Due to the unprecedented growth and development in Information Communications Technology (ICT) there has been an increased utilisation of online virtual technology to facilitate both personal and commercial relationships. (Mamduh Ibraheem, 2008: 11).
1 See: Celis, L.E. (2012) PhD Thesis: Information Economics in the Age of e-Commerce: Models and Mechanisms for Information-Rich Markets Computer Science and Engineering; University of Washington
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The pioneering and evolution of Internet based software and its accessibility to the mass public across the globe is considered to be the bridge between the technological and digital communication revolution. This has essentially removed barriers and distances between nations, businesses and their consumers and turned the world into a global village. (Ohmae, 1995:27)1 The Internet has attracted many users in just a short space of time, far more than any other means of communication in history. The Internet took just four years before it had 50 million users, whereas the television took around 75 years before it had that many users and the telephone 13 years (Mann et al, 2000: 7).
Despite the increased adoption of the internet by users globally, it is still in its infancy and experts predict that the coming of a second generation of Internet that will exceed the first generation in terms of speed and technical capabilities. It will be supplemented with the developments in fibre optics and wireless technologies to cater for an extremely broad area of coverage.2 The advent of the Internet has also created a new space for commercial and
recreational activities. This includes, for example, services such as electronic banking and electronic finance, wherein all range of financial products can be accessed online and a host of financial transactions can be carried out including insurance services, mortgage services, digital money and electronic payments. (Fraser et al., 2000: 62) With regards to recreation and social activities services such as Facebook, LinkedIn etc. has completely transformed the social landscape. Users can now update their profiles and activities and keep their contacts both known and unknown informed about their lives around the clock (24-7-365).3 Buchanan (2011) argues in her thesis that increased use of the Internet has essentially led to both
enthusiasm and anxiety. There is euphoric enthusiasm to the possibilities for freedom of communication with people whom it was not possible to communicate with. This also has repercussions for businesses that can now target previously unreachable or unknown customer bases. However, the flip side is the notion of anxiety that can manifest as fear, insecurity, privacy issues and identity theft amongst a list of factors. For example Rivera et al. (2004) studied the privacy concerns of online consumers’ via an online survey of Internet users in five cities around the world: Bangalore (India), New York (US), Seoul (South
1Ohmae, K. (1996) The End of the Nation State: The Rise of Regional Economies; Harper Collins, London
2See: http://www.cs.wustl.edu/~jain/cis788-99/testbeds/index.html
3 See: Buchanan, M (2011) PhD Thesis: Privacy and Power in Social Space: Facebook Division of Communications, Media and Arts; School of the Arts and Humanities
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Korea), Sydney (Australia), and Singapore. The study focused on understanding the attitudes, perceptions and concerns of Asian online users regarding online privacy and the impact on Business-to-Customer-Commerce. (See section 4.3.3 for details on B2C) They found that although consumers expressed great concern over protection of their online privacy, this concern did not affect their participation in B2C e-commerce. However, they also found that consumers were uncomfortable about their lack of control regarding how online traders use their personal information, thus welcomed legal protection over their personal data.
Furthermore studies conducted by Dickey et al. (2000: 106) and Shaw (2000: 14)
demonstrate that consumer polls reveal privacy to be an overwhelmingly critical factor in deciding whether to purchase over the Internet. Nonetheless, there have been major
controversies between interests of businesses, the government, and consumers in addressing issues related privacy. These issues have been exacerbated of late with the Edward Snowden disclosures (2013)1 about the mass global surveillance and information gathering of the public’s Internet accounts and phone records. This exemplifies the point that as the cost of producing and manufacturing storage hardware decreases, the access to gigantic databases that can store consumer profiles, information on spending patterns and personal relationships increases. This information is then used by global and now local corporations to specifically target their products and services much more efficiently.
Shaw (2000: 14) suggests that to strike a balance between the openness and freedom of the Internet with the privacy concerns of the general public, it is important that an agreed-upon practice or standard be adopted globally. This will then act as a unified universal code to govern information-collection in electronic commerce. This emerging framework is based on the concept of notification and consent. Here, a business or company has to notify individuals about their information-collection practices and a soon as the company has attained consent, companies are then free to use such collected personal information for their business usages.
This method can allow for greater flexibility in having multiple levels of privacy for the general public and consumers.
However, despite the concerns it must also be remembered that the attraction of the Internet is in its ability to remove barriers and distances between parties. Even with regards to
1 see: http://www.theguardian.com/world/2014/jul/18/-sp-edward-snowden-nsa-whistleblower-interview-transcript
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language the software available can allow people to communicate and translate efficiently without the requirement of external agents or intermediaries (Ibraheem, 2000: 13).
By 1995, 16 million people were online, less than half of a percent of the world’s population.
However, by 2000 that figure grew to 5% (304 million) and this doubled by 2003, by 2005 the number of users online was more than a billion (15% of the world’s population) and has grown slowly since then. Europe has the highest penetration at 70% while in some
Scandinavian countries (Norway and Sweden), 90% of the population has access to the Internet. English, Spanish and Chinese are the languages of most of the world’s users with Chinese seeing the largest growth with more than a 1000% since 2000. According to data from the International Telecommunications Union (ITU) at the end of 2011 there were 2.3 billion people who had access to the Internet.1 According to recent research by We Are Social, by the end of 2016, 50% of the world’s population will have access to the Internet.2Hence it is argued that this unparalleled level of Internet penetration, ICT infrastructure, legal infrastructure and the availability of skilled Information technology experts are key factors in driving the surge towards the promotion and eventual adoption of e-Commerce (Gibbs et al., 2002; Chan and Hawamdeh, 2002).
4.2 Defining E-Commerce
The term electronic commerce (e-commerce) has per the previous segment gained enormous currency and popularity with the increasing utilisation of Internet based technologies.
Therefore, it is essential at the outset to provide a definitive comprehension of the term as it has been used in this study so that its usage with reference to the legislative framework is both succinct and clear.
The term e-commerce is comprised of two words:
Electronic: “…carried out or accessed by means of a computer or other electronic device, especially over a network: e.g.: the electronic edition of the newspaper; electronic
1 Tina Aridas and Valentina Pasquali, Internet Users by Country, Global Finance:
https://www.gfmag.com/global-data/non-economic-data/internet-users
2 Simon Kemp, Digital, Social and Mobile Worldwide 2015, 21 January 2015:
http://wearesocial.net/tag/statistics/
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banking…”
(Oxford Online Dictionary)
Commerce:”the activity of buying and selling…”
(Oxford Online Dictionary)
Although the neologism ‘e-commerce’ is considered to be a modern term within the disciplines of economics and law, there exists within the literature a general definition provided by most commentators. Economists suggests that e-commerce entails the use of the Internet to buy, sell or support products and services (Gibbs et al. 2002; Tan and Teo, 2002;
Bakos, 1997) Furthermore Qashqush, (2000: 5) provides an almost similar definition of e-Commerce as the “a practice conducted between two parties, a buyer and a seller, or more, via the use of a computer via the Internet”. The Global Journal of E-Commerce (1999:22) also defined it as a term, which “…intends the practices of buying and selling, offering commodities and requesting them from their producers or sellers electronically, rather than the usual way…. often conducted via the internet”.1.
These narrow definitions of e-Commerce entail the process to be simply about buying and selling products and services via the Internet.2
E-Commerce in the economic context is thus limited to trade and trading via modern means of electronic communication. Although some commentators concede that it as of yet it does not extend to the production and manufacturing of goods but the advent of 3-D printing technologies will also make this a possibility in the near future. (Isma'il, 2009: 30).
Therefore, it is argued that these limited perceptions and definitions do not account for the myriad aspects of e-commerce that are not only business specific but also context dependent.
The factors concerned with the advertising of products and services, exchanging information, the creation of websites and virtual shops, means of electronic payment and electronic
banking can also be considered a concern of the legislation. Thus legal concept of e-commerce also includes the production, manufacturing and selling of goods for profit maximisation, as e-commerce represents a modern method of trade, which does not differ in
1Majallah al-’Ālamiyyah al-Mutakhassisahh bi’t-Tijārah al-Elektroniyyah wa’t-Tasawwuq ’Abra’l-Internet
[Global Journal for E-Commerce and Online Shopping], no.1, October/November 1999, p.22.
2 Rāfat Ridwān, op.cit., p.14
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essence from the traditional notion of trade. However, the marketing of goods and products, the procurement process including purchase transactions and the eventual distribution and tracking of these goods and products to customers is all performed via a new unprecedented medium that legislation has of yet not encountered.
Hence Chatterjee (2002)1 argues that e-commerce is not simply a process that encompasses the initiation and maintenance of websites, whereby businesses can deal and trade directly with consumers, it entails many more components.
So from the legislative-juristic perspective the definition of e-commerce entails a greater holistic comprehension of the entire activity of trade and all that it may encompass.
Jentz and Miller (2002:59) observe that legislation should define e-commerce to mean all
“business transactions and activities carried out via electronic means of communication”.2 The Dubai Technology, E-Commerce and Media Free Zone Law share this definition of e-commerce, as all “business, which is conducted by an electronic medium… predominantly the Internet”.3
It is argued that these definitions recognise that e-commerce includes the entire process end-end from the prerogative of the business and consumer. It extend-ends to include all
administrative, commercial, production, financial and service activities. In addition advocates of this perspective hold that the concept of e-commerce also includes health, education and administrative work (Isma'il, 2009: 36). For this reason, the description of e-Commerce as being solely an electronic transaction between parties is imprecise and does not parlay its legislative content.
Therefore this thesis in defining the notion of e-commerce agrees with the definition provided by the World Trade Organisation (WTO):
“…Contract making practices, the formation of trade links and the production, distribution, marketing and sale of products via communication networks…”4
1 Charles Chatterjee, E-Commerce Law for Business Managers (Canterbury: Financial World Publishing, 2002), p.3
2 Roger Leroy Miller and Gaylord A. Jentz, Law for E-Commerce: The Online Legal Environment (2002), p.59
3 See: http://www.tecom.ae/law/law_1.htm
4 Refer to the studies of the WTO regarding e-Commerce on www.wto.org
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This is commensurate with the nature of e-Commerce, which does not differ greatly from the traditional notion of trade except in its use of an electronic intermediary to complete the transaction. This has led to broadening the scope and possibilities of the digital environment, characterised by its ever encroaching ability to replicate the real physical world through a virtual medium at lower costs and in faster times.
Therefore, e-commerce encompasses the utilisation of ICT to enhance trade deals between mutually interested parties. (Watson et al., 1998) Although there are many definitions of e-commerce this study defines e-e-commerce to be:
“The participation in commercial activities, the forging and maintenance of relationships and business transactions through the means of electronic network communications in accordance to the legislative standards agreed upon by the mutual parties in contact.”
Thus implies that although e-commerce is a commercial transaction between a buyer and seller over the Internet, this only forms a partial aspect of the process as there are also legislative, juristic and terms and conditions of transaction, which must be agreed upon before any transaction can commence.
Also refer to the statement given by the Director-General of the WTO on 17 September 1998 entitled A Framework for Global Electronic Commerce, available at: www.wto.org/wto.org/speeches/osio.htm
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4.3 The Scope of E-Commerce
The scope of electronic commerce has been highlighted in Figure 4.3: (Shaw, et al., 1997;
Shaw, 2000: 7),
Figure 4.3: The Scope of Electronic Commerce (Shaw, 2000: 7)
The above diagram (Figure 4.3) demonstrates the main influence of Web based technologies in managing a company and the infrastructure for collecting, distributing, and sharing
information. It serves as a new channel for making sales, promoting products, and delivering services. It also integrates the information organization for managing activities on all levels of the company and provides new electronic links for reaching out to the customers and supply-chain partners.
The management within the enterprise (EC1) links with suppliers (EC5), distributors (EC4) horizontally whilst interfacing with consumers vertically downwards (EC3). The e-commerce aspect is then demonstrated through EC1 linking with the global infrastructure in a vertically upward relationship (EC2) that encompasses such factors as payment systems, network
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security, human-computer interface, and the information infrastructure.
Shaw (2000) further observes that e-commerce provides unique opportunities to integrate various types of communication networks for businesses:
(a) Intranet: For process, knowledge, and internal communication management,
(b) Extranet: For external coordination and information sharing with channel partners such as suppliers, distributors and dealers, and
(c) Internet: For setting up electronic storefronts, providing customer services, and collecting market intelligence. In developing electronic commerce there is a constant need for new business models adequate for new digital products, new industrial virtual organizations and new industrial organizations (e.g., information intermediaries).
There is an important distinction to make at this juncture between e-commerce and the
conduct of business electronically (e-business). The latter refers mainly to the implementation of the business via the use of Internet technologies in order to increase profits.
E-Commerce however, is an advanced stage of commerce, which utilises ICT to produce and distribute goods and services on a global level, with the explicit aim of creating a new
electronic trade outlet. There is also the possibility to eliminate the intermediary stage between the producer and the consumer.
The concept of e-Commerce is not restricted to commodities and material goods as a
significant element of e-Commerce includes the exchange of information and knowledge, and the delivery of services in real-time such as booking plane tickets, reserving hotels, bank transactions and the like. (Jagannathan et al., 2002; Huff et al., 2000).
This has lead to the natural evolution in not only the notion of e-commerce but also as specialised types of e-commerce.
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4.3.1 Forms of E-Commerce
Seebacher (2002) identified several types of e-commerce, with the most widely known being Business-to-Business (B2B) and Business-to-Consumer (B2C). The growing use of electronic networks by commercial traders has demonstrated that these networks have advantages and different objectives.
The wide dissemination of these networks indicates the presence of learned users who possess extensive expertise in this field. This is an attractive incentive to all business units, consumers and even governments, for this reason, e-Commerce includes commercial deals that can be made between individuals and companies. The nature of this is as follows:
E-Commerce deals could be incorporeal which means intangible such as the exchange of information or informatics products. Though these goods and services are delivered digitally to the buyer via download, such as computer programs, music, films and books. In this instance, customers appear in digital format (i.e. they are not physically present when making the purchase) and the commodities are digital as is the transaction process (Walden and Hornle, 2001: 75). In the other instance electronic business transactions may be considered partial when one of the main elements (customers, commodities or the business operation) is digital, and the other elements are material. An example of that is when a customer purchases a book from Amazon and asks them to send the book to his home via regular mail.
Table 4.3.1: identifies and summarises the activities and e-commerce operations of the varying types of e-commerce activities that exist at present:1
1 See Appendix 4 for a detailed analysis and description of each type of e-commercial activity
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Table 4.3.1: Types of E-Commerce Activities
Thus it can be suggested that e-commerce has already pervaded the core practises of general society and what must now be considered is how it will further develop and what impact it may have in the future.
4.4 The Prospects and Future of E-Commerce
Research by Ahmed (2013), Quelch and Klein (1996) and Poon and Swatman (1997) indicated that the internet will revolutionise the dynamics of international commerce and in particular lead to rapid international growth of small to medium-sized enterprise (SME’s).
While Hamil (1997) concludes that the Internet can offer SME’s with a low-cost solution to accessing the global market thereby overcoming some of the barriers associated with international trade, which is usually experienced by small companies.
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Commerce, in its new manifestation, allows a small company to compete with a large
company and help overcome many of the obstacles that are faced by customers particularly in regards to security, confidentiality and the protection of financial transactions.
It is not possible to predict the future of e-Commerce and its potential without identifying issues connected to the formation of e-Commerce as there are a number of important issues inherent within the launch of e-Commerce that require a standardised criteria. Trade is built upon trust so for the online trading to begin on both an individual and institutional level there has to be trust from all parties at least equal to the level experienced with traditional trading (along with a phone line, fax and normal mail options). Each party to an electronic
transaction has to guarantee the following:1
• The buyer and the seller are involved in the transaction and not a third party
• The seller has the right to sell the commodity, or service.
• The buyer must ensure the availability of financial resources to pay for the value of the item.
• Coping and payment mechanisms must be available, legitimate and safe.
• The item or service being sold must have the characteristics as advertised and requested.
• There should be the possibility of delivery of the product or service to the buyer
• Both parties should gain/ benefit from the transaction (s)
All of these issues cover a number of fundamental e-commerce features such as: consumer protection, ensuring diversity and competition in the market, financial systems, payment systems, collection and intellectual property rights.
These are now explored in more depth and detail.
1 As-Sayyid ’Atiyyah ’AbdulWāhid, ‘at-Tijārah al-Elektroniyyah Mushkilātuhā wa Mustaqbaluhā fī Daw’
Tawseeyāt’ [‘E-Commerce: Its Problems and Future in Light of Expansions’]. Global Commerce Conference, May 1998, College of Rights, Halwān University, 1999, p.121.
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4.4.1 Consumer Protection
The review of literature alongside the survey results in section 4.1 demonstrated that the consumers in their roles as individuals or business and institutional entities perceive trust to
The review of literature alongside the survey results in section 4.1 demonstrated that the consumers in their roles as individuals or business and institutional entities perceive trust to