An Introduction
Online transaction is when we buy any goods online and we pay for those goods online. Everything is safe and secure in online transactions. In this, It happens via confirmation of the OTP sent to your phone, which is very well secured. There is no need to do any kind of paperwork in online transactions.
There are three stages of online transaction i.e. first - registration, second - placing the order, and third - online payment. This online transaction is completed by combining all three stages. Online transactions are used to buy or sell any item on an online platform such as Flipkart, Amazon, or eBay etc.
Stages of Online Transactions:
There are three stages of online transactions-
Pre-purchase/Sale- The company advertises the product in this stage, it tells about some important things through the advertisement so that the customer can get to know about that product. These advertisements are made in such a way that the customer who is attracted to the advertisement is ready to buy the product.
Purchase / Sale - In this stage, when the customer is attracted to buy goods, he likes the goods, then he buys the goods and he pays online for those goods.
Delivery Stage - In this stage the customer buys the final goods and gets the delivery to the themself.
Steps Involved in Online Shopping (Online Transaction):
The following steps involved in online shopping (online transaction)
Registration: The first step is registration in online transactions. In this step, the customer has to register himself on a website such as Flipkart, Amazon. To register, he has to provide his email id, name, address and all other similar details, which the website saves and Always keep these details secure and only. After registering on the website, an account is created and he has a shopping cart, both these things are password-protected.
Placing an Order: In this, the customer puts whatever items he likes from his registered shopping website in the shopping cart. This shopping cart then keeps the details of all the items saved, such as how much money it is in, how much is in the amount, it saves all the things with the shopping cart. Then whenever the customer has to order those things, by paying online, he can get all those things.
Payment: The buyer gets a lot of options for placing orders, which are safe and secure, the payment options that are available here are very secure, they have high-level encryption so that the financial details of the buyer cannot be leaked like his/her card number, his/her bank account number, his/her password, all these things could not be leaked. Below are some payment methods in which the buyer can choose how to pay.
Cash on Delivery: In cash on delivery, the customer pays wherever he wants his product to be delivered. He can make the payment from any method, whether it is through card or cash.
Cheque: In this step, after selecting the cheque option in the payment method, the payment is made in the cheque. First, the customer has to send the cheque to the seller and when the seller withdraws the cash from the cheque then he sends the goods to the customer whatever he ordered.
Net Banking Transfer: Payment in this step is from the buyer's account. First, the buyer transfers money through electronic methods to the seller's account. When that money comes from the seller's account, then the seller dispatches the product to the buyer's address.
Credit or Debit Card: In this step, the buyer has to share the details of his credit or debit card with the seller. When the buyer shares his details with the seller, the seller extracts the specific amount of money from the buyer's account. The confirmation message for the transaction goes through the OTP to the buyer and then when the buyer enters that OTP, the specific amount is deducted from the buyer’s account.
Security and Safety of E- Business:
1. Transactional Risks: The common transactions risks of online dealings are:-
Default an Order- Suppose you bought something online from a site and paid for it, but the seller can deny that you have placed the order or paid for the order. The seller can also refuse to deliver the goods in this way.
Default on Delivery - It often happens that you have placed an order and the product sent to the address of someone else instead of your address (that you have inserted).
Defaulter Payment - It happens very often that the seller does not get the same payment, but the customer who claims that he paid. To avoid this problem, the website provides cookies which are like a personal ID or caller ID which extracts the name, address, and previous purchase records of the customer.
2. Data Storage and Transaction Risk: Upon registering on a site, we share some personal information on it, such as our name, our address, email ID, phone number. All this information is saved and kept in its data. Due to this, the probability increases that our personal information can be stolen by anyone and can put us at high risk.
The risk involved in data storage is- Virus (Vital information under siege)- A lot of computer viruses are deadly, which can enter your computer in any way such as through a pen drive, through an email ID, or through a disk, which can enter your computer. All the data present in it, all the important information can be deleted. Because of which you may have a lot of problems and there may be too much time wasted.
Hacking – Hackers are unauthorised people. They can destroy all your data and can also steal it, due to which there is a lot of damage to the website.
3. The Risk of Threat Intellectual Property and Privacy: The information you provide to the website may get copied by any other online vendors, who may start sending you promotional messages and even hackers may pretend to be customers themselves. A fake website may be developed instead of the original website and they take away advance money from customers and not supply any product to the customers.
Risks Related to Online Shopping
Besides the risks related to data storage, transactions, and threat to privacy, there are some other risks involved with online shopping too. These are as follows:
Customer disputes
Online security issues
Credit card fraud
The problems related to the return of goods and their warrant
Logistic issues
Warehousing issues
FAQs on Online Transactions or E- Transaction
1. How can a person register on any online website?
The first step is registration in online transactions. In this step, the customer has to register himself on a website such as Flipkart, Amazon etc. To register, he has to provide his email id, name, address and all other similar details, which the website saves and keep these details secured. After registering on the website, an account is created and he has a shopping cart, both these things are password-protected.
2. How can i make online transactions?
There are various ways to make online transactions - net banking transfer, using credit and debit card, or online wallet (such as GPay) or through UPI ID.
3. What are the steps to be followed to do an online transaction if i want to purchase something online?
In case you want to buy something online, you can follow these steps that are given below.
Registration (on an e-shopping portal)
Place an order
Payment (Under this section, the buyer can choose for the online transaction option.)
4. Why are E-transactions encouraged?
There are various benefits associated with online transactions which make it a very favourable method. These are as follows:
Online payment is very time-efficient and convenient. Unlike traditional methods of paying, this saves both the customer as well as the seller a lot of time.
It reduces the need for cash and checks which in turn reduces various security risks.
It is easily manageable as it reduces the need for both cash as well as checks and minimises other administrative tasks for the other party as well.
It tends to offer a way better customer experience as compared to traditional methods.
It accepts a wide range of payment methods from debit and credit cards to e-checks and various other modes.
When you make online payments, the online portals make sure to store all your billing information in one place, thereby adding yet another benefit of convenient storage of one’s data
5. State the precautions associated with online transactions.
There are certain precautions that are to be kept in mind while engaging in any kind of online transaction. They are as follows:
Make sure you are using secure connections only to make an online transaction.
Make sure the website you’re dealing with is a reputed and a known one so as to avoid your financial and personal information from falling into the wrong hands.
It is advisable to use credit cards for online shopping over debit cards. This is because the latter tends to be linked to your bank account and credit cards also have a spending limit, which makes it difficult for them to be misused the way debit cards can be.
Avoid using public computers. Make sure you’re using your own computer or phone while making online transactions to keep the financial security intact.
6. What does payment risk mean?
The possibility of an incomplete payment refers to risk in payments. This risk generally exists in those payment systems that aren’t settled on a real-time basis. The risk also tends to depend on the value of transactions along with the volume in the payment system and its impact can be measured in terms of either the level of confidence in the system, or the damaging value. The causes of such payment risks tend to vary but one of the major, most commonly seen causes is what is known as counterparty risk, which refers to credit banks and liquidity.
7. What are some ways through which the process of online transactions can be improved?
There are certain ways through which online and E-transactions can be improved. They are as follows:
By keeping the payment and financial information as safe and secure as possible.
By providing the widest range of payment options and methods possible.
By keeping the requests regarding information minimal.
By avoiding the redirects that tend to happen in the middle of the payment process.
By not requiring the site visitors to have an account as a compulsion if they want to go ahead with a particular payment.
8. Discuss the different modes of online transactions.
There are various types of online financial transactions. They are as follows:
National Electronic Fund Transfer or NEFT: this tends to facilitate one-to-one funds transfer. Firms, corporates, and individuals can easily transfer funds from any given branch of a bank to the account of the other party, given they are participating in this scheme.
Real Time Gross Settlement or RTGS: this is referred to as a continuous real-time settlement of the transfer of funds on an order by order transfer basis.
Electronic Clearing System or ECS: this is a great alternative for transactions that involve utility-bill payments such as electricity bills, telephone bills, etc.
Immediate Payment Service or IMPS: this tends to offer an instant, 24 hour-long, electronic fund transfer service through individuals’ mobile phones. It is a very safe as well as economically viable mode of payment.