What is Ecommerce Hosting?

Ecommerce is what makes the Internet such a valuable outlet for business. The Internet allows customers to find the businesses which have the products or services which they are seeking, but what happens then? A transaction of some monetary kind has to occur. In a conventional shop the customer would pay using a variety of means including cash, but on the Internet, because of its nature, completely different payment systems and methods are required.

Ecommerce systems allow customers to access and pay for the services or products they require from online businesses. On the Internet, because it is not possible for the customer to pay using cash, the customer’s identity and their payment method have to be verified.  A number of systems and entities have emerged to service Internet payments, some of them run by completely new entrants to the market such as PayPal, which never existed before the Internet age.  However, all the major banks have some kind of Internet payment system which they use for their own customers, and these same systems are often retailed to business customers of banks for processing payments from their own end customers.

One of the strangest effects of the Internet on the world of finance was that it made possible the notion of micro-payments. In pre-Internet days the cost of processing a transaction through the banking system was dictated by the amount of human attention which the transaction had to be given, and the number of processes which were involved. Once the Internet proved to be a valuable route to market for a large number of businesses it became apparent that the existing payments model was not sufficient and carried high overheads.  As one entrepreneur put it at that time “we’re moving from a world with tens of markets of millions to millions of markets of one “. To meet the needs of this seismic shift in how markets were organised clearly required a new kind of transaction processing.  Furthermore, this new model was an international one which had to operate seamlessly across international borders and currencies without delay.  To fill these needs businesses such as WorldPay and PayPal sprang up and their success was quickly followed by existing major financial institutions wanting to get in on the act.

Whilst we most commonly think of ecommerce as being the vehicle by which a transaction between an end-user customer and vendor takes place, it is also a mechanism whereby companies can do business with one another via the Internet.  Ecommerce can equally apply to company-to-company transactions as well as to company-to-individual transactions.

In summary, ecommerce systems offer a fast, low-cost way for companies and individuals to exchange payments. Ecommerce engines based around popular database products, such as Oracle, are complex and therefore expensive pieces of software. There are a number of open source ecommerce systems but these have tended to be implemented in relatively low profit areas.  A key difference between ecommerce and commerce in the physical world is that ecommerce systems deliberately make it efficient and effective to process small transactions rather than setting minimum transaction values – as has often been the case in the conventional banking payments world.

Posted in E-Commerce Hosting | Leave a comment