E-Commerce Technologies & Infrastructure: Networks, Web Services, Security & Payment Systems

TAKEAWAYS:

• The TCP/IP model (4 layers) and OSI model (7 layers) define how data travels across the internet, with DNS translating domain names to IP addresses.
• Web services (SOAP, REST, APIs) enable communication between e-commerce platforms and third-party systems (e.g., Daraz’s inventory sync with suppliers).
• E-commerce security relies on SSL/TLS (encryption), firewalls, and VPNs, with real-world applications in eSewa’s secure transactions and Khalti’s fraud detection.
• Payment systems include credit/debit cards (PCI-DSS compliance), digital wallets (Nepal’s Khalti), and bank transfers (Nepal’s NIBL’s online banking).
• Collaborative commerce (C2C, B2B, B2G) leverages EDI (Electronic Data Interchange) for automated transactions, used by NTC for procurement and Ncell for bulk billing.
• Physical infrastructure (servers, data centers, ISPs) ensures 24/7 uptime, critical for platforms like YouTube’s global CDN or Pathao’s ride-matching servers.

1. Technical Infrastructure of E-Commerce

E-commerce relies on a layered technical framework combining hardware, software, networks, and security. The two most critical models are:

A. OSI vs. TCP/IP Model

The Open Systems Interconnection (OSI) model (7 layers) and the TCP/IP model (4 layers) define how data is transmitted across networks. While OSI is theoretical, TCP/IP is the practical standard used by the internet.

graph TD
    A["OSI Model (7 Layers)"] --> B["Application"]
    A --> C["Presentation"]
    A --> D["Session"]
    A --> E["Transport"]
    A --> F["Network"]
    A --> G["Data Link"]
    A --> H["Physical"]

    I["TCP/IP Model (4 Layers)"] --> J["Application"]
    I --> K["Transport"]
    I --> L["Internet"]
    I --> M["Network Access"]

Key Differences:

Real-World Example:

• When you order from Daraz, your request travels through:
  1. Application Layer (HTTP/HTTPS) → Daraz’s website.
  2. Transport Layer (TCP) → Ensures data arrives intact.
  3. Internet Layer (IP) → Routes via ISPs (Nepal Telecom, Ncell).
  4. Network Access Layer → Physical cables/fiber to Daraz’s server.

2. Physical Infrastructure Components of the Internet

The physical backbone of e-commerce includes:

• Servers & Data Centers (e.g., Google’s servers in the US/Europe).
• Internet Service Providers (ISPs) (e.g., Nepal Telecom, Ncell, Worldlink).
• Network Devices (routers, switches, firewalls).
• Cables & Wireless Networks (fiber optics, 4G/5G).

Worked Example: How eSewa Processes a Payment

1. User logs in via Ncell/Khalti app → Mobile Network (Ncell/NT).
2. Request reaches eSewa’s server (hosted in Nepal/India).
3. Firewall checks for malware; SSL/TLS encrypts data.
4. Bank’s server (e.g., NIBL, Global IME) verifies funds.
5. Transaction log stored in eSewa’s database (SQL/NoSQL).
6. Confirmation SMS sent via telecom provider (NTC/Ncell).

3. Web Services in E-Commerce

Web services enable machine-to-machine (M2M) communication between e-commerce platforms and external systems (banks, logistics, suppliers).

A. Types of Web Services

Worked Example: Daraz’s Supplier Integration

• Daraz uses REST APIs to:
  1. Fetch product catalogs from suppliers (JSON format).
  2. Update stock levels in real-time.
  3. Process orders via EDI (Electronic Data Interchange).

4. E-Commerce Security Technologies

Security is critical to protect customer data, transactions, and business reputation.

A. Key Security Dimensions

mindmap
  root((E-Commerce Security))
    Confidentiality
      Encryption (SSL/TLS)
      Data Masking
    Integrity
      Hashing (SHA-256)
      Digital Signatures
    Availability
      DDoS Protection
      Redundant Servers
    Authentication
      Multi-Factor (OTP, Biometrics)
      OAuth 2.0
    Non-Repudiation
      Audit Logs
      Blockchain (for contracts)

B. Security Solutions

Worked Example: Khalti’s Fraud Prevention

1. OTP Verification → User enters a one-time password.
2. Device Fingerprinting → Checks if the login is from a new device.
3. Transaction Limits → Flags unusual spending (e.g., $1000 in 1 minute).
4. Blockchain Logs → Stores immutable records of transactions.

5. E-Payment Systems in E-Commerce

Payment systems enable secure, fast transactions online.

A. Types of Payment Systems

Worked Example: eSewa’s Payment Flow

1. User selects eSewa as payment method on Daraz.
2. Redirects to eSewa app → Logs in via Ncell/Khalti.
3. OTP sent to phone → User verifies.
4. eSewa deducts amount from linked bank wallet.
5. Daraz receives payment confirmation via API.
6. Order is processed → Shipped via Gati, Ncell Parivahan.

6. Collaborative Commerce (C2C, B2B, B2G)

Collaborative commerce involves electronic transactions between businesses, governments, and consumers.

A. Types of Collaborative Commerce

Worked Example: NTC’s Bulk Billing via EDI

1. NTC sends EDI messages to telecom providers (Ncell, Smart).
2. Automated billing generates invoices for 10,000+ customers.
3. Bank transfers are initiated via NIBL’s corporate API.
4. Reconciliation reports are generated for NTC’s finance team.

7. Impact of E-Commerce on Industry Structure

E-commerce has disrupted traditional business models by:

• Reducing intermediaries (e.g., Daraz cutting out physical retailers).
• Enabling 24/7 operations (unlike brick-and-mortar stores).
• Lowering costs (digital marketing vs. print ads).
• Creating new business models (subscription boxes, dropshipping).

Comparison: Traditional vs. Electronic Commerce

In the Real World

1. eSewa & Khalti (Digital Wallets)

   • Idea Used: Tokenization & Encryption (PCI-DSS)
   • How? When you pay via Khalti, your credit card details are never stored—instead, a token is generated. This prevents fraud even if eSewa’s database is hacked (used by Mastercard/Visa globally).

2. Daraz’s Supplier Network (REST APIs + EDI)

   • Idea Used: Real-time inventory sync
   • How? Daraz uses REST APIs to pull product data from 10,000+ suppliers in real-time. If a supplier’s stock updates, Daraz’s website auto-reflects without manual entry (similar to Amazon’s supplier portal).

3. Nepal Rastra Bank’s SWIFT System (SOAP Web Services)

   • Idea Used: Secure cross-border transactions
   • How? When Nepal Investment Bank sends money abroad, it uses SOAP-based SWIFT messages (XML format) to ensure end-to-end encryption and non-repudiation (proving the transaction happened).

4. Pathao’s Ride-Matching Algorithm (Load Balancing)

   • Idea Used: Distributed servers & CDN
   • How? Pathao’s app connects 100,000+ drivers in real-time. When you request a ride:
     • Your request hits Pathao’s load balancer (distributes traffic across servers).
     • Nearest available driver is matched via geohashing.
     • Payment processing happens via Khalti/eSewa APIs.

5. NTC’s Fiber Optic Network (Physical Infrastructure)

   • Idea Used: Redundant data centers & DDoS protection
   • How? NTC’s fiber backbone ensures:
     • 99.99% uptime (even during load shedding).
     • DDoS mitigation (blocks cyberattacks on e-gov services).
     • CDN caching (faster loading for eSewa, MyRepublic).

Exam Tip

How to Score Full Marks in TU/PU Exams

1. For "Explain the technical infrastructure" questions:

   • Must mention both OSI and TCP/IP models (compare layers).
   • Include a real-world example (e.g., "When you order from Daraz, your request follows the TCP/IP model...").
   • Draw a simple diagram (even a text-based one):

     User → ISP (NTC) → Daraz Server (Cloud) → Bank (SSL Encryption) → Confirmation
     

2. For "Web services in e-commerce" questions:

   • Define SOAP vs. REST (XML vs. JSON).
   • Give a Nepali example (e.g., "Daraz uses REST APIs to sync inventory with suppliers").
   • Mention one security aspect (e.g., "SOAP uses WS-Security for encryption").

3. For "E-commerce security" questions:

   • List 3 dimensions (Confidentiality, Integrity, Availability).
   • Give 2 solutions (SSL/TLS + Firewalls).
   • Relate to a Nepali platform (e.g., "eSewa uses OTP + biometrics for authentication").

4. For "Payment systems" questions:

   • Compare 2 methods (Credit Card vs. Digital Wallet).
   • Explain the flow (e.g., "Khalti deducts money → sends confirmation → Daraz updates order status").
   • Mention compliance (PCI-DSS for cards, Nepal’s Fintech Regulations).

5. For "Collaborative commerce" questions:

   • Define B2B, B2C, C2C with Nepali examples.
   • Explain EDI (e.g., "NTC uses EDI to automate billing with Ncell").
   • Discuss one impact (e.g., "Reduced paperwork in government procurement").

6. Avoid common mistakes:

   • ❌ Saying "internet = WWW" (they are different).
   • ❌ Forgetting real-world examples (examiners love Nepali cases).
   • ❌ Describing diagrams in text instead of drawing them (even a simple table counts).

Final Pro Tip:

• Memorize the TCP/IP layers in order (Application → Transport → Internet → Network Access).
• Know the difference between SOAP and REST (exam favorite!).
• Practice drawing a simple e-commerce transaction flow (user → website → bank → confirmation).