Roles of EDI application in business

Roles of EDI application in business:

EDI has been extensively used in showing the relationship between the buyer and seller. Auto manufacturer use EDI to transmit large, complex engineering design created on specialized computers. Large multinational firms use EDI  to send on-line price catalogs to customers listing their products, price discounts and terms. EDI capable business are able. to compare prices and terms and they are able to make direct orders by EDI  we take a small example for explaining role of EDI  application in business as follows.

1. Buyers computer passes purchase order to seller's computer

2. Seller's computer receives the purchase order and again it sends or passes purchase order confirmation to buyers computer

3. Sellers computer sends booking request to transport company's computer

4. Transport company's computer sends booking confirmation to sellers computer

5. Sellers computer sends advance slip notice to buyer's computer

Here we see that by using  EDI application the transaction had been taken place between buyer, seller and transport company within few minutes of time.

Risks associated with e-payments:

In e-commerce we have three risks which are associated with e-payment. Risk management is one of the challenging task to the e-commerce. To handle the risk management the e-payment application should be prepared to prevent mistakes and take necessary actions for further eradication's of the mistakes. In general we have three types of risks associated with e-payments.

They are :

1 Fraud or mistake 

2 Privacy issues 

3 Credit risk

Credit cards

Credit cards:

Credit card is a card provided by different banks to the consumer and these banks lend money to the consumer or users. The credit card system is a type of retail transaction settlement and credit system. It is a plastic card issued to the users by the banks. The credit card and debit card are same in appearance but in debit card amount is removed from each transaction where as credit card money is lent by the banks. Recently we found a technology where we can even store amount in the accounts with the help of debit cards but this facility is unavailable in credit card system. Most of the credit cards of the same shape and size as specified by the ISO 78 10 standard. The credit card was first used in 1920's in U.S.A specifically to sell fuel to many automobile owners. On this card we find some numbering scheme. In earlier days of credit card due to low security feature the card presented countless opportunities for fraud. This opportunity has created a huge black market in stolen credit card numbers which are quickly used before they are reported stolen.

Smart cards or debit cards:

Which are capable of holding much information than that of magnetic tapes. These are of two types.

1. Relationship based smart cards and 2) Electronic purses the best example is non index electronic currency card.

Visa:

EDI stands for electronic data interchange. It is the computer to computer exchange of structured information by agreed message standard from one computer application to  another by means and with a minimum of human intervention. In common usage EDI is understood to mean specific interchange methods agreed upon by national or international standard bodies for the transfer of business transaction data, with one typical application being the automated purchase of goods and services. EDI  documents contain the same data that would normally be found in a paper document used for the same organizational function. EDI helps in time saving it reduces the paper cost. It simplifies inter department communication it saves the costs for company helps in quick and efficient communication.

Electronic cash

Electronic cash:

Where the entire amount is in form of electronic media which can also be known as e-cash which presents some interesting characteristics that makes it attractive for payment over the internet. These are the fundamental payment systems in consumer oriented electronic payment systems. But in this type of system cash remains the claimants form of payment only for three reasons which are:

1. Lack of trust in banking system.

2. Inefficient clearing and settlement of non cash transactions.

3. Negative real interest rate which shall be paid on bank deposits.

Electronic checks:

Which are another form of electronic tokens preferring to pay on credit or through some mechanism other than cash. These have many advantages like

1. They simplify customer education as they are ease of use

2. Reliability and scalability is provided by multiple accounting servers.

3. These are well suited for clearing micro payment which use the concept of public key cryptography. Credit card based payment systems encrypted credit cards

Which uses the concept of cipher text form with secret key or privacy key. The best example is world wide web form based encryption. Third party authorization numbers

Where consumers can register with a third party on the internet to verify electronic micro transaction and electronic tokens are issued to the respective consumers which differ from existing financial instruments, on-line involvement measures which provides extra security.

Overall electronic payment systems save the time of respective users where the transaction done are accurate giving chance for different users and these electronic payment system or electronic fund transfer measures contain various advantages like.

1. Various detailed payments can be done through credit cards, charge cards etc in a very easy manner in the absence of paper money only keeping in view to pay some amount of interest to the concerned authorities.

2. Financial payments can be done to different sectors like large scales or small scales or retailers with the help of automated teller machines.

3. Bank to bank transaction i.e from central bank to subordinates is done in large scale.

4. Different online payments can be done with ecahs, debit cards, smart cards etc.

Various types of electronic payment systems (EFT)

Various types of electronic payment systems (EFT):

In the early 1970's the developing electronic payment technology was given the name as electronic technology was given the name as electronic funds(EFT) where it lead to the concept of EFT  which stands for electronic fund transfer and it can be defined as any transfer of funds which can take place through an electronic terminal, telephonic instrument, computer or any other device like magnetic tapes to carry the transactions like debit or credit an account. In EFT  both the computer and telephonic components are utilized for proper supply of money or financial assets. Electronic funds transfer can be broadly categorized into three segments

Banking and financial payments:

This type of segment contains transaction as large scale or wholesale payment or bulk payment where the payments are done in huge sectors. The best suitable example is of bank to bank transfer where crores millions of amount is transferred from central transaction level to the subordinate levels of different banks. We also consider the examples like small scale or retail payments which are a part of large scale banks where the limited amount is dumped into different ATM  counters and automated teller machines. In this the last and the least type of transaction's home banking where different bills are collected like electronic power, property etc.

Retailing payments:

This type of segment consists of transactions with the usage of credit cards like VISA card or master cards where different transactions can be made even under the absence of paper money or coin money and latter the amount can be handed over to the respective concerned authorities. We also use the concept of private label card/debit cards, charge cards which are like the plastic money where different transaction can be done pertaining to a particular limit.

Example:

If we consider debit card the maximum limit is only up to rs.15,000 for 24 hours and we also consider an example like J.C penny cared and american express. The third segment what we find here is on line electronic commerce payments taken based payment systems

Where the payment is done on the system of tokens where all the transaction can be done at same time with respects to the tokens issued by the authorities.Here electronic tokens are issued which are equivalent to cash which is backed by bank. These tokens are of three types:

1. Cash or real time which involves the paper cash or coin cash.

2. Debit or prepaid where the amount can be paid in advance eg. reservation of flight or train. The best examples are smart cards and electronic purchase which store electronic money.

3.Credit or postpaid where the amount can be paid later with certain interest rate.

Symmetric cryptography

Symmetric cryptography:

This is an encryption technique where all entities share a common secret key. In this process the key used to encrypt and decry pt a message must be kept a secret. We should note that in symmetric and asymmetric encryption forms the strength of cryptographer is measured by length of key in bits. The confidentiality service of cryptography depends on number of variable associated with encryption function same of these are.

1. The security protocol or application used o invoke the encryption function.

2. The trust in the platform executing the protocol or application

3. The cryptography algorithm

4. The length of keys used for encryption/decryption

5. The storage of secret keys.

As the key length increases the strength of a system also increases. Any key length less than 64 bits is no longer considered to be secure. In symmetric key systems both the sender the receiver of the message must have access to the same key. This key is a secret key and is used to both encrypt and decry pt the message.

Asymmetric cryptography:

In this process it uses public key which is quite opposite to secret key. The public key method allows a sender and a receiver to generate a shared secret key over an insecure telecommunications line. This process uses an algorithm based on the sender's and receiver's public and private information. In this the secret key is shared which avoids problem of transmitting it over an in secure telecommunications line.

EDI is not a successful technology for the small business:

EDI stands for electronic data interchange which can be defined as inter crosses communication of the business, information between different computers which is in a standardized electronic form. Every aspect of business like placing purchase orders, sending acknowledgements, and even booking is also done by EDI now a days. With the help of EDI different businesses can cut an the costs involved in postage and carriers as well the paper cost is also eliminated to a large extent. Event the payments can be made electronically with the help of EDI. One of the important benefit of EDI is that it reduce the transaction cost which is done through speed and efficiency of filling orders. EDI  can be used in various business sectors like.

1. SUPPLY CHAIN MANAGEMENTS (SCM)

2. ELECTRONIC FUND TRANSFER (EFT)

3. JUST IN TIME INVENTORY (JIT) ETC.

In spite of many advantages EDI is not so much popular only due to the reasons like high initial setup cost, absence of any legal frame work in case of any disputes and main reason is that it needs to follow standardized formats world wide which is quite a difficult task. EDI is quite expensive and it is difficult to implement which has some pitfalls which might be considered in any business. It is also having different reasons like lack of single good standard, every business need to came forward to accept all the business standards which is really not done. EDI  facility is available only in the by businesses which form a link only between the for by organizations as it is too expensive. But in the coming future we shall expect EDI to take over all the large scale and small scale businesses.

Ftp

Ftp:

It stands for file transfer protocol. It provides the basic elements of file sharing between hosts. It uses TCP to create a virtual connection for central information and then create a separate TCP connection for data transfer.

Http:

It is an application level protocol with the lightness and speed necessary for distributed, collaborative, hypermedia information system. Here messages are passed in similar to internet mail model.

Shttp:

It stands for secure hyper text transfer protocol. It provides secure communication mechanism between Http client, server pair in order to enable regular commercial transactions for wide range of application.

Tcp/ip:

It stands for transmission control protocol or internet protocol. It helps in internet transmission between different system. These protocol are generally used in Van (Vast area network) Ex.internet.

Encryption and different types of encryption techniques:

Encryption is a process in which data is converted into a form called cipher text is converted completely into different cipher text form. To covert cipher text form or encrypted data back into its original form is called decryption. Thus encryption and decryption and decryption are two quite transformable forms.

The use of encryption/decryption is as old as art of communications. A cipher often incorrectly called as code examples Morse code and ASCII. More complex ciphers network according to sophisticated computer algorithms that rearrange the data bits in digital signals.

Encryption/decryption is especially important in wireless communications. This is because wireless circuits are easier to tap than their hard-wired circuits.

If the cipher is much harder for unauthorized people to break it thus encryption can also be defined as the transformation of data through a cryptographic mathematical process into a form that is unreadable by anyone who does not posses the appropriate secret key.

In general there are two types of Encryption techniques. They are:

1. SYMMETRIC CRYPTOGRAPHY

2.ASYMMETRIC CRYPTOGRAPHY

Hypertext publishing

Hypertext publishing:

Hypertext is an approach to information management where the data is stored in network of documents and these documents are connected by links. Here the documents are taken as nodes and links represent the relationship between the documents and nodes. As the documents are known as nodes similarly the links are known as the pointers. The nodes or documents may contain text, graphic, animation, audio video, images or programs. In same system the nodes and system network itself is viewed through browsers and are manipulated, edited with the help of structure editor. We see that different nodes are connected by links or pointers. The node from which the link gets started is known as reference or anchor and the node at which it ends is called referent. The movement between bodes is made possible by activating links which connect related concepts or nodes. Links can be of bi directional providing backward traversals, referential, hierarchical. In some browsers hypertext is a very simple context lies in its ability to produce large, complex, richly connected and cross referenced bodies of information.

Protocols:

protocols are defined as agreed upon rules to be followed upon between two applications. These can also be defined as agreed upon format for transmitting data between two devices. The protocol determines the following.

a. The type of error checking to be used.

b. Data compression method if any.

c. How the sender device indicate that it is sending the data.

d. How the receiver device indicate that it is receiving the data.

The protocol cab be implemented either in hardware or in software.The different types of protocols.

1. tcp/ip transmission control protocol or internet protocol

2. Http Hyper text transfer protocol

3. Smtp Simple mail transport protocol

4. Pop Post office protocol

5. Espp Encapsulating security pay protocol

6. Saip security association identifier protocol

7. Tlsp Transport layer support protocol

8. Egp Exterior gateway protocol

9. Eigrp Enhanced interior gateway routing protocol

10. Grep Generic routing encapsulation protocol

11. Hsrp Hot standby router protocol

12. Igrp Interior gateway routing protocol

13. Ftp file transfer protocol 


14. Shttp Security hyper text transfer protocol