Unit 2: Online business technology and payments
E-Commerce and Digital Markets notes · PTU syllabus (MBA 942-18)
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Unit summary
Behind every online sale lies technology infrastructure, payment systems and legal safeguards. This unit covers IT infrastructure, middleware and content integration, online payment mechanisms, electronic payment systems and payment gateways, website promotion tools, plastic money and laws on online transactions, and e-commerce applications in manufacturing, wholesale, retail and services.
After this unit you can
- Explain IT infrastructure and middleware for e-commerce
- Explain online payment mechanisms and payment gateways
- Explain website promotion tools and laws on online transactions
- Explain e-commerce applications across sectors
PTU syllabus topics
- IT infrastructure
- middleware and content integration
- online payment mechanisms
- electronic payment systems
- payment gateways
- website promotion tools
- plastic money and online transaction laws
- e-commerce applications in manufacturing/wholesale/retail/service sectors
- 1
Customer pays at checkout
- 2
Gateway encrypts details
- 3
Sent to the acquiring bank
- 4
Card network routes to issuing bank
- 5
Bank approves or declines
- 6
Merchant gets confirmation
Topic 1
IT infrastructure for e-commerce
Hardware and hosting
Web and application servers, cloud hosting (AWS, Azure), content delivery networks
Software
Web server, e-commerce platform (Shopify, Magento, WooCommerce), databases
Network
Internet connectivity, bandwidth, mobile networks
Security
SSL/TLS certificates, firewalls, payment security (PCI DSS)
Integration
ERP, inventory, logistics and CRM links
- Scalability for peak events (festive sales), availability and speed directly affect sales.
Topic 2
Middleware and content integration
- Middleware: software that connects different applications and data sources so they work together — APIs, message queues, enterprise service bus, integration platforms.
- Content integration: combining product information, prices, inventory and reviews from many systems into a consistent storefront; content management systems (CMS) manage web content.
- Example: a marketplace's website pulls stock levels from sellers' systems, prices from a pricing engine and delivery dates from logistics partners through APIs.
Topic 3
Online payment mechanisms and electronic payment systems
Cards
Credit, debit, prepaid cards; RuPay
Net banking
Direct transfer from bank account
UPI
Instant, mobile-based (NPCI); BHIM, Google Pay, PhonePe
Mobile wallets
Paytm, Amazon Pay
Fund transfer systems
NEFT, RTGS, IMPS
Others
Payment gateways (Razorpay), BNPL, e-RUPI vouchers, Central Bank Digital Currency (e₹)
- 1
Customer enters card details at checkout
- 2
Payment gateway encrypts and sends to acquiring bank
- 3
Card network (Visa, RuPay) routes to issuing bank
- 4
Issuing bank authorises (OTP / 2-factor)
- 5
Approval returns to merchant
- 6
Settlement to merchant's account
- Requirements of a good e-payment system: security, convenience, low cost, speed, acceptability, privacy, interoperability.
Topic 4
Payment gateways
- Payment gateway: a service that securely captures payment details, encrypts them and routes them to banks or card networks for authorisation — Razorpay, PayU, CCAvenue, Paytm.
- Payment aggregator: onboards merchants and collects payments on their behalf (regulated by RBI's guidelines for payment aggregators, 2020).
- Features: multiple payment options, tokenisation of cards (RBI mandate from October 2022), fraud detection, settlement reports, refunds.
Topic 5
Website promotion tools
- Search engine optimisation and search advertising; social media pages and ads; email newsletters; affiliate links; content (blogs, videos); online directories and marketplaces; offline promotion — URL on packaging and ads; referral programmes.
Topic 6
Plastic money and online transaction laws
- Plastic money: credit, debit, prepaid and co-branded cards; RuPay (NPCI) as India's domestic network; contactless (NFC) cards.
Information Technology Act, 2000
Legal recognition of electronic records and digital signatures; cyber offences
Payment and Settlement Systems Act, 2007
RBI regulation of payment systems
Consumer Protection (E-Commerce) Rules, 2020
Seller disclosures, grievance officer, no manipulation of prices
Digital Personal Data Protection Act, 2023
Consent and protection of personal data
Indian Contract Act, 1872
Online (click-wrap) contracts are valid
GST
TCS by e-commerce operators
- RBI rules: additional factor of authentication (OTP) for card-not-present transactions; limits on liability of customers for unauthorised transactions if reported promptly.
Topic 7
E-commerce applications across sectors
| Sector | Applications |
|---|---|
| Manufacturing | E-procurement, supplier portals, EDI, B2B marketplaces, online dealer orders |
| Wholesale | B2B platforms (Udaan, IndiaMART), online catalogues, credit and logistics services for retailers |
| Retail | Online stores, marketplaces, omnichannel, quick commerce, ONDC |
| Services | Online banking and insurance, travel booking, ed-tech, telemedicine, food delivery |
Key terms
- Middleware
- Software connecting different applications
- Payment gateway
- Service routing online payments for authorisation
- Tokenisation
- Replacing card details with a secure token
- Payment aggregator
- Entity collecting payments for merchants
- Click-wrap contract
- Online agreement accepted by clicking
Quick revision
- Infrastructure: hosting, platforms, network, security, integration.
- Middleware and APIs; content integration and CMS.
- E-payments: cards, net banking, UPI, wallets; card payment flow.
- Gateways and aggregators; tokenisation; promotion tools.
- Laws: IT Act, PSS Act, E-Commerce Rules, DPDP Act; sector applications.
Important exam questions
Practice questions written to the PTU exam pattern for this unit's syllabus: short answers (Section A style) and long answers (Sections B and C style).
Short-answer questions
- Q1.What is middleware?
- Q2.Name four electronic payment methods.
- Q3.Distinguish a payment gateway and a payment aggregator.
- Q4.What is card tokenisation?
- Q5.Name two laws governing online transactions in India.
- Q6.Give one e-commerce application in manufacturing.
Long-answer questions
- Q1.Explain the IT infrastructure and middleware required for e-commerce.
- Q2.Explain online payment mechanisms and the role of payment gateways.
- Q3.Discuss the legal framework for online transactions in India.
- Q4.Discuss e-commerce applications in manufacturing, wholesale, retail and services.
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