Electronic CommerceElectronic commerce (EC) is a term used to describe business activities that are conducted electronically, without the need for paper. EC combines data exchange, communications, and security services, and has been used for years for such things as direct deposit and ATM transactions. The surge of interest in the Net brings greatly expands the possibilities of electronic commerce. Ideally, EC will be used not only for the exchange of hard data, but for eliminating time and location restrictions and providing a forum for the exchange of ideas and opinions as well.
Since the Web changes the way information is viewed and processed, its influence on business and commerce is inevitable. At the present time, the buzz about electronic commerce is bigger than the number of transactions. According to SIMBA Information, a market research firm, 1994 purchases of services, content, and goods on the Net amounted to only $13 million. However, they predict that Net commerce will increase 6,000 percent to a $1 billion a year business by 1998.
Businesses view successful use of EC as a crucial part of the future marketplace. A mega-chain store that has checkout scanners directly linked to its distribution headquarters, for example, is able to restock very quickly, while simultaneously monitoring purchasing trends. The benefits of such information are quite apparent to most companies. MCC (The Microelectronics & Computer Technology Corporation), an association of more than 80 computer and microelectronics companies, has created EINnet (Electronic Integration Network) for the purpose of jointly developing EC technologies. The government, too, is interested in EC, especially since EC has the potential to minimize bureaucracy. The U.S. Customs Agency has incorporated EC very successfully; today 94% of customs declarations are processed electronically, and the agency claims to have reduced error rates from 17% to 1.7% (these figures according to "Electronic Commerce and the NII: Draft for Public Comment", http://iitfcat.nist.gov:94/doc/Electronic_Commerce.html).
Before businesses can successfully engage in electronic commerce, they need the structure to do so. The development of a system called EDI, Electronic Data Interchange, was begun in the mid-1970s by the transportation industry in response to the growing need for common standards for conducting electronic commerce. EDI can be thought of as the electronic language of the business world that allows computer-to-computer transfer of information. It can automatically transmit documents that would normally be (slowly) transmitted in paper form. By exchanging information application-to-application for operations such as purchase orders and invoices, time and labor are greatly reduced. According to the EDI Group Ltd., 90% of the Fortune 500 companies are EDI-compatible, although most smaller companies are not.
EDIs may use VANs (Value Added Networks), which provide commercial access to communication services. Since VAN technology allows companies to communicate without a direct point-to-point connection, they can be very practical in financial terms. Other of VANs' benefits include the remote access, enhanced security for transactions, and additional translation software. The use of VANs is considered a necessity by many companies, although their high cost may prevent smaller businesses from entering the EC world.
When EDI standards are followed, companies can exchange transactional data without regard to original format or OS platform. Two organizations create and maintain the EDI standards. ,The American National Standards Institute (ANSI) coordinates the efforts for national standards in the US. ANSI charters organizations called Accredited Standards Committees which are made up by representatives from government, consumer, industry, and labor agencies. The Electronic Data Interchange for Administration, Commerce, and Transport creates the standards for international interactions. Between the two of them, these organizations have over 200 sets of guidelines for data transactions. (At the onset of EDI, there were about 45 of these transaction sets.)
Most critics of EC agree that in order for electronic commerce to become truly successful at the level of individual use, it needs to become more practical. The average person is interested in electronic commerce only if it makes life less complicated. One of the major impediments to electronic commerce's success from this standpoint is speed (or lack thereof). Ordinary people won't rush to shop online if the process takes even longer than it would at a store, and with today's modem speeds, examining merchandise online just isn't speedy enough. Of course, there are obvious advantages such as savings in transportation costs and the comfort of shopping from one's own home--but at this point, EC can't provide anything you can't already get from mail order catalog.
A common prediction about electronic commerce is that it will benefit from the use of intelligent agents. Intelligent agents perform tasks such as information filtering for people. For example, an intelligent agent can be instructed to go onto the Net and find news resources or references pertaining to a specific topic. Electronic shopping could also be greatly expedited by intelligent agents, who would have the ability to compare prices for various goods online, even finding coupons and other discounts. Since an electronic agent is really an on-line representative of yourself, you can give it the power to buy things for you, as well as to sell your products and services. A good electronic agent can operate in the same way as a good travel agent, by keeping an eye out for bargains and alerting you when something you might be interested in shows up.
One of the major impediments to EC's success is the question security. At the present time, there are still enough questions about EC's security to prevent it from fulfilling its potential. Businesses worry about the transmission of sensitive data, and the Many people are (rightly) concerned about conducting credit card transactions online, although it can be argued that this risk arises when you allow anyone to obtain your credit card information-- whether in a virtual mall or a "real" mall. There are credit cards designed solely for use on the Web that are supposedly safer to use than traditional cards. CARI (Collect All Relevant Information) is one of these systems (see link to CARI FAQ above).
Electronic cash, or ecash, is being offered as one of the solutions to the Net's financial security problems. Ecash works like this: Using ecash software, you withdraw money from a bank account (preferably your own). The money is then stored on your computer, and you have the freedom to spend it wherever you like, and your transactions are protected by public key cryptography. The interesting thing about ecash is that, unlike a credit card (Web version or not), when you use ecash, your identity remains anonymous. The payee is identified by the bank when the transaction is cleared, but the person making the payment is not. Proponents of ecash argue that this fact will make ecash unappealing to criminals. Of course, since ecash will really exist only as a digital number, with each unit of ecash having its own number, true anonymity may not be possible. Since the people most interested in implementing ecash will also benefit the most by obtaining as much information as possible about its users, their interests may also have an influence over the level of anonymity that is allowed. A form of ecash called CyberCash is already being used on the Web in sites such as Hotwired (http://www.hotwired.com).