Unit 4: Payment mechanisms and web marketing
E-Commerce notes · PTU syllabus (MCOPGE401-18)
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Unit summary
Online business needs secure payments and smart marketing. This unit covers the SET protocol, SET vs SSL, magnetic strip and smart cards, e-cheques and e-cash, intelligent agents in e-commerce, web-based marketing strategy, the 4Ps applied to internet marketing, online advertising and website design.
After this unit you can
- Explain SET and SSL protocols and compare them
- Explain magnetic strip and smart cards, e-cheques and e-cash
- Explain intelligent agents and their role in e-commerce
- Explain web marketing strategy, the online 4Ps, online advertising and website design
PTU syllabus topics
- SET protocol
- SET vs SSL
- magnetic strip and smart cards
- e-checks and e-cash
- intelligent agents and their role in e-commerce
- web-based marketing strategy
- the 4Ps applied to internet marketing
- online advertising and website design
Cards
Credit, debit, smart cards
E-cheques
Digital cheques
E-cash and wallets
Prepaid digital money
UPI and net banking
Secure protocols
SSL/TLS, SET
Topic 1
SET protocol and SET vs SSL
- SET (Secure Electronic Transaction): developed by Visa and Mastercard (1996) for secure card payments over the internet — uses digital certificates for cardholders, merchants and payment gateways; dual signature so the merchant sees order details but not card details, and the bank sees payment details but not the order.
- SSL/TLS: encrypts the channel between browser and server (HTTPS).
Purpose
Secure card payment transactions
Secure any data in transit
Authentication
All parties via certificates
Mainly server (client optional)
Card details
Hidden from merchant
Visible to merchant after decryption
Complexity and cost
High — software for all parties
Low — built into browsers
Adoption
Failed commercially; replaced by 3-D Secure
Universal standard
- Modern equivalents: 3-D Secure (OTP authentication), tokenisation, PCI-DSS compliance.
Topic 2
Magnetic strip and smart cards; e-cheques and e-cash
Data storage
Static data on a stripe
Microprocessor with secure memory
Security
Easily skimmed and cloned
Dynamic cryptogram per transaction; PIN
Uses
Older debit/credit cards
EMV cards, contactless (NFC), SIM, ID cards
India
Phased out by RBI (2018–19)
Mandatory EMV chip-and-PIN
- E-cheque: electronic version of a cheque with digital signature (recognised under the NI Act amendment 2002 — "cheque in electronic form"); used for B2B payments.
- E-cash (digital cash): electronic money stored in wallets or prepaid instruments — features: anonymity (in some systems), divisibility, transferability; India — prepaid payment instruments (PPIs) like Paytm wallet regulated by RBI; CBDC (e₹) retail and wholesale pilots.
- Other e-payments: UPI, net banking, BNPL, payment gateways.
Topic 3
Intelligent agents in e-commerce
Intelligent (software) agents are programs that act autonomously on behalf of users to perform tasks.
Shopping and price-comparison bots
Find best prices across sites
Recommendation engines
Personalised suggestions (Amazon, Netflix)
Chatbots and virtual assistants
Customer service, order tracking
Negotiation and auction agents
Automated bidding
Monitoring agents
Price alerts, stock alerts
AI agents
Generative-AI shopping assistants completing tasks
- Benefits: saves time, personalisation, 24×7 service; concerns: privacy, bias, transparency, security.
Topic 4
Web-based marketing strategy and the online 4Ps
- 1
Set objectives
Awareness, leads, sales, loyalty
- 2
Define target audience and personas
- 3
Choose positioning and value proposition
- 4
Plan the marketing mix online
- 5
Select channels
SEO, social, email, ads, marketplaces
- 6
Measure and optimise
Analytics, A/B testing
| P | Online application |
|---|---|
| Product | Digital products, customisation, reviews and ratings, bundles, information-rich listings |
| Price | Dynamic pricing, price comparison transparency, freemium, subscriptions, flash sales |
| Place | Own website/app, marketplaces, D2C, quick commerce, omnichannel |
| Promotion | SEO, SEM, social media, influencer, email, content marketing, affiliate |
Topic 5
Online advertising
Search engine advertising
Paid listings on Google (pay-per-click)
Display advertising
Banners, pop-ups, video ads on websites
Social media advertising
Targeted ads on Instagram, Facebook, YouTube, LinkedIn
Email and affiliate marketing
Newsletters; partners earn commission per sale
- Other forms: influencer marketing, native ads, retargeting, in-app ads.
- Pricing models: CPM (cost per thousand impressions), CPC (cost per click), CPA (cost per action/acquisition).
- Advantages: precise targeting, measurable results (click-through rate, conversion rate), low cost, interactivity, real-time changes.
- Limitations: ad blindness and ad blockers, click fraud, privacy concerns, clutter.
Topic 6
Website design
Domain name and hosting
Address (www.sbs.ac.in) and server space
Home page and navigation
Menus, search bar, categories
Product catalogue
Images, descriptions, prices, reviews
Shopping cart and checkout
Add to cart, address, delivery options
Payment gateway
Secure online payment
Customer account
Login, order history, wish list
Content management system
Updating pages without coding
Policies and contact
Privacy, returns, terms, support
Principles of good website design
- Easy navigation and search; clear call-to-action buttons.
- Fast loading — optimised images, minimal scripts.
- Responsive (mobile-friendly) layout.
- Consistency in colours, fonts and layout; brand identity.
- Trust signals — HTTPS padlock, reviews, contact details, return policy.
- Accessibility for all users; SEO for visibility on search engines.
Key terms
- SET
- Secure Electronic Transaction protocol for card payments
- Dual signature
- SET technique separating order and payment information
- EMV chip card
- Smart card generating dynamic cryptograms
- Intelligent agent
- Autonomous software acting for users
- Dynamic pricing
- Prices changing with demand and conditions
Quick revision
- SET (Visa/Mastercard) vs SSL/TLS; 3-D Secure today.
- Magnetic strip vs EMV chip; e-cheques; e-cash and PPIs; CBDC.
- Intelligent agents: bots, recommendations, chatbots.
- Web marketing strategy; online 4Ps.
- Online advertising (CPM, CPC, CPA); website design principles.
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 SET?
- Q2.What is a dual signature?
- Q3.Distinguish magnetic strip and smart cards.
- Q4.What is an e-cheque?
- Q5.What is an intelligent agent?
- Q6.How does pricing change in internet marketing?
Long-answer questions
- Q1.Explain the SET protocol and compare it with SSL.
- Q2.Explain smart cards, e-cheques and e-cash as payment mechanisms.
- Q3.Explain the role of intelligent agents in e-commerce.
- Q4.Explain web-based marketing strategy, the online 4Ps, online advertising and website design.
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