DR. AJAY KUMAR PATHAK
ASSISTANT PROFESSOR
Copyright © by Dr. Ajay kumar pathak
B. Sc IT SEMESTER 5 NOTES BASED ON NEP
SUBJECT : MN–1C (Minor From Discipline–1
(To be selected by the students from)
MN-1C: E-COMMERCE AND DIGITAL MARKETING
NOTES OF THE E-COMMERCE AND DIGITAL MARKETING
Course Objectives:
- To understand the increasing
significance of E-Commerce and its applications in Business.
- To provide an insight into Digital
Marketing activities on various Social Media platforms and its emerging
significance in Business
- To understand Latest Trends, Practices
in E-Commerce and Digital Marketing,
COURSE
CONTENTS:
|
Unit-1 (10 Classes) |
An overview of E-Business, Models,
Types ·
Conceptual Framework of E-Commerce, General Model of Business; Defining
E-commerce, Characteristics, advantages and disadvantages, adoption and
impact of E- Business., Electronic Data Interchange (EDI); Types of e-Transactions – B2B, B2C, C2C, C2B etc., Electronic Storefronts, E-Marketplace |
|
Unit-2 (12 Classes) |
E-Business Technology and E Security ·
Web Presence – domain registration, website development, developing
static and dynamic webpages and hosting, registering the Website with Search
Engines. ·
Web server hardware and software; Data centre services. ·
Security –
service providers, digital certificates, encryption, SSL, Digital signatures. |
|
Unit-3 (10 Classes) |
Electronic Payment Systems: ·
Overview of electronic Payment Technology, Online
payment mechanism; Electronic Payment systems, payment Gateway, EFT,
NEFT, RTGS, SWIFT, NFC, Green Channel. ·
Legal issues: Laws for E-Commerce, Issues of
Trademarks & Domain Names |
|
Unit-4 (14 Classes) |
Digital Marketing – I ·
Introduction to Digital Marketing, Advantages and Limitations of
Digital Marketing. Keyword research, Competitor analysis in digital
marketing. ·
Various Activities of Digital Marketing: Search Engine Algorithm, Search Engine Optimization and stages, Search
Engine Marketing, Content
Marketing and Content Influencer Marketing, Remarketing, Campaign Marketing, E-mail Marketing, Display Advertising, Blog Marketing, Viral Marketing, Podcasts and Vodcasts. |
|
Unit-5 (14 Classes) |
Digital Marketing – II ·
The P.O.E.M. framework. ·
Digital Marketing on Various Social Media Platforms. ·
Online Advertisement, Online Marketing Research, Online PR. ·
Web Analytics. ·
Promoting Web Traffic. ·
Latest Developments and Strategies in Digital Marketing. |
**** NOTES *****
UNIT-3
:- ELECTRONIC PAYMENT
SYSTEMS
OVERVIEW
OF ELECTRONIC PAYMENT TECHNOLOGY:- Electronic payment systems work
by facilitating the exchange of funds between parties electronically. When a payment is initiated, the system
securely processes the transaction details via a payment gateway that verifies
the payer’s identity and validates the transaction. The gateway transfers
information between the electronic interface and the payer’s credit card or
bank account. It uses security protocols and encryption along the way to make
sure the transaction remains safe. The
bank or credit card company quickly verifies whether there’s enough money in
the payer’s account to complete the transaction. If so, the gateway routes the
funds from the payer’s account to the payee’s account. Once the transaction is complete, both
parties receive notification and the electronic payment is concluded.
TYPES
OF ELECTRONIC PAYMENTS:-
1) Unified Payments Interface (UPI):- UPI has become a widely adopted and
popular electronic payment system in India. It enables users to link multiple
bank accounts to a single mobile application, allowing seamless and instant
fund transfers between individuals and merchants.
2) Mobile Wallets:-
Mobile Wallet services like Paytm, PhonePe, and Google Pay have gained
widespread acceptance. Users can load money into these digital wallets and use
the balance for various transactions, including mobile recharge, bill payments,
and online shopping
3) Debit and Credit Cards:- Debit and Credit card usage is widespread in India, with
various banks issuing these cards for electronic transactions. Cards are
commonly used for Point-of-Sale (POS) transactions, online purchases, and cash
withdrawals from ATMs.
4) Immediate Payment Service (IMPS):- IMPS enables instant interbank electronic
fund transfers through mobile phones, internet banking, or ATMs. It is
particularly useful for peer-to-peer transactions and small-value payments.
5) National Electronic Funds Transfer (NEFT):- NEFT is a nationwide electronic payment
system that facilitates one-to-one funds transfer between bank accounts. It
operates on a delayed settlement basis and is widely used for both individual
and corporate transactions.
6) Real-Time Gross Settlement (RTGS):- RTGS is another electronic fund transfer
system that allows real-time settlement of large-value transactions. It is
typically used for high-value interbank transfers.
7) Prepaid Instruments:-
Prepaid Instruments, including prepaid cards and gift cards, provide users with
a convenient way to make electronic payments with a pre-loaded amount.
8) QR Code Payments;- QR
code payments involve scanning a Quick Response (QR) code using a smartphone
camera to initiate a transaction. The scanned code directs the user to a
payment interface where they can complete the payment using their preferred method.
This approach is gaining popularity due to its simplicity and the minimal
infrastructure required for merchants to implement it.
9) Internet Banking Transfers:- Internet banking transfers, also known as online bank
transfers, enable individuals and businesses to move funds between bank
accounts electronically through a financial institution's online platform. This
method is commonly used for bill payments, transferring funds between personal
accounts, and making payments to third parties. It offers the convenience of
managing finances remotely and scheduling future payments.
10) Buy Now, Pay Later (BNPL) :- BNPL is an emerging online payment system for e-commerce that lets customers purchase products and pay later in easy installments.
ADVANTAGES OF ELECTRONIC
PAYMENT SYSTEM
1) Speed:-
Electronic transfers are subsequent to instant. In fact, waiting times are
reduced to negligible times compared to other payment methods.
2) 24/7 Accessibility:-
Electronic Payments can be made at any time, providing round-the-clock access
to financial transactions.
3) Global Accessibility:-
Users can make payments and transfer funds globally without being restricted by
geographical boundaries.
4) Instant Transactions:-
Electronic Payments are processed quickly, allowing for near-instantaneous
transfer of funds between accounts.
5) Faster Settlement:-
Compared to traditional payment methods, electronic transactions often result
in faster settlement times.
6) Record-Keeping and Tracking:- Electronic Payment Systems facilitate easy record-keeping for both
businesses and individuals.
7) Encryption and Authentication:- Electronic Payment Systems employ robust encryption and
authentication protocols to secure transactions and protect sensitive
information.
DISADVANTAGES OF
ELECTRONIC PAYMENT SYSTEM
1)
Security Concerns:-
Electronic Payment Systems are susceptible to security breaches, including
hacking, phishing, and identity theft.
2)
Technical Issues:-
Electronic Payment Systems rely on technology, and technical glitches or system
failures can disrupt transactions.
3)
Fraud Risk:- Despite security measures, Electronic Payment
Systems are not immune to fraud. Unauthorized transactions, stolen credentials,
or fraudulent activities can occur, leading to financial losses for individuals
and businesses.
4)
Privacy Concerns:-
Users may be concerned about the collection and storage of personal information
by electronic payment providers.
5)
Transaction Fees:-
Some electronic payment systems impose transaction fees, which can add up over
time.
ONLINE PAYMENT MECHANISM :- An online payment mechanism in
e-commerce is a digital system that enables customers to pay for products or
services through the internet securely and conveniently. It typically involves
a payment gateway, which acts as an intermediary between the e-commerce site
and payment processors to encrypt and transmit payment data for authorization
and settlement.
Online
payment mechanisms in e-commerce trust on three core components::-
(1) The payment gateway
(2) Payment processor
(3) Merchant (commercial) account, which work
together to securely handle transactions from customer input to fund
settlement.
(1) Payment Gateway:- The payment gateway serves as the secure entry point, capturing
and encrypting sensitive customer data like card details before transmitting it
to financial networks. It ensures the customer remains on the merchant's site
for a all-in-one experience, often using protocols like SSL/TLS (Secure Sockets
Layer / Transport Layer Security ) for protection. For example, Stripe
integrates directly into e-commerce platforms like Shopify, where a customer
buying shoes enters card info, and Stripe encrypts it instantly to prevent
interception
(2) Payment Processor :- The payment processor
verifies the transaction details with the customer's issuing bank or card
network (e.g., Visa, Mastercard), checking for sufficient funds, fraud risks,
and authorization. It communicates approvals or declines in real-time,
typically within seconds. Razorpay, popular in India, exemplifies this by
supporting UPI and cards; during a checkout for electronics, it queries the
bank, flags suspicious activity via AI, and confirms the payment before
proceeding.
(3) Merchant Account:- A merchant account acts
as a holding area where approved funds are deposited after settlement, minus
fees, allowing the seller to access money via their bank. It separates business
transactions from personal banking to manage high volumes securely. PayPal
provides merchant accounts globally; after processing a subscription for
software, funds settle into the seller's PayPal-linked account within 1-2 days,
with tools for reconciliation.
ELECTRONIC
FUND TRANSFER (EFT) :-
An
electronic funds transfer (EFT), or direct deposit, is a digital money movement
from one bank account to another. These transfers take place independently from
bank employees. As a digital transaction, there is no need for paper documents.
EFT has become a predominant method of money transfer since it is a simple,
accessible, and direct payment or transfer of funds. As businesses increase
their usage of EFT, paper checks become obsolete due to expense, slower
expedition, and overall effort.
(1) ACH Direct Payments:- ACH (Automated
Clearing House) Direct Payments are a popular Electronic Fund Transfer method
used by businesses and individuals alike. These transactions include direct
deposits, bill payments, and other electronic transfers. ACH payments are
processed in batches and typically take a few business days to complete. They
are reliable and cost-effective, making them a preferred choice for recurring
payments like salaries and utility bills.
(2) Electronic Fund Transfer Through IMPS:- IMPS
(Immediate Payment Service) is an instant payment service available 24/7,
including holidays. It is perfect for urgent transfers, allowing money to be
sent and received immediately. Users can initiate IMPS transactions via mobile
banking, ATMs, or net banking. All you need is the beneficiary’s mobile number,
MMID (Mobile Money Identifier) or account number, and IFSC code. Such types of
EFT are especially handy when you need to transfer funds outside regular
banking hours.
(3) Electronic Fund Transfer Through RTGS:- RTGS
(Real Time Gross Settlement) is ideal for high-value transactions, typically
above Rs. 2 lakh. This system processes transactions individually in real time,
ensuring that the funds are transferred instantly during banking hours. Both
the sending and receiving banks must be RTGS-enabled. This method is often used
for large-scale business transactions or urgent, high-value payments. The
process requires the beneficiary’s name, account number, and IFSC code.
(4) Electronic Fund Transfer Through UPI:- UPI
(Unified Payments Interface) has revolutionized EFT (Electronic Fund Transfer)
in India. With UPI, you can transfer funds instantly using just a smartphone.
There is no need to share bank details—only a virtual payment address (VPA) is
required. UPI transactions are free for person-to-person transfers and can be
done anytime, anywhere.
(5) ATM Transactions:- Withdrawing cash from
an ATM might seem like a straightforward action, but it is also a type of
Electronic Fund Transfer. The ATM communicates with your bank to verify your
account balance and dispense cash. This instant electronic verification and
transfer of funds highlight the versatility of EFT.
(6) Online Payment Systems :- Online payment
systems like PayPal, Google Pay, and others facilitate Electronic Fund
Transfers for online shopping and bill payments. These systems use secure
connections to process transactions, ensuring that your financial information
remains safe. They offer a convenient way to pay for goods and services without
physical cash or checks.
(7) Credit Card/Debit Card Transactions As EFT:-
When you make a purchase with a credit or debit card, you are using Electronic
Fund Transfer. The card terminal communicates with your bank to verify the
transaction and transfer the funds electronically. While the funds may take a
few days to clear, the transaction is essentially validated instantly.
NEFT (NATIONAL ELECTRONIC FUNDS TRANSFER):-
The full
form of NEFT is National Electronic Funds Transfer, an electronic payment
system in India that enables seamless fund transfers between NEFT-enabled bank
accounts across participating banks. This system operates on a Deferred Net
Settlement basis, settling transactions in 30-minute batches around the clock
(24x7x365). Operated by the Reserve Bank of India (RBI) since 2005, NEFT
provides a secure, economical, and reliable way to transfer funds online,
without visiting a bank branch. NEFT transfers are widely used for salary
disbursement, bill payments, and online purchases, making it a convenient and
efficient choice for both individuals and organizations.
ADVANTAGES OF USING NEFT SYSTEM?
NEFT offers the
following advantages for funds transfer or receipt:
·
Round the clock
availability on all days of the year.
·
Near-real-time funds
transfer to the beneficiary account and settlement in a secure manner.
·
Pan-India (PAN (Presence Across Nation ) means nationwide
or across the entire country of India.) coverage through large network of
branches of all types of banks.
·
The beneficiary need
not visit a bank branch for depositing the paper instruments. Remitter can
initiate the remittances from his / her home / place of work using internet
banking, if his / her bank offers such service.
·
Positive confirmation
to the remitter by SMS / e-mail on credit to beneficiary account.
·
Penal interest
provision for delay in credit or return of transactions.
·
No tax of charges by
RBI from banks.
·
No charges to savings
bank account customers for online NEFT transactions.
·
The transaction
charges have been capped by RBI.
·
Besides funds
transfer, NEFT system can be used for a variety of transactions including
payment of credit card dues to the card issuing banks, payment of loan EMI,
inward foreign exchange remittances, etc.
·
The transaction has
legal backing.
·
Available for one-way
funds transfers from India to Nepal.
RTGS
:- RTGS stands for Real-Time Gross
Settlement, a secure electronic funds transfer system in India used for
high-value transactions, typically above Rs. 2 lakhs. In RTGS, funds are
transferred and settled in real-time and on a one-to-one basis, ensuring
immediate transfer between bank accounts without any waiting period. With the
introduction of 24/7 availability by the Reserve Bank of India, RTGS can now be
used at any time of the day, including weekends and holidays. This makes it
highly reliable for time-sensitive payments. Since each transaction is settled
individually and not in batches, the system eliminates counterparty risk and
ensures fast and secure fund transfers.
BENEFITS
OF RTGS:-
1. Reduced Settlement Risks for Large
Transactions:- Since RTGS settles each
transaction individually in real time, the chances of payment failure or
default are significantly lowered.
2. Enhanced Security and Regulatory
Oversight:- Being an RBI-regulated
system, RTGS transactions are subject to strict compliance and security
measures. This ensures a secure environment, protecting users from fraud,
errors, or cyber threats.
3. Faster Fund Availability:- RTGS ensures that the recipient’s account is
credited promptly, often within minutes or up to a couple of hours. This fast
clearance helps businesses maintain smooth cash flow and individuals avoid
payment delays.
4. Convenient 24/7 Access:- Unlike older banking systems that worked
only during office hours, RTGS operates 24×7, including weekends and holidays.
This means urgent payments can be made any time without waiting for banking
hours.
5. Transparency in Charges:- Banks are required to disclose the RTGS
transaction fees clearly, which are also regulated by the RBI. This
transparency allows users to know exactly what they will pay, avoiding
surprises or hidden costs.
6. Ideal for Critical High-Value Payments:- RTGS is the go-to payment system for large
business deals, real estate transactions, corporate payments, or any scenario
where transferring large sums quickly and securely is essential.
7. Reduced Exposure to Cybersecurity
Threats:- Since RTGS settles payments
immediately, the window for cybercriminals to intercept or manipulate
transactions is minimized, adding an extra layer of security.
8. Legal Backing and Audit Trail:- RTGS transactions are legally binding and
come with a clear audit trail, which is helpful for financial records,
compliance, and dispute resolution if needed.
SWIFT
:- (FULL FORM, SOCIETY FOR WORLDWIDE INTERBANK FINANCIAL
TELECOMMUNICATION) :-
SWIFT is a
network that banks use to communicate with each other securely, It is a trusted
messaging system for banks and other financial institutions around the world. mainly
to give instructions for transferring funds between accounts. While SWIFT is a
vital component of the global payments system, the network itself is used only
for sending and receiving messages, SWIFT It doesn’t settle any money itself,
but provides instruction messages for just how to give and receive specific
funds.
It is
controlled by the central banks of the G10 countries, the European Central
Bank, and the National Bank of Belgium. It was established in 1973 and is based
in Belgium. The Group of Ten is made up
of eleven industrial countries (Belgium, Canada, France, Germany, Italy, Japan,
the Netherlands, Sweden, Switzerland, the United Kingdom and the United States)
which consult and co-operate on economic, monetary and financial matters.
Now, There are about 11,000 member banks in 200
countries and territories that use SWIFT. SWIFT has become an integral part of the flow
of global trade. India’s financial system has access to the SWIFT.
HOW
DOES SWIFT WORK?:-
An
important component of the SWIFT messaging system is the SWIFT code. Each bank
that participates in the system is assigned this code, which identifies the
bank, the country it’s in, where it’s located in the country, and, optionally,
the branch.
It has the
eight-character SWIFT code UNCRITMM
1) First four characters: the
institute code (UNCR for UniCredit Banca)
2) Next two characters: the country
code (IT for the country Italy)
3) Next two characters: the
location/city code (MM for Milan)
4) Last three characters: optional,
but organizations use them to assign codes to individual branches.
NFC
(NEAR FIELD COMMUNICATION):-
NFC is the
technology that allows two devices, such as your phone and a payments terminal,
to talk to each other when they’re close together. NFC enables contactless
payments. People increasingly use their mobile devices to help manage their
day-to-day lives, from email to personal banking to health apps.
NFC It
enables short-range communication between compatible devices. At least one
transmitting device and another receiving device are needed to transmit the
signal. Many devices can use the NFC standard and are considered either passive
or active. (NOTE :- LIKE BLUETOOTH BUT BLUETOOTH IS DIFFERENT )
TYPES
OF NFC
(1) Passive NFC devices:- These near-field communication devices include
tags and other small transmitters that can send information to other NFC
devices without the need for a power source of their own. These devices don’t
really process any information sent from other sources, and can not connect to
other passive components.
(2) Active NFC devices:- These
near-field communication devices can do both things i.e. send and receive data.
They can communicate with each other as well as with passive devices.
Smartphones are the best example of active NFC devices. Card readers in public
transport and touch payment terminals are also good examples of the technology.
GREEN
CHANNEL:-
Green
Channel in Electronic Payment Systems refers to a streamlined, low-risk
processing pathway that allows compliant transactions to clear quickly without
extensive checks or physical inspections, often used in cross-border trade and
customs-integrated payments to speed up fund transfers and refunds.
Core
Concept of GREEN CHANNEL
This
facility prioritizes trusted entities, such as exporters or importers meeting
regulatory criteria like full compliance and document readiness, enabling
faster transaction settlement. For instance, a low-risk cargo shipment of
spices might bypass routine customs exams, allowing electronic payment release
within an hour via linked banking systems. It enhances efficiency in electronic
payment systems by reducing clearance times and automating refunds for eligible
taxpayer
Types
of Green Channel
(1) Green Channel for Trade and Customs
Clearance:- This is the most common usage where goods or payments linked to
compliant shipments are processed quickly without detailed inspections or
delays. Entities with a Green Channel status can clear payments or cargo
faster, typically because they meet stringent compliance criteria. For example,
low-risk exporters can use this channel for faster refund processing and smooth
customs clearance.
This type
enables immediate goods release without physical or detailed document checks
for trusted importers/exporters.
Example:- A shipment of low-value
electronics from a frequent, compliant EU (European Union ) exporter to India
clears in hours via electronic Bill of Entry, skipping routine exams and
enabling instant payment settlement.
Major importers like government
departments receive Green Channel status, allowing cargo like machinery to
bypass 100% inspection after electronic declaration verification
(2). Green Channel in Electronic Payments for
Marketplaces:- Some payment platforms offer a
"Green Channel" program to onboard and connect with top merchants who
have been pre-screened and approved. This helps in faster transaction
processing and enhanced trust. For instance, Payoneer's Green Channel program
targets vetted sellers for quicker payments and settlement.
Example:- Platforms use this for
pre-vetted (means, the methods or processes used to thoroughly check and
confirm the suitability, reliability, or acceptability of something or someone
before it is officially used or presented) high-volume sellers to accelerate
onboarding and payouts.
Payoneer's Green Channel connects top eBay or
Amazon sellers with faster cross-border electronic transfers, reducing
settlement from days to hours for compliant merchants.
(3). Green
Channel for Electronic Transactions and Refunds:- Within banking and e-payment
systems, Green Channel facilities allow fast settlement of refunds and payments
by optimizing the electronic processing system.
Example:- A compliant exporter files electronic
claims for duty drawbacks, receiving refunds within 48 hours via automated
ledgers, as in India's post-clearance audit schemes.
Swipe-based
deposits into green accounts trigger instant electronic transfers for verified
taxpayers, avoiding paperwork delays.
(4)
Green Channel for E-commerce Export Payments:- Some governments and trade
organizations propose or implement Green Channel schemes specific to e-commerce
exports, helping MSME (Micro, Small, and Medium Enterprises) and exporters to
get faster electronic payment clearances without cumbersome procedures.
Example:- Indian MSMEs exporting apparel
via platforms like a global online marketplace focused on handmade, unique
creative goods use proposed Green Channels for quick customs-linked electronic
payouts, bypassing red tape for low-risk parcels.
E-commerce
hubs grant green status to repeat sellers of non-regulated goods like spices,
enabling same-day fund releases post electronic filing
LEGAL
ISSUES:-
Legal issues in e-commerce
involve a range of challenges centered on regulatory compliance, consumer
rights, intellectual property, data privacy, contracts, and product liability.
These issues arise because buying and selling goods or services online involve
virtual interactions where traditional rules must be adapted to the digital
environment.
THE CORE LEGAL ISSUES
IN E-COMMERCE:-
(1). Data privacy in e-commerce :- One of the most pressing legal
issues in e-commerce businesses is data privacy. In the age of digital commerce,
personal information is the essence of many online operations. To safeguard
consumers and protect sensitive data, governments worldwide have implemented
stringent data privacy regulations.
Here are some key aspects to
consider:
(A) Privacy Policies:- An e-commerce website privacy policy is a
concise document that explains how a website collects, uses, safeguards, and
shares the personal information of its visitors and customers. It outlines the
website’s commitment to protecting user privacy and ensures transparency in
data handling practices.
(B). Cyber security and data breaches:- E-commerce businesses are
prime targets for cyber-attacks. Ensuring robust cyber security measures and
data breach preparedness is essential to protect both consumers and the
business.
( C) Cyber security protocols:- Implementing encryption, firewalls,
and intrusion detection systems can help safeguard customer data from cyber
threats.
(D) Data breach notifications:- E-commerce businesses must
promptly notify affected individuals and authorities in the event of a data
breach. Failing to do so can result in heavy fines and legal repercussions.
(E) Cyber insurance:- Cyber liability insurance can mitigate the
financial impact of data breaches and cyber incidents.
(2) Consumer protection in e-commerce:- Consumer protection is a
keystone of e-commerce legality. Laws and regulations vary from country to
country, but some principles remain consistent.
(A). Transparency:- E-commerce businesses must provide clear and
accurate information about their products or services. This includes pricing,
refund policies, and terms and conditions.
(B) Payment security:- Ensuring secure payment processing is
crucial. E-commerce platforms should comply with Payment Card Industry Data
Security Standard (PCI DSS) requirements to protect consumers’ financial
information.
(C ) Customer reviews:- Encouraging
and managing customer reviews can be a double-edged sword. While honest
feedback is valuable, businesses must not manipulate or censor reviews, as this
can lead to legal issues.
(3) Product liability (responsibility):- One of the top legal issues in
e-commerce revolves around product liability. Particularly for businesses that
source products from third-party vendors, the potential for product liability
claims is a significant risk. Clients can charge e-commerce businesses for
product defects, especially if warranties and liabilities are not clearly
defined.
(4) Intellectual property concerns:- Intellectual property (IP)
issues are extensive in the digital world, where content and ideas spread
rapidly.
(A) Copyright infringement (violation):- Unauthorized use of
copyrighted materials, such as images, text, or music, can result in legal
action. E-commerce platforms must respect copyright laws and obtain proper
licenses.
(B) Trademark infringement:- Businesses should conduct thorough
trademark searches to ensure their brand names and logos do not infringe (copy)
on existing trademarks. Conversely, they should protect their own trademarks to
prevent infringement by others.
(C ) Counterfeits and knockoffs:- E-commerce platforms face study
for hosting fake or copy products. Implementing firm measures to detect and
remove such listings is crucial to avoid legal trouble.
(5) Regulatory compliance and taxation :- Navigating the regulatory
landscape is another legal issue in e-commerce. It involves following to
various laws and standards.
(A) Business licensing:- E-commerce businesses may require
licenses to operate legally. The type of license varies depending on the nature
of the business and its location.
(B) Sales tax:- E-commerce businesses often find themselves
navigating the complex world of sales taxes, which can vary from state to
state. States may require online companies to pay sales tax based on economic
ties, even if they are located out of state. Consult a tax lawyer to understand
how to charge sales tax in different jurisdictions and remain compliant with
local tax laws.
(C ) Import and export laws:- Cross-border e-commerce raises
additional legal issues related to customs regulations, tariffs, and
international trade laws.
(6) Contractual agreements and obligations:- E-commerce businesses enter into
numerous contracts with various stakeholders, including payment systems, tech
providers, consumers, employees, suppliers, and website hosting services.
Managing these contracts effectively is vital to ensure smooth operations and
legal compliance.
(A) Purchase agreements:- This contract, also known as a sales agreement or sales contract, outlines the terms of a
transaction between a seller and a buyer. It typically includes details about
the products or services being purchased, pricing, payment methods, delivery,
returns, and warranties.
(B) Data Processing Agreements (DPAs) :- DPAs are essential in situations where the e-commerce
business acts as the data controller, and the third party acts as the data
processor. This might include cloud computing services, payment processing
systems, customer relationship management (CRM) systems.
( C) Service-Level Agreements (SLAs):- If an e-commerce business
relies on third-party service providers for hosting, cloud services, or other
critical functions, an SLA is essential. It defines the level and quality of
service expected from the provider, including performance metrics, uptime
guarantees, and dispute resolution procedures.
(D) Non-Disclosure Agreements (NDAs):- E-commerce businesses often
enter into NDAs
with third parties, such as suppliers, manufacturers, or partners, to protect
confidential information. NDAs prohibit the disclosure of sensitive information
to unauthorized parties and outline the consequences of breaching
confidentiality.
(E) Electronic signatures:- Electronic signatures are legally binding in many
jurisdictions. Implementing secure methods for obtaining electronic signatures
can streamline transactions while maintaining legality.
LAWS FOR E-COMMERCE:-
The legal framework for
e-commerce in India is multifaceted, about legislations such as the Information
Technology Act, 2000; Consumer Protection Act, 2019; and the E-Commerce Rules,
2020. Additionally, the sector intersects with laws on taxation, data
protection, intellectual property, competition, and cross-border trade.
E-commerce laws are a set of
regulations aimed at governing electronic transactions, online business
activities, and the handling of digital data to ensure secure, fair, and
transparent operations. These laws build consumer confidence and protect both
buyers and sellers in the digital marketplace.
TYPES OF E-COMMERCE
LAWS:-
(1) Contract and Electronic Signature Laws- Contract and Electronic Signature
Laws in e-commerce validate the use of electronic contracts and signatures,
giving them the same legal standing as traditional paper contracts. These laws
ensure that agreements formed online are enforceable by law and that electronic
signatures authenticate the identity of parties involved.
An electronic signature can be
any electronic symbol, process, or method adopted with the intent to sign and
authenticate a contract or record. This includes unique passwords, typed names,
scanned signatures, and digital signatures. For example, in the US, the
Electronic Signatures in Global and National Commerce Act (E-SIGN Act) confirms
that electronic signatures are legally valid and enforceable, just like
handwritten signatures. Similarly, the Uniform Electronic Transactions Act
(UETA) supports electronic contract validity and signature recognition.
In practice, e-commerce platforms
often use click wrap agreements, where consumers click "I agree" to
accept terms and conditions before purchasing. This action is legally binding
under contract law and electronic signature statutes. For instance, sellers and
buyers may conduct transactions and sign agreements electronically, with
records stored digitally, which courts will recognize as legally binding
evidence.
In India, the Information
Technology Act, 2000 (IT Act) grants legal status to electronic contracts and
electronic signatures. It distinguishes between digital signatures
(cryptographically secure) and e-signatures (such as Aadhaar-based
authentication). This legal framework enables online retailers and service
providers to conduct binding transactions securely and efficiently.
Thus, Contract and Electronic
Signature Laws provide seamless, legally sound mechanisms for forming
agreements electronically, facilitating the growth of secure e-commerce
transactions worldwide.
(2) Consumer Protection Laws:- Consumer Protection Laws in
e-commerce safeguard buyers from unfair practices, false advertising, unsafe
products, and inadequate grievance redressal by mandating transparency,
accurate information, and accountability from online platforms and sellers.
These laws require e-commerce
entities to display comprehensive details about products, sellers (including
legal name, address, and contact info), return/refund policies, and total
pricing before purchase. They prohibit manipulative tactics like fake discounts
(inflating original prices to show false savings), false scarcity ("only
one left"), or preferential treatment to certain sellers. Platforms must
appoint grievance officers for resolving complaints within specified timelines,
ensure safe products, and handle refunds promptly as per RBI guidelines.
Examples : - India's Consumer Protection (E-Commerce)
Rules, 2020: An online marketplace must disclose if a product is imported, ban
counterfeit goods, and not charge cancellation fees if the platform cancels
orders without valid reason. For instance, if a site lists expired cosmetics or
faulty electronics without warnings, it violates the right to safety, allowing
consumers to seek recalls or penalties via the Central Consumer Protection
Authority (CCPA).
(3) Privacy and Data Protection Laws:- Privacy and Data Protection Laws
in e-commerce regulate how online businesses collect, store, and use customers'
personal data, ensuring privacy, security, and transparency. These laws require
e-commerce companies to obtain explicit consent from users before collecting data,
inform them about data usage, allow access and deletion rights, and secure data
against breaches.
Example:- The General Data Protection Regulation (GDPR)
of the European Union, which sets strict consent, data minimization, and
transparency requirements. It mandates that businesses provide clear privacy
policies, notify users of data breaches within 72 hours, and allow users to
access or erase their personal data. Non-compliance can result in fines up to
4% of global turnover.
India's Digital Personal Data
Protection Act, 2023, complements the IT Act by emphasizing informed consent,
data minimization, accountability, and severe penalties for violations, aiming
to protect consumer data in growing digital markets.
Practically, these laws ensure
that when a consumer shops online, their sensitive information (such as payment
details, addresses, and contact info) is handled securely, with clear privacy
notices and options to control their data. For example, if an e-commerce
platform shares user data without consent, it could face legal penalties and
loss of consumer trust.
(4) Information Technology Laws:- Information Technology Laws form
a fundamental legal framework for regulating e-commerce operations, electronic
transactions, and cybersecurity. In India, the Information Technology Act, 2000
(IT Act) is the foundation legislation that provides legal recognition to
electronic contracts, digital signatures, and electronic records, thereby
facilitating secure and legally valid online business activities.
The IT Act mandates that
e-commerce businesses implement reasonable security practices to protect user
data from unauthorized access or breaches. It also establishes regulatory
authorities like the Controller of Certifying Authorities who oversee the
issuance and management of digital signature certificates, ensuring the
authenticity and integrity of electronic documents and transactions. For
example, an e-commerce website utilizing digital signatures to authenticate
contracts or receipts ensures that these digitally signed records are legally
enforceable.
Furthermore, the IT Act outlines
penalties for cybercrimes such as hacking, identity theft, and data breaches,
which are critical for safeguarding e-commerce platforms and consumers from
fraud and cyberattacks. The Act also requires intermediaries (such as online
marketplaces or platform hosts) to follow due diligence norms including
appointing grievance officers and removing objectionable content within
specific time frames, contributing to safer transactional environments.
(5) Intellectual Property Laws:- Intellectual Property Laws in
e-commerce protect creators' rights over trademarks, copyrights, patents, and
designs in digital spaces, preventing unauthorized use, copying, and
infringement (violation) on online
platforms. These laws require e-commerce sites to implement mechanisms like
notice-and-takedown processes to quickly remove infringing content upon valid
complaints, ensuring fair competition and brand integrity.
Key aspects include trademark
laws that prohibit selling fake goods , copyright laws safeguarding digital
media like images or software, and patent laws covering innovative products or
processes sold online. Platforms must monitor listings, disclose seller
identities, and cooperate with IP owners to avoid liability as secondary
infringers.
Examples : -India's Trademarks
Act, 1999 & Copyright Act, 1957: E-commerce marketplaces must prevent fake
products; Amazon India, for example, faced lawsuits for selling counterfeit
pharmaceuticals, leading to stricter IP enforcement like brand registries and
automated detection tools.
(6) Marketing and Advertisement Laws:- Marketing and Advertisement Laws
in e-commerce regulate promotional activities to prevent false practices,
ensure transparency, and protect consumers from misleading claims, spam, or
false certifications. These laws mandate accurate product explanations, clear
disclosure of sponsored content, opt-out options for communications, and
consistency between ads and actual offerings.
E-commerce platforms must verify
ad claims, prohibit manipulative tactics like fake urgency or inflated
discounts, and appoint officers to handle related complaints. They also require
influencers to disclose paid promotions and ban ads for prohibited items like
certain health cures without evidence.
Example:- India's Consumer Protection (E-Commerce)
Rules, 2020: Prohibits misleading ads; sellers must ensure promotions match
product characteristics, with platforms liable for refunds if discrepancies
occur.
(7) Taxation and Licensing Laws:- Taxation and Licensing Laws in
e-commerce govern business registration, tax collection on online sales, and
compliance with financial obligations to ensure fair revenue generation and
prevent tax avoidance. E-commerce operators must obtain necessary licenses
(e.g., GST registration if turnover exceeds ), collect and remit indirect taxes
like GST/VAT on sales, deduct TDS on seller payments.
These laws require platforms to
track sales, issue invoices with tax details, file periodic returns, and pay
equalization taxes on digital services by non-residents. Sellers need business
licenses, shop establishment registration, and sector-specific permits (e.g.,
FSSAI (Food Safety and Standards Authority of India ) for food), while
platforms act as tax withholding agents.
Example:- India's Section 194-O (Income Tax Act):
E-commerce operators deduct 1% TDS on gross sales/services paid to sellers
ISSUES OF TRADEMARKS & DOMAIN
NAMES:-
Introduction
of the TRADEMARKS :- Digital technology has
changed the way businesses work and grow. One big area affected is trademark in
cyber law. It deals with the misuse of brand names and logos on the internet.
Earlier, trademarks were only on products and labels. But now, they also
include domain names, search keywords, website codes, and social media
accounts. As companies go online, trademark issues in cyber law are becoming
harder to handle. The people copy or misuse famous brands on the internet. This
harms the brand and confuses buyers.
In the current era, especially
the period post COVID-19, there has been a tremendous growth in the internet
traffic and this advancement has helped merchants to drastically expand their
businesses online through utilisation of domain names. It is defined to be a
unique address that is used by Internet users for the purpose of accessing a
website via a web browser. They correspond with IP addresses and are easier to
remember and type. They generally share a standard structure, i.e., beginning
with the third level domain which is ‘www’, then comes the second-level domain,
which is used as a identification mark for the particular entity to which that
website belongs. Finally, comes the top-level domain which indicates type of
organization like “.gov” is used for indicating government organization whereas
“.edu” is used for indicating educational institutions.
In simpler terms, a domain name
just like a trademark functions as a distinctive marker for a business and
safeguards and promotes the identity of the brand in the digital market. The
Internet Corporation for Assigned Names and Numbers (ICANN) oversees the
Internet Assigned Numbers Authority (IANA) functions, which are pivotal
technical services crucial for the ongoing functionality of the Internet’s
fundamental address book, the Domain Name System (DNS). This has a potential to
give rise to significant issues, because any individual, irrespective of their
association with a recognized entity, may register a name. This could further
impede the right of the authentic and rightful owner from utilizing the said
name.
ISSUES OF
TRADEMARKS:-
Issues of trademarks primarily
revolve around legal conflicts, infringement (violation), registration
challenges, and misuse. Trademark issues arise when trademarks are similar or
identical to existing ones causing confusion, unauthorized use by others,
reduction of brand identity, and difficulties in enforcing rights
internationally. Examples include fake social media pages using a brand's logo,
or competitors using confusingly similar names that mislead consumers.
TYPES OF TRADEMARK
ISSUES INCLUDE:
(1) Trademark
Infringement (violation):- When a
competitor uses a similar or identical trademark in a way that confuses
consumers about the source of the product or service. For example, if a company
named "FastTrack" sells shoes and another new company uses
"FastTrak" for similar footwear, it may cause infringement issues.
(2) Trademark
Dilution:- This refers to unauthorized use of a trademark in a manner that weakens
its uniqueness or harms its reputation, even without confusion. An example is
when a famous brand’s name is used on unrelated or low-quality products, thus
weakening the original brand's identity.
(3) Registration
Issues:- Challenges during trademark registration such as refusal due to
similarity with existing registered marks, or conflicts with geographical
indications like Designation of Origin marks.
(4) Non-Use
and Cancellation: A trademark may be vulnerable (weak) to cancellation if it is
not used continuously. For example, if a registered trademark is not actively
used in commerce, others might petition for its cancellation. Social Media and
Online Trademark Violations: Brands face increasing issues from fake pages,
influencer misuse, and misleading advertisements using trademarks online
without permission.
WHAT IS DOMAIN
NAMES;-
A domain name (often simply
called a domain) is an
easy-to-remember name that’s associated with a physical IP address on the
Internet. It’s the unique name that appears after the @ sign in email addresses, and
after www. in web
addresses. For instance, the domain name example.com might translate to the physical address 198.102.434.8.
Other examples of domain names are google.com and wikipedia.org. Using a
domain name to identify a location on the Internet rather than the numeric IP
address makes it much easier to remember and type web addresses.
Anyone can purchase a domain
name. You just go to a domain host or registrar, find a name no one else is
using, and pay a small annual fee to own it. When you sign up for Google Cloud
services, you supply the domain name you want to use with your services. It
must be a domain you own (or we'll help you purchase one) and we’ll ask you to
verify ownership.
TYPES OF DOMAIN NAMES:-
(1) Generic top-level domain (gTLD):- Generic top-level domains (gTLDs)
are the most common type of domain extension, including .com, .net, .org, .gov
and .edu. These TLDs indicate the purpose of a website — such as commercial use
(.com) or educational purposes (.edu).
(2) New Generic Top-Level Domains (New
gTLDs):- In addition
to traditional gTLDs, there is a wide range of new generic top-level domains
(new gTLDs) that offer innovative branding opportunities. Extensions like .app,
.blog, .guru, .shop, .xyz, .co, and .online allow businesses and individuals to
create more tailored and memorable online identities.
(3) Country-code top-level domain (ccTLD):- Country-code top-level domains
(ccTLDs) indicate the country where a website is registered or where a company
or organization operates. For example, .us is the ccTLD for the United States,
and .ie is the ccTLD for Ireland, . in for India.
SUBDOMAIN:-
A subdomain is a domain that's
part of a larger domain. For example, mail.google.com, www.google.com, and
docs.google.com are all subdomains of the domain google.com. Domain owners can
create subdomains to provide easy-to-remember addresses for web pages or
services within their top-level domain.
PROTECTION OF DOMAIN
NAME AND RELATED DISPUTES:-
Domain name registrations take place through various organizations on a
first-come first-served basis which gives rise to the cases of cybersquatting
(means, the practice of registering the name of a well-known company, brand, or
person as an internet domain in the hope of later selling it at a profit).
Hence, on 24th October 1999, ICANN (Internet Corporation for Assigned Names and
Numbers) adopted a policy for resolutions of disputes related to domain names,
called UDRP (Uniform Domain Name Dispute Resolution Policy), all registrars are
required to follow this policy. A person needs to make an application and pay
the required amount of fees to register the domain name. Anyone who registers a
domain name is protected under the Trade Marks Act, 1999 and the Trademark Rules 2002. However, it is related
to note that the registered domain name has to fulfill all the requirements
properly in order to receive the protection under the trademark and once
registered, the domain name owners will be regarded similar as to the trademark
owners and thus can avail the rights and authorities associated with it.
Disputes arise when someone else registers the domain name of an already
existing trademark. The domain names are protected by the ICANN (Internet
Corporation for Assigned Names and Numbers) organisation.
DOMAIN NAME DISPUTES CAN BE CATEGORIZED INTO THE
FOLLOWING OR MECHANISMS PRESENT TO
PROTECT THE DOMAIN NAME:-
(1). TRADEMARK INFRINGEMENT (BREACH) :- Trademark
infringement is usage of a mark that is identical or deceptively similar to the
registered trademark without the prior consent of the trademark owner.
Trademark infringement takes place when the mark used by a person causes
confusion among the public. If it makes the people believe that the goods or
services are associated with the goods or services of the registered mark, the
person using such mark will be said to have infringed the registered trademark.
Unregistered owners of trademarks are also protected under the Trademark Act,
1999. Domain names are registered and protected under ICANN (Internet
Corporation for Assigned Names and Numbers) at an international level.
(2). TRADEMARK DILUTION (means the term
“trademark dilution” refers to the unauthorised use of, and/or application for,
a trademark that is likely to damage an established mark’s distinctiveness):- It
essentially differs from the concept of normal trademark infringement;
trademark dilution occurs by a party’s unauthorised use of a mark that
tarnishes (discolors) or reduces the reputation of a well- known trademark. The
policy of dilution is not defined under the Trade Marks Act, 1999. However, we
find its presence under the Section 29(4) of the Act, which states that
trademark infringement occurs when an unauthorised user creates a mark that is
“identical or similar to a well-known registered trademark.”
(3). VIOLATION OF DOMAIN NAME:-
(A) Cyber parasite:- The
concept of cyber parasite is very similar to that of cybersquatting (means, the
practice of registering the name of a well-known company, brand, or person as
an internet domain in the hope of later selling it at a profit). Here, the
intention behind registering the domain name under the trade name of a
well-known mark is to benefit from the use of the domain name rather than sell
it for profit. Generally, disputes arise between direct competitors, those in
similar business or those who intend to ‘pass off’ their goods as the goods of
the well-known trademark owner.
(B) Reverse Domain Name Hijacking:- When the trademark owner, in bad faith attempts to take over a domain
name registered by someone else, who has not breached any trademark laws, it is
called “reverse domain name hijacking.” Rule 15(e) of the UDRP (Uniform
Domain-Name Dispute-Resolution Policy ) explicitly states that if any complaint
is brought under to unnecessarily harass the domain name holder, such complaint
shall be constituted as ‘abuse of administrative proceedings’.
(C) Cyber Twin When both the domain name
holders have a genuine claim to the domain name they are called cyber twins. In a case before the WIPO (World Intellectual Property Organization )
arbitration centre, the defendant had registered his genuine domain name and
had been using it in good faith. The petitioner also had a legal interest over
the domain name of the defendant. Here, allegations so made were against the
defendant diverting traffic was dismissed by the Arbitration Centre. The suit
was dismissed based on the fact that the petitioner had failed at proving the
bad intention and thus it was held that both the parties had a legitimate claim
over the domain name.
(D) Cyber squatter:- As has been mentioned, cyber squatters are those who register domain
name of trademarks owned by other with the intention of selling, renting or
transferring them to the rightful owner for a consideration.
(4). DOMAIN NAMES DISPUTES:- With the growing popularity of Internet companies, they have discovered
that a domain name identical to their company name or the name of one of their
products can be an invaluable component of creating an Internet presence.
Companies wishing to purchase a domain name need to register with the relevant
organizations as mentioned above.
They first
look to see if their chosen domain name is already in use. Network solutions is
a great place to start if you're looking for something specific. If a business
finds that a domain name that matches its business or brand name has been
taken, it has two options:
change its name
or try to get the domain name back from its current owner.
Legal
Remedies:- If a domain name dispute arises
as described above, the parties can always seek court assistance. While courts
and judges have the right to grant control and ownership of domain names (like
any other property), the legal system is very slow. As a result, many countries
have turned to domain name registrar dispute resolution policies rather than
courts. Companies that file lawsuits must provide legal reasons why a domain
name registered for someone else should be revoked or transferred to a company
that is not fast enough to register the name first. This argument is always
based on trademark or dilution law. It can sometimes be difficult to make a
solid case on the basis of traditional trademark law, especially when the
person searching for a domain name can't show possible confusion or is a
well-known person who doesn't own the trademark rights to their name.
DOMAIN NAME v. TRADE
MARK:- Domain names and trademarks serve distinct purposes: domain names
act as internet addresses for websites, while trademarks protect brand
identities for goods and services
Aspect
|
Domain
Name
|
Trademark
|
||
Definition
|
Human-readable internet address (e.g., www.ajay.com)
to access websites. Global and exclusive; no other party can use the same one
online |
Symbol, name, or design identifying goods/services source and
distinguishing from others.
|
||
|
Registration |
Mandatory via ICANN-accredited registrars; available
if not identical to existing. |
Optional but provides legal rights; rejected if too
similar to prior marks. |
||
|
Duration |
Valid for contracted period (e.g., 1-10 years),
renewable. |
Typically 10 years, renewable indefinitely. |
||
|
Purpose |
Digital navigation to specific URL; operates only
online. |
Builds brand identity in marketplace; used offline
and online. |
||
|
Composition |
|
Can include logos, designs, names; must be
distinctive. |
||
|
Relationship |
Owning one grants no automatic trademark rights; can
be protected as trademark if source-identifying. |
Can influence domain disputes if infringing; domain
registration doesn't create trademark. |
THE HAPPY END TO UNIT 3
GOOD MARNING
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