Introduction
Electronic business transactions are as old as the internet and were first used in early 90s.They involve selling and buying of goods and services on the internet. The increase in computer literacy has resulted in the increase of businesses that are operated on the internet. The businesses are carried out electronically but where goods are involved, they have to be transported from the seller to reach the consumer. This is due to the fact that when the consumer is looking around for a specific item on the internet he or she will find it but it is only available virtually.
Main body
The internet serves as the platform where these businesses are conducted. They mainly rely on electronic funds transfer (EFT) systems, electronic data interchange (EDI), and value added networks (VANs). EFT refers to electronic transfer of money from one bank account to another owned by different persons within the same organization or in a different organization. There are several examples that can be used to describe how EFT is applied on day to day life (Daniel, 2006).
For instance most reputable organizations pay their employees by depositing money into their employees’ bank accounts. This means that money is moved electronically from the organization’s bank account to respective bank accounts of its employees. This transaction is enhanced by the use of payroll service bureau systems, which are virtual accounting organizations that are manned by certified public accountants. The bureau is responsible of calculating all the taxes that are deducted from employees’ salary and also ensuring the payroll is available on time. They also have the mandate to deposit money directly into employees’ bank accounts with authorization from the organization.
Electronic Data Interchange refers to the movement of data regarding a given business transaction from one computer to another electronically. This electronic data transfer is an alternative to hard copies because the soft copy reflects all the information that would have been available in a hard copy regarding similar transactions of the same institution. There are several ways that data can be exchanged between traders. This is necessary because it will ensure data on transit is secure from alterations of any manner. The most common methods of transmissions are modem-to-modem and Value Added Networks (VAN) (Shelly, Napier, & Rivers, 2009).
VANs operate like virtual post offices. They receive data and vet the details of the sender and the receiver on the other end. They then direct data to its intended destination. This technology has been found to be very reliable and secure and since its readily available on the internet most institutions regard it as the most convenient way of exchanging business documents. There are several factors that encourage the use of EDI over paper work. First, EDI transactions take very short time to be completed. Second, EDI reduces occurrences of errors in transactions and if there are any changes to be made the receiver may not recognize them as opposed to hard copies where the paper looks untidy.
One of the most common applications of electronic transactions is transferring electronic messages (Email).The Email is made up of the message body and the message header. In earlier days, for the transmission of electronic to be successful, it was mandatory for the party sending the email and the party receiving the email to be online at the same time. Today things have changed significantly because there are servers that are harbored by the internet to store and send electronic mails.
Conclusion
Online shopping is the best example of electronic business transactions. The buyers here log into a website on the internet and identify the commodity that catches the attention of their eyes. For one to buy an item he or she must be in a possession of a credit card. After the payment of a purchase has been made the item is therefore delivered to the buyer by either downloading into his/her computer, by post, or shipped to the buyer’s address (Shelly et al., 2009).
Reference
Daniel, N. (2006). Future shop: How the New Culture will revolutionalize the way we buy, sell and get the things we really want (hardcover Ed.). New York: The Penguin Press.
Shelly, G.B., Napier, H.A, & Rivers, O. (2009). Discovering the Internet: Complete Concepts and Techniques. 3rd Ed. Boston: Cengage Learning, Inc.