E commerce obviously includes commerce conducted over the internet, but it can include other forms of electronic commerce such as mobile phones, telephone banking, using a fax, video conferencing, electronic data interchange or generating and managing accounting systems on a computer (without use of the internet).

E commerce relies heavily upon electronic transactions. Money is transferred between the buyer and seller by using a credit card, or perhaps bank to bank transfer.

There are three problems associated with this:

1. Financial details may be illegally captured by a third party. This is illegal; but nevertheless, does happen from time to time. It has the same amount of risk involved of third parties illegally capturing financial details in a traditional transfer.

2. Unscrupulous businesses can take payments and not deliver the goods or services.

It is easier for a trader to commit a crime of this type; and more difficult for a customer to prevent a crime of this type.

3. Some people lack confidence in carrying out transactions over the internet

Even if the business is legitimate, there can be a reluctance to do business due to prejudices or preconceptions which a potential customer holds.

E commerce also offers distinct advantages for both the buyer and the seller:

• The seller has lower costs
• Quicker and easier communication
• The seller can change electronic details easier than details printed on paper (eg. if the cost of a service needs to be changed; you can do it easily and immediately on a web site: but cannot on a printed brochure)
• The seller can reach the whole world as a market, through the internet
• Immediate payment can be achieved at a distance electronically (with credit card or direct bank transfer, etc)
• The buyer has greater bargaining power to purchase at a better price.
• It becomes viable for smaller businesses to enter the market place; and that can result in some services or products becoming available, which might not normally be available through, for example, a traditional shop front.
• The buyer can access a greater variety of suppliers easier
• The buyer has the convenience of shopping from home 24/7
• The buyer can shop around to get the best bargain in a fraction of the time than in the traditional way of shopping.
• There is less stress involved in shopping online because there is no traffic to beat, no parking problems.
• Online shopping offers a whole new world of shopping for people with disabilities, elderly and people with less mobility.
• Establishing an e-commerce business requires a fraction of investment in comparison to a traditional brick and mortar business therefore enables many more individuals to establish their own business.

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