ELECTRONIC BUSINESS

Electronic business methods enable companies to link their internal and external data
processing systems more efficiently and flexibly, to work more closely with suppliers and
partners, and to be er sa sfy the needs and expecta ons of their customers.

Electronic Commerce

Electronic commerce, commonly known as e- commerce.

E-commerce combines business and electronic infrastructures, allowing tradi onal business
transac on to be conducted electronically.

It enables the online buying and selling of goods and services via the communica on
capabili es of private and public computer networks including the internet.

E-Commerce Models

 Business to – Business (B2B) model

 Business to – Consumer (B2C) model

 Consumer – to- Consumer (C2C) model

 Consumer to – Business (C2B) model

Business-to-Business (B2B) Model

This model describes commerce transac ons between businesses, such as between a
manufacturer and a wholesaler, or between a wholesaler and a retailer.

Example: Dell deals computers and other associated accessories online but it does not
manufacture all those products.

So, in govern to deal those products, first step is to purchases them from unlike businesses i.e.
the producers of those products
OTHER MODELS
CONTRACT
What is a Contract?

In the past, contracts were only done on paper, which took weeks or months to
complete. With the internet, contracts can now be created and signed in seconds. Many
countries now recognize electronic contracts (E-contracts) as legally valid.

What is an E-Contract?

An E-Contract is any contract made using digital means, such as:

 Emails
 Websites
 Computer programs (like automated systems)

E-contracts help businesses complete agreements quickly and efficiently.

Nature of E-Contracts

 Two parties are involved:

o Originator: The person sending or creating the contract.
o Addressee: The person receiving the contract.
 No physical meetings are required.
 No need for handwritten signatures (digital signatures are used instead).
 Contracts are made through emails, websites, or online agreements.
 Electronic documents can be used as evidence in court.

Important Elements of E-Contracts

For an E-contract to be valid, it must have these elements:

1. Offer – A person must propose an agreement (e.g., a website offering a product).

2. Acceptance – The other party must accept the offer (e.g., clicking "I Agree" on a
website).
3. Revocation – In paper contracts, offers can be withdrawn before acceptance. In
E-contracts, everything happens instantly, so revocation is rarely possible.
4. Lawful Consideration – The contract must involve a valid exchange (e.g.,
money for a product).
5. Lawful Purpose – The contract must not involve illegal activities.
6. Competent Parties – Only real people or legally recognized businesses can form
contracts.
7. Free Consent – Both parties must agree voluntarily.
8. Clear Terms – The contract must be understandable and specific.

Types of E-Contracts

1. Click-Wrap Contracts
o When users click “I Agree” before using a service or software (e.g.,
installing an app).
o Can be "Type and Click" (typing "I Accept" before clicking) or "Icon
Clicking" (pressing “OK” or “I Agree”).
2. Shrink-Wrap Contracts
o Found in packaged products (e.g., a software license that applies when
the package is opened).
o Once you open the package, you automatically accept the contract terms.
Are E-Contracts Legal?

Yes! In India, E-contracts are recognized under:

1. The Indian Contract Act – Ensures E-contracts follow normal contract rules.
2. The Information Technology Act (2000) – Recognizes digital signatures and
electronic records as valid.
3. Indian Courts – Have ruled in favor of E-contracts in cases like Shakti Bhog
Foods Ltd v. Kola Shipping Ltd.

Digital Signatures

A Digital Signature is an online way of signing documents securely. It ensures:

 Data Integrity (the document is not altered).

 Authentication (proves the sender’s identity).
 Non-Repudiation (the sender cannot deny signing it).

Legal Issues with E-Contracts

Some challenges include:

 Identity Theft & Phishing (fraudulent emails tricking people into contracts).
 Copyright & Licensing Issues (digital content theft).
 Jurisdiction Problems (deciding which country's laws apply to an online
contract).
E-COMMERCE SECURITY
What is E-Commerce Security?

E-commerce security refers to protecting online businesses and transactions from

unauthorized access, fraud, hacking, and data breaches. It ensures that sensitive
information like customer details, financial transactions, and business data remain safe.

1. Six Key Aspects of E-Commerce Security

1. Integrity – Ensuring that data is not altered or tampered with during

transactions.
2. Non-Repudiation – Ensuring that both parties cannot deny their actions in a
transaction.
3. Authenticity – Verifying that users, messages, and data are genuine.
4. Confidentiality – Keeping sensitive data private and secure.
5. Privacy – Protecting personal and financial information from being misused.
6. Availability – Ensuring that the e-commerce system is always accessible to
legitimate users.
2. Why is E-Commerce Security Important?

Organizations like:

 Computer Security Institute (CSI) – Helps train professionals in

cybersecurity.
 Computer Emergency Response Team (CERT) – Monitors cyberattacks and
suggests security measures.

These institutions work to prevent security threats in e-commerce.

3. Basic Security Measures

 Authentication – Verifying user identity (e.g., passwords, biometrics).

 Authorization – Giving access only to authorized users.
 Auditing – Keeping records of activities to track any suspicious behavior.

4. Types of Cyberattacks

A. Non-Technical Attacks

 Uses tricks and deception to steal information.

 Example: Phishing emails that trick people into sharing passwords.

B. Technical Attacks

 Uses software and hacking techniques to breach security.

 Example: Denial-of-Service (DoS) & Distributed Denial-of-Service (DDoS)
attacks, which overload a website to make it crash.

5. Malware (Malicious Software)

 Virus – A program that attaches to a file and spreads when opened.

 Worm – A self-replicating program that spreads without user action.

Example: A fake software download that contains malware and harms the system.
6. Common Mistakes in Security Management

1. Ignoring valuable data – Not protecting sensitive information properly.

2. Limited security scope – Focusing only on certain areas and leaving others
vulnerable.
3. Reactive security – Fixing problems after they happen instead of preventing
them.
4. Outdated security processes – Using old, ineffective security measures.
5. Poor communication – Employees are not trained about security risks.

7. Security Risk Management

A systematic approach to:

1. Identifying assets – Recognizing important data and systems.

2. Assessing risks – Understanding potential threats.
3. Implementing solutions – Taking steps to reduce security risks.

8. Authentication Methods

 Passive Tokens – Magnetic strips/cards that store secret codes (e.g., ATM
cards).
 Active Tokens – Devices that generate one-time passwords (e.g., security key
fobs).

9. Encryption Methods

A. Symmetric (Private Key) Encryption

 Uses one key to encrypt and decrypt data.

 Faster but less secure if the key is exposed.

B. Public (Asymmetric Key) Encryption

 Uses two keys:

o Public Key – Encrypts the message.
o Private Key – Decrypts the message.
 More secure but slower.
10. Additional Security Measures

Virtual Private Network (VPN)

 Encrypts internet connections to keep data private and secure while using
public networks.

Honeypots & Honeynets

 Honeypots – Fake systems designed to attract hackers and study their attacks.
 Honeynets – A network of honeypots used for analyzing threats.

BUSINESS TAXATION
1. What Are Business Taxes?

 Business taxes are imposed on transactions where money is exchanged (also

called onerous transfers).
 These taxes apply to sales, barters, exchanges, and imports.

2. Types of Onerous Transfers

A. In the Ordinary Course of Business

 Happens regularly as part of business operations.

 Two types of taxes applied:
1. Business Tax – Charged on the transaction itself, regardless of
profit/loss.
2. Income Tax – Charged on the income (profit) earned from the
transaction.

B. Not in the Ordinary Course of Business

 Happens occasionally (not a regular business activity).

 Only Income Tax applies (except in cases of importation).
 Business Tax is NOT applied.

3. Business Taxes vs. Transfer Taxes

Type of
When is it applied? Example
Tax
Business When a product or service is sold for Selling goods, providing a
Tax money. paid service.
Transfer When something is given for free (without
Gifts, donations, inheritance.
Tax money in return).

4. What Are Transfer Taxes?

 Taxes on free transfers (donations, gifts, inheritances).

Types of Gratuitous (Free) Transfers

1. Donation Inter-Vivos
o Given while the donor is alive.
o Tax Applied: Donor’s Tax.
2. Donation Mortis Causa
o Given after the donor’s death.
o Tax Applied: Estate Tax.

5. Definition of "In the Course of Trade or Business"

 The regular selling of goods or services, including related activities.

 Even non-profit organizations and government entities can be engaged in
taxable business activities.
 Exception: If a non-resident foreigner provides a service in the Philippines, it is
still taxed—even if it is not done regularly.

6. What Are Isolated Transactions?

 Transactions that do not happen regularly in business.

 Usually not subject to Business Tax.
 Exception: If a non-resident foreigner provides a service in the Philippines, it is
still considered a business transaction and taxed.
7. Illustrations & Examples

Illustration #1

True or
Statement
False?
A person must regularly engage in business to be subject to business tax. True
A non-resident foreigner performing a single transaction in the
True
Philippines must pay VAT.

Illustration #2

True or
Statement
False?
Nonprofit organizations selling only to their members are exempt from
True
VAT.
Government entities engaged in commercial activity are exempt from
False
VAT.

ELECTRONIC PAYMENT SYSTEM (EPS)

1. Introduction

Electronic Payment System (EPS) is a method that allows users to make payments
online for shopping, bills, reservations, and more. It enables the transfer of money over
the internet without the need for physical cash.

Objectives of EPS

 Understand the concept of EPS and its security services.

 Develop secure applications for electronic payments.
 Learn how various EPS applications work.

2. Traditional vs. Electronic Payment Methods

Traditional Payment Methods Electronic Payment Methods

Cash E-Cash (Digital Money)
Checks E-Wallets (Google Pay, Paytm)
Credit/Debit Cards Smart Cards
Examples of Electronic Payments:

 Online bill payments

 Online shopping
 Online ticket booking (movies, flights, trains)

3. Types of Electronic Payment Systems

A. E-Cash

 Works like digital money transferred between computers.

 Issued by banks and represents real currency.
 Features:
o Anonymous – No direct link to the user.
o Reusable – Can be used multiple times.

E-Cash Security

 Uses cryptographic algorithms to prevent fraud.

 Double-spending prevention ensures each transaction is unique.

How E-Cash Works?

B. E-Wallets

 A digital storage system that keeps e-cash and payment details.

 Provides fast, secure, and easy payments for online shopping.
 Example: Google Pay, Paytm, Apple Pay.
How to Use an E-Wallet?

1. Choose an online store.

2. Download an e-wallet from the merchant’s website.
3. Enter personal details (credit card info, address, etc.).
4. Click the wallet button during checkout to complete payment.

C. Smart Cards

 A pocket-sized card with an embedded microchip for secure payments.

 Example: University ID cards, Transport Cards (Metro Card), and Banking
Smart Cards.

How Smart Cards Work?

1. User gets a smart card from a bank.

2. Tokens (money) are loaded onto the card.
3. User inserts the card into a reader.
4. Tokens are transferred from the card to the vendor.
5. Goods/services are delivered.

D. Credit Cards

 A plastic card with a magnetic strip and unique code.

 Allows spending a fixed amount on credit, which must be repaid later.

How Credit Card Payments Work?

1. Customer places an order online.

2. Merchant sends payment request to the bank.
3. Bank verifies and approves the transaction.
 4. Payment is transferred from the customer’s bank to the merchant.

Risks of Using Credit Cards:

1. Operational Risk – Errors in processing payments.

2. Credit Risk – If a customer fails to repay.
3. Legal Risk – Fraud or misuse of cards.

4. Secure Electronic Transaction (SET) Protocol

 Developed by MasterCard and Visa for secure online payments.

 Ensures encryption, authentication, and integrity of transactions.

How SET Works?

1. Validates consumers & merchants before a transaction.

2. Uses public key cryptography for security.
3. Ensures data integrity, privacy, and non-repudiation.
5. Payment Gateways

 A secure online service that processes payments for businesses.

 Protects transactions using encryption and authentication.
 Examples: PayPal, Stripe, Razorpay, Paytm, Google Pay.

How a Payment Gateway Works?

1. User places an order online.

2. The payment request is sent to the payment gateway.
3. The gateway verifies details with the user’s bank.
4. Payment is processed securely and transferred to the merchant.

6. Security Requirements in EPS

 Integrity – Ensures data is accurate and unchanged.

 Non-Repudiation – Users cannot deny making a transaction.
 Privacy – Protects customer details.
 Safety – Prevents fraud and hacking.
ELECTRONIC DATA INTERCHANGE
1. Introduction to Electronic Data Interchange (EDI)

Electronic Data Interchange (EDI) is the computer-to-computer exchange of business

documents in a standardized electronic format between business partners.

Key Features of EDI:

 Replaces manual processes like postal mail, fax, and email.

 Ensures automated and secure data transfer between buyer and supplier systems.
 Reduces processing time, errors, and costs.

2. Traditional vs. Automated EDI Process

A. Traditional Manual Process

1. The buyer generates a purchase order (PO) in their internal system.

2. The PO is sent via fax, mail, or email to the supplier.
3. The supplier manually enters the PO into their system.
4. An invoice is generated and sent back to the buyer.

B. Automated EDI Process

1. The buyer’s procurement system automatically generates an EDI-formatted PO.

2. The supplier's order system receives the PO electronically.
3. The system notifies the shipping department to dispatch goods.
4. Once the order is packed, an Advanced Ship Notice (ASN) is sent to the buyer.
5. The supplier's ERP system generates an EDI invoice and transmits it to the
buyer's accounting system.

3. Business Documents Exchanged via EDI

EDI can be used to automatically send various business documents, including:

 Purchase Orders (PO)

 Invoices
 Shipping Status Updates
 Customs Documents
 Inventory Reports
 Payment Confirmations
4. How EDI Works?

1. A buyer’s procurement system sends an EDI purchase order when inventory is

low.
2. The supplier’s sales order system receives and processes the PO.
3. The shipping department is notified to pack and dispatch the goods.
4. An Advanced Ship Notice (ASN) is sent to the buyer.
5. The supplier’s ERP system generates an invoice and sends it to the buyer’s
accounting system.

5. Benefits of EDI

Faster Processing – Automated transactions reduce processing time.

Lower Costs – No need for paper, mailing, or manual data entry.
More Accuracy, Fewer Errors – Eliminates manual entry mistakes.
Better Relationships – Faster processing strengthens supplier and buyer trust.
Strategic Advantages – Enables companies to improve supply chain efficiency.

EMERGING TRENDS IN E-BUSINESS

1. Shift from Product-Centric to Customer-Centric Business

 Traditional businesses focused on product innovation and differentiation.

 E-businesses focus on customer experience and customization.
 Customers now participate in product design and influence company decisions.

2. How E-Business & Mobile Technology Are Changing Business

  The rise of broadband internet and mobile apps has transformed companies into
digital-first organizations.
 Small businesses can now expand globally using e-commerce platforms.
 Digital interactions have introduced new consumer expectations and business
trends.

3. Key Consumer Trends in E-Business

A. Speed of Service

 Customers expect quick transactions and hate delays.

 "Time is money" – faster service leads to higher customer satisfaction.

B. Self-Service & Intermediary Changes

 Customers prefer self-service options rather than relying on middlemen.

 Example: Booking travel online instead of using a travel agent.

C. Integrated Solutions, Not Just Products

 Customers want complete solutions rather than just individual products.

 Example:
o Instead of just selling a laptop, companies offer bundles with accessories
and software.
o "One-stop shopping" provides convenience and better customer
experience.

4. Supply Chain & Flexible Fulfillment Trends

 Customers demand personalized products and fast home delivery.

 E-commerce enables smarter supply chain management, reducing:
o Delivery time
o Inventory waste
o Operational inefficiencies
 Enterprise Technology Trends help businesses integrate different systems to
improve decision-making.
IMPORTANCE OF CYBER LAW IN THE PRESENT ERA

1. Introduction to Cyber Law

Cyber Law refers to the legal framework that governs activities in cyberspace,
including:

 Computers & Networks

 Software & Data Storage Devices
 The Internet, Websites & Emails
 Electronic Devices like Mobile Phones & ATMs

With the rapid growth of digital technology, cyber law ensures security, privacy, and
legal compliance in the online world.

2. Why Do We Need Cyber Law?

A. Increasing Cyber Threats

 "A modern thief can steal more with a computer than with a gun. Tomorrow's
terrorist may do more damage with a keyboard than with a bomb." – National
Research Council, USA (1991)
 Cybercrimes such as hacking, identity theft, and financial fraud have increased.

B. Changing Digital Landscape

 The Internet has changed how we govern, do business, and communicate.

 IT has transformed the world from paper-based to digital transactions.

C. Legal Challenges in Cyberspace

 Traditional laws do not cover all aspects of cyberspace.

 A legal framework is needed to regulate online transactions and activities.

3. What Does Cyber Law Cover?

Cyber Law deals with:

1. Cyber Crimes – Crimes committed using computers and the internet.

2. Electronic/Digital Signatures – Ensuring the authenticity of online
transactions.
3. Intellectual Property – Protecting copyrights, patents, and trademarks.
 4. Data Protection & Privacy – Ensuring confidentiality of personal and business
data.

4. Categories of Cyber Crimes

A. Cyber Crimes Against Individuals

 Cyberstalking – Repeatedly harassing or threatening someone online.

 Impersonation – Creating fake profiles or stealing someone’s identity.
 Privacy Violations – Stealing or exposing personal data.
 Transmission of Obscene Content – Sharing explicit material online.

B. Cyber Crimes Against Property

 Unauthorized Computer Trespassing – Hacking into another person’s system.

 Computer Vandalism – Destroying or altering computer systems.
 Malicious Software (Viruses, Worms, Trojans) – Spreading harmful
programs.
 Financial Frauds – Transferring funds illegally from bank accounts.
 Data Theft – Stealing confidential business information.

C. Cyber Crimes Against Government

 Hacking Government Websites – Attacking national security systems.

 Cyber Terrorism – Using technology to spread fear or harm nations.
 Cyber Extortion – Threatening to release sensitive data for ransom.
 Spreading Computer Viruses – Disrupting government networks.

5. The Information Technology (IT) Act, 2000

The IT Act, 2000, came into force on October 17, 2000, to:
✔ Provide legal recognition to electronic transactions.
✔ Facilitate electronic filing of government documents.
✔ Amend existing laws to support digital evidence.

Key Objectives of the IT Act, 2000

 Recognizing electronic transactions legally.

 Allowing electronic filing of documents.
 Updating Indian Penal Code (IPC) to include cybercrimes.
6. Important Sections of the IT Act, 2000

Cyber Crimes Under IPC & Other Laws

7. IT Act Amendments (2008)

The IT Act, 2008, was passed on December 23, 2008, and enforced on October 27,
2009.

Key Features of IT Act, 2008

✔ Focus on Information Security.

✔ New sections added for Cyber Terrorism & Data Protection.
✔ Digital Signature replaced with Electronic Signature.
✔ Sections 66A-66F prescribe punishments for cyber offenses.
8. International Cyber Laws

A. United States Laws

 SOPA (Stop Online Piracy Act) – Aims to prevent copyright infringement.

 PIPA (Protect IP Act) – Protects intellectual property rights.

B. China’s Cyber Laws

 "Great Firewall of China" – Monitors all internet activity.

 Restricts offensive content against the government.

C. Cyber Laws in Other Countries

 Brazil – Known for high cybercrime rates.

 Iran – Has a Cyber Crime Police Unit to monitor cyber activities.

9. Importance of Cyber Law

A. Why is Cyber Law Important Today?

✔ We live in a highly digital world where everything is online.

✔ Companies store valuable data digitally.
✔ Government services like tax filing and legal forms are online.
✔ Credit card transactions are increasing.

B. Cyber Law in Non-Cyber Crimes

Even in regular crimes (like murder, kidnapping, and terrorism), evidence is found in:

 Computer systems
 Mobile phones
 Emails & digital communications

C. Global Impact of Cyber Law

Cyber law regulates all activities in cyberspace, ensuring security, privacy, and
accountability.
ETHICAL ISSUES IN AI AND BLOCKCHAIN ETHICS

1. Introduction to Ethics in AI and Blockchain

With the rise of Artificial Intelligence (AI) and Blockchain, ethical concerns have
become crucial. Ethics ensures that technology is used responsibly, fairly, and
transparently.

2. Basic Ethical Concepts

A. Responsibility

 Accepting the duties, costs, and obligations of decisions.

B. Accountability

 Identifying responsible parties for decisions and actions.

C. Liability

 Ensures that people or companies can recover damages if they suffer harm
due to unethical AI or technology use.

D. Due Process

 Laws and rules should be clear, fair, and appealable to higher authorities.

3. Steps in Ethical Analysis

1. Identify and describe the facts – What happened?

2. Define the conflict – What values or ethical issues are involved?
3. Identify the stakeholders – Who is affected by the decision?
4. List the available options – What actions can be taken?
5. Analyze the consequences – What will happen based on each action?

4. Candidate Ethical Principles

A. Golden Rule
  "Do unto others as you would have them do unto you."

B. Kant’s Categorical Imperative

 If an action is not right for everyone, it is not right for anyone.

C. Descartes' Rule of Change

 If an action cannot be taken repeatedly, it should not be taken at all.

D. Utilitarian Principle

 Take the action that provides the greatest benefit to the majority.

E. Risk Aversion Principle

 Choose the action that causes the least harm or cost.

F. Ethical "No Free Lunch" Rule

 Assume that everything of value is owned by someone.

 If you use something, the creator deserves compensation.

5. Professional Codes of Conduct

 Professional associations create ethical guidelines for their industries.

 Examples:
o American Medical Association (AMA) – Medical ethics.
o American Bar Association (ABA) – Legal ethics.

6. Real-World IT Ethical Dilemmas

A. Technology and Employment

 Using AI to increase efficiency can lead to job losses and financial

hardships.

B. Employee Privacy vs. Company Security

 Monitoring employee emails protects company assets but reduces privacy.

 Tracking internet use at work can prevent cyber threats but violates
personal freedom.

C. Data Privacy and Security

  Companies use big data to improve credit approvals, but it also increases
the risk of data breaches.
 Stolen personal data can be misused by hackers, criminals, or terrorists.

ETHICAL ISSUES IN AI AND BLOCKCHAIN ETHICS

1. Introduction to Artificial Intelligence (AI)

Artificial Intelligence (AI) is a field of computer science that enables machines to:

 Simulate human intelligence.

 Perform tasks, make decisions, and learn from data.
 Be used in various industries such as healthcare, finance, transportation,
and entertainment.

2. Examples of AI Applications

Chatbots – Virtual assistants like Siri, Alexa, and Google Assistant.

Smart Assistants – AI-powered home automation.
E-Payments – Fraud detection and online transactions.
Search Algorithms – Google and Bing search engines.
Social Media Feeds – Personalized content recommendations.
Facial Recognition – Unlocking phones and security systems.
Smart Cars & Navigation Apps – AI-driven autonomous vehicles.

3. Ethics in AI

As AI advances, ethical concerns become more significant. Professionals across

various fields must ensure AI follows ethical standards to balance technology and
human rights.

Why is Ethics in AI Important?

 AI can reshape the world by making decisions that impact society.

 It is crucial to set guiding principles that ensure responsible AI
development.

4.Ethical Problems AI Can Pose

5.Additional Ethical Concerns in AI

6. Solutions to AI Ethical Issues

A. How Can We Promote Ethical AI?

Integrating Ethics into AI Development – Teaching ethics in AI courses.

Organizing Events & Hackathons – Encouraging responsible AI research.
Collaborating with Industry Experts – Discussing AI challenges and solutions.

B. How Should AI Be Used Ethically?

✔ Transparent Data Handling – No hidden AI processes.

✔ Minimizing Bias – Training AI with diverse datasets.
✔ Ensuring Privacy – Protecting user information.
✔ Making AI Work for Society – Using AI for the benefit of humanity.