Transaction risks: Online
transactions are vulnerable to the
following types of transaction risks:
• Seller denies that the customer
ever placed the order or the
customer denies that he ever
placed the order. This may be
referred to as ‘default on order
taking/giving.’
• The intended delivery does not
take place, goods are delivered at
wrong address, or goods other
than ordered may be delivered.
This may be regarded as ‘default
on delivery’.
• Seller does not get the payment for
the goods supplied whereas the
customer claims that the payment
was made. This may be referred
to as ‘default on payment’.
Thus, in e-business risk may arise
for the seller or the buyer on account
of default on order taking/giving,
delivery as well as payment. Such
situations can be averted by providing
for identity and location/address
verification at the time of registration,
and obtaining authorisation as to the
order confirmation and payment
realisation. For example, in order to
confirm that the customer has correctly
entered his details in the registration
form, the seller may verify the same
from the ‘cookies’. Cookies are very
similar to the caller ID in telephones
that provide telemarketers with such
relevant information as: the consumer’s
name, address and previous purchase
payment record. As for customer’s
protection from anonymous sellers, it
is always advisable to shop from well-
established shopping sites. While
allowing advertisers to sell their
products online, these sites assure
customers of the sellers’ identities,
locations and service records. Sites
such as eBay even provide for rating of
the sellers. These sites provide
protection to the customers against
default on delivery and reimburse the
payments made up to some extent.
As for the payments, we have
already seen that in almost 95 per cent
of the cases people use credit cards for
their online purchases. At the time of
confirming the order, the buyer is
required to furnish the details such as
the card number, card issuer and card
validity online. These details may be
processed offline; and only after
satisfying himself or herself about the
availability of the credit limits, etc., the
seller may go ahead with the delivery
of goods. Alternatively, e-commerce
technology today permits even online
processing of the credit card
information. For protecting the credit
card details from being misused,
shopping malls these days use the
encryption technology such as
Netscape’s Secure Sockets Layer (SSL).
You can gain some information about
SSL from box on history of e-commerce.
In the succeeding section, we will
familiarise you with the encryption or
cryptography — an important tool
used for safeguarding against data
transmission risks in online transactions.