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E-Commerce, the abbreviation for electronic commerce, usually defined as the conduct of business online, via the Internet. Until recently, e-commerce was limited mainly to large companies and their suppliers, who connected their computers together to speed up ordering and payment systems. Today, millions of people are involved in e-commerce on the Internet—when, for example, they visit World Wide Web sites to buy books or CDs, order flowers or pizzas, or check their bank accounts.

In the narrow definition of e-commerce, the term covers the buying and selling of goods and services using computer communications. This might be done via a messaging system such as electronic mail (see Office Systems), via the World Wide Web, or by direct computer-to-computer communications. Direct communications may use a standard form of electronic data interchange (EDI) such as Edifact (EDI For Administration, Commerce, and Trade).

Successful e-commerce ultimately leads to some form of payment, and ideally this will involve ‘electronic funds transfer’ (EFT): in other words, the payment will be made via an electronic message, not in a physical form such as cash or a cheque. So-called smart cards and stored value cards (credit cards that contain a microchip, telephone cards, and so on) should, therefore, be considered part of e-commerce. The communications element may not always be obvious, but somewhere in the background, computer accounts are usually being credited and debited.

The broadest definitions of e-commerce may also include other electronic forms of doing business, such as Fax, Telex (see Telegraph), video conferencing, and even telephone calls. Usually, these are not e-commerce, but they could be regarded as such, depending on how they are used.

Companies invest in e-commerce systems to eliminate human input: orders and payments are made by machines rather than by people. This has several advantages. It cuts the cost of each transaction; speeds it up; and also makes it more convenient, because transactions can be performed at any hour of the day or night, often regardless of location.

The key question, then, in describing a transaction as an example of e-commerce is not which communications system is used, but whether or not the transaction has been automated. With a telephone-based bank account, for example, a user may wish to make a payment via the telephone. If a human assistant takes the instruction and types it into the bank’s computer, that cannot be described as e-commerce. However, if the call is answered by a speech recognition system (software running on a computer), which verifies the user’s identity and makes the payment without human involvement, that is e-commerce. Much e-commerce may soon be performed using a mixture of voice recognition and text messaging from mobile telephones (see Cellular Radio).

Contributed By:
Jack Schofield