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How does e-commerce work?

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The e-commerce is defined as buying and selling of products or services over electronic systems such as the Internet and other computer networks.

The working of e-commerce:

There are five major components of eCommerce, the Merchant Account, the Shopping System, the Payment Gateway (for real-time-processing), the Hosting Service and the Security System.

1. The Merchant Account:

Any type of real eCommerce requires a Merchant Account. A merchant account comes with a merchant identification number. In order to process transactions require either a terminal (the little box that you swipe your credit card through at retail outlets) or software that runs on your PC and will dial up the merchant via your modem/and then process the transaction and deposit the money into your bank account.

2. The Shopping System:

A site with a variety of products should use the shopping cart system because it’s the easiest way for customers to choose items during the shop. There are many choices when selecting a Shopping System but some of the most important should be. functionality, ease of use, and compatibility. Shopping systems like anything else now days can be purchased or leased.

3. SSL Certificate:
This Certificate provides security for the credit card information from the user’s browser through the trader website and then into the Gateway. Certificates can be purchased from companies like Geo Trust, VeriSign and a handful of others.

4. Gateway Account:
Once the user sends his order it is transferred from his machine to the Shop-Cart and is protected by the Secure Socket Layer (SSL), the server then sends data to the Payment Gateway. Gateways are services linked between the e-commerce website and the banking networks. The Gateway is simply the door into the ATM banking network. The processor accepts the data from the shop-cart and brings it into the ATM network.

If the order is accepted, it will then charge the order amount to the customer’s account and sends the Gateway an authorization code. The Customers Bank will then settle the remainder of the transaction at a later time.
Payment Diagram:
1. Consumer places an order with the merchant through any number of sales channels: Web Site, Call Center, Retail, Wireless or Broadband.

2. Authorize.Net detects an order has been placed, securely encrypts and forwards the Authorization Request to the Consumer’s Credit Card Issuer to verify the consumer’s credit card account and funds availability.

3. The Authorization (or Decline) Response is returned via Authorize.Net to the Merchant. Round trip this process averages less than 3 seconds.

4. Upon approval, the Merchant fulfills the consumer’s order.

5. Authorize.Net sends the settlement request to the Merchant Account Provider.

6. The Merchant Account Provider deposits transaction funds into the Merchant’s Checking Account.

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