Transaction Issues - Technical Aspects

For completing online transactions, some form of seal is required akin to the traditional signature. For that reason, digital signatures came to prominence in the late 1990s and early 2000s. Digital signatures are encrypted packets of information that validate the identity of an individual in cyberspace. The U.S. Electronic Signatures in Global and National Commerce Act (E-SIGN), signed into law by President Clinton with a digital signature in 2000, renders digital signatures as legally binding as traditional written signatures. Legally, electronic signatures not only verify the identity of the sender but also ensure the validity and authenticity of the document to which the signature is attached. Digital signatures utilize public key infrastructure (PKI), a mode of encryption whereby the signature owner maintains an exclusive private key that only he or she can use to view or alter the signature, and a public key that anyone can use to verify that the signature did indeed come from the private key's owner. Importantly, digital signatures cannot be taken out of their context; that is, they are bound to the document or order form to which they are attached and can't be copied and illicitly affixed to other documents.

Another major concern for e-businesses, both those devoted to consumers and those geared toward other businesses, was the development of Web-enabled transaction services and applications. Since the World Wide Web has emerged as the dominant Internet medium and the primary means by which customers shop online, there were growing pressures to implement transaction systems that could complete orders and payments right on the Web, thereby saving time and making online shopping a less cumbersome process. In this way, companies ease their transaction costs and processing time, while customers' shopping experience is rendered more pleasant and convenient.

A central element of smoothing online transaction issues was the development and implementation of eXtensible Markup Language (XML), a metalanguage that allows programmers to closely define the meaning and format of data presented in electronic documents. Poised to emerge as the lingua franca of e-commerce, XML was the basis for most existing electronic procurement systems in the early 2000s. In the business-to-business realm, transaction networks have grown more convoluted and multifaceted, with businesses connected in ever more intricate Webs of relationships operating on different systems and platforms. As a result, companies were scrambling to devise increasingly flexible ordering, procurement, and other transaction systems that can readily respond to all systems employed in their business relationships. The development of XML, and the continued use of electronic data interchange (EDI), were key characteristics of this trend, but these were complemented by still-existing proprietary systems and industry-specific arrangements.

To fully take advantage of the Internet's capabilities, analysts point out that the future of online commerce will be characterized by instantaneous, real-time transactions. In such a system, electronic banking, the organizing and display of shipping information, confirmations, and other details pertinent to the transaction all take place at high speed so as to present all information to the customer in real time. Obviously, real-time transactions were a long way off in the early 2000s, as banks required days to clear online credit-card information and logistics required great coordination after the order was placed. Moreover, in a business setting, many important transactions require time for various levels of the organization to regroup and coordinate for that particular transaction; a transaction may require approval from certain segments of the organization, it may demand consultation, and so on. In the early 2000s, transaction-processing applications were generally very rigid, in that they required all details to be firmly in place before they processed the information in the transaction. According to InformationWeek, the potential of online commerce for real-time transactions could be achieved if those transaction-processing applications could be retooled for great flexibility and thus harness their capabilities for use earlier in the transaction process.