain what to do and why.
2. Explain how a trader in a rural area can receive payment for goods without opening a shop.
3. Explain the difference between cash on delivery and an online payment, and state one risk of each.
4. A website shows a price but does not show the delivery charge until the payment stage. Explain why this is a problem.
5. Explain two benefits of electronic commerce to a small trader and one benefit to a customer.
6. Describe how a customer can check whether a website is genuine before paying.
7. Explain why a confirmation message or email is useful after an order has been placed.