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The views and answers to this FAQ are contributed by various CNSG corporate members, consultative partners and consultants. If you have any queries relating to FAQ, you may send your queries to info@cnsg.com.sg
I wish to put up a web site that would allow online transaction of goods and services my company offers. How do I go from here?
How do I make sure that people are aware of my web presence?
Where do I find the skills needed for eCommerce?
How much cost is involved in starting an Internet venture?
What options do I have for payment services?
How secure are credit card payments?
Should I outsource the online service to other commerce service providers or run it myself?
How do I deal with transactions that end up in default? What legal recourse can I take?
ANS 1 : The most important point when starting such a venture is the business idea. You need to determine what you want to do, who would be your customers, why would they buy from you and not from a physical store or from a competitor and how you can bind those customers to your site. Determine the probable size of the market, how you plan to deliver the goods or the services and how best to collect the payments.

The easiest and cheapest way to do online sales is to join one of the shopping malls that are already operational. Different malls offer different services. But in general, you can enter your products into a database, you can enter your prices and you can collect money through a payment system that uses a common merchant account that is already set up. The money that is due to you will be paid to you from the operator of the mall. In this case you do not need to worry about buying hardware, getting it connected to the Internet. All this are done for you.

The above approach is mainly for startup companies. If you have an established business, you might want to have a web site that blends in with the company's image and style and you might want to offer features that might not be available in a shopping mall that serves many shops. In this case, the easiest approach is to look for one of the off-the-shelf merchant products available from a number of vendors. Each of these products is capable of being customized and the prices vary from a couple of thousand dollars up to a couple of hundred thousand dollars. Please be aware that you may need to spend the same amount on customisation as you did for the software.

Where would you put up such a system? You probably need to get your own hardware system. For connectivity to the Internet you could get yourself a leased line to one of the ISP, which can be expensive (about S$1.500 per month for 64 KB, twice for 128 KB). An alternative option is to place your server either with an ISP (co-location) or with a web hosting service that already has an Internet connection. The advantage is that you can share the line cost. In the case where you set up your own web server, you also need to take care of the payment services yourself. Please see below for more details about this topic.

If you are setting up your own server with Internet connection, you have to be concerned about security as much as you would for co-location. You need to look seriously into the issue of a firewall. You will store confidential information about your company and your customers which needs to be protected.

CommerceNet Singapore has setup a program called ConsumerTrust where they certify the quality of electronic shop fronts. Security is one their criteria, however there are many other criteria in addition, such as how you deal with complaints, how you handle disputes and how transparent are your policies and procedures etc.

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ANS 2 : The main techniques for that are the presence in search engines and the references from other web sites. In order to be picked up by the search engines you can connect your website to their websites and fill out the appropriate forms that they provide for this purpose. Alternatively, there are available services that is chargeable for a fee. References from other websites are probably more effective. This means that you will cross-link to your web site with those of others.

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ANS 3 : Very probably, you may not have the skills necessary to setup and run such a shop front yourself. If your company is big, you may want to consider hiring the appropriate skills. However, another option is to ask a system integration company to set up the whole system for you. In this case you can avoid the long-term obligations of hiring your own staff. The system integrators will charge you for the service. If you determine that you need a rework of the site, you can ask for a quotation. If you are happy with how things are going (or you determine to give up the service), you have no further cost.

If your company is big and established, you may want to consider a bigger project where the shop front is directly talking to your back-end system, e.g. an MRP/ERP system. This way changes in prices and products offered are immediately available on the web site without further maintenance. Also, using this back-end integration, the stock status can be checked before promising delivery dates.

If your project is of massive scale, even if you want to use external consultants services (which might be very advisable if your IT-department has no eCommerce experience), you will probably need some in-house skills so as to monitor and interface with the team from the integration company.

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ANS 4 : Well, that ranges from a couple of thousands dollars (such as sharing a shop front with others) to multi-million dollars (such as competing directly with big corporations like Amazon.com). There is plenty of venture capital available in Europe and the U.S. Such companies are constantly looking out for promising business ventures. If your business idea is promising, funding on the order of several millions can be available.

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ANS 5 : There are several options that include:

  1. Credit card payment.
    Credit cards are the obvious choice in many cases, though they may not be the only and best option.
  2. Cash-on-delivery.
    This is the PizzaHut method. The person who delivers the goods also collects the money. Very safe option - goods delivered, money collected.
  3. Conventional invoice-based billing scheme.
    This is feasible in all cases where you already have a business relationship with the buyers. You send out the goods and you send out invoices separately. In this case, the web is just a different way of receiving orders which otherwise would have been accepted via fax.
  4. Inclusion of amount in other bills that you send out.
    This is for companies that already have an ongoing regular billing implemented, e.g. utilities, phone companies, other regular services.
  5. Subscription schemes with up-front payments.
    This is a very good method. You collect money up front and then you supply goods as you go along. Very suitable for regular services. This can also be implemented using Giro deductions.
  6. Cash card.
    For users in Singapore and for smaller amounts, using cash cards is a very safe way to pay, both for the buyer and the seller. It requires the buyer to have a smart card reader, though.

If you want to accept credit card payments, you need to talk to your bank first and get a MOTO account (unless you join a shop front that allows you to participate in an existing merchant account, see above, question 1). If you have a MOTO account, you still have two options. The first and simple one is that you can save the credit card information into a file and process the credit card billings just as the way you accept orders over the phone ("signature in file"). This option is feasible in all cases where you need to pack the goods manually and your traffic is not very high. The second option is to handle credit card transactions online. That option is definitely needed if you want to sell information or software automatically without user intervention.

If you want to process the credit cards online, you need to check with your bank the kind of services they provide. These services are still quite limited in Singapore. When you find a bank that is willing to handle your payment requests, you need to buy, install and configure the payment gateway software. The bank will probably tell you what software to use. This software connects to Network for Electronic Transfers (NETS) for authorisation and also to the bank for the actual payments. Again, a system integrator might be helpful to get you started. You can shorten this path somewhat by using a payment service that handles most of the technical issues for you. In this case, you get professional help in setting up the payment process. A few of such services are available in Singapore.

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ANS 6 : It depends on who is asking. For the buyer, credit card payments over the Internet are pretty safe - i.e. if the server is set up using the Secure Socket Layer (SSL) protocol for those pages. SSL provides authentication of the server system and encrypts the data stream automatically. SSL used outside the U.S. only supports a limited encryption of 40 bits. However decrypting 40-bit encryption would still require expert assistance. It is much easier for anyone who intends to fraud to pick the credit card numbers from the physical payment slips of restaurants or shops. If the buyer disputes the purchase, he or she will get the money back. Different companies have different policies. Some return the money immediately and investigate later. Others keep the money and investigate first. But in all cases, the buyer needs to produce evidence that the exchange of goods or services took place. That leads to the second part of this answer: how safe is the credit card process for the merchant? The answer is that it is much less safe. The SSL process does not provide any authentication of the buyer, so the merchant has not proof of the identity of the buyer. To overcome this problem, another protocol - Secure Electronic Transaction (SET) - has been developed by credit card companies like Visa and MasterCard. However, this protocol requires the buyer to install a piece of software called an electronic wallet on his PC. This software needs to be obtained from the credit card issuers. The flip side is that there are very few potential customers out there who have obtained these wallets. Thus the use of SET restricts the size of the potential market. The challenge is faced by the vendor on how to overcome any potential disputes. If you are selling physical goods, the best way is to obtain some form of delivery confirmation. If you are selling software, music, videos or information that people can download after the payment, you have no sure means to prove that the download was completed successfully. Your server logs will show the download. However you cannot prove that it is completed.

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ANS 7 : That depends on a number of factors such as the size of your company, how you want to maintain, control and own the server yourself, how much customisation you think you will need and if there is a need there to integrate with your other back-end systems. Customisation with back-end systems and the need for tight control and access would favor setting the system up at your own place.

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ANS 8 : Please refer to question 5 above. In order to defend yourself, you need to produce some evidence that you delivered the goods or the services. Your legal options depend on a number of factors, including the country that your customer resides in and the evidence you have regarding the transactions. These issues can be avoided if you do cash-on-delivery. And it is easier if you can perform your transactions on a subscription basis. Event then, there can still be disputes about services rendered after you got your payment.

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"The above is the view of the author and does not in any way represent the view of CNSG. CNSG will not be responsible or liable for any discrepancy whatsoever, nor liable for any claim whatsoever arising from the information presented herein."

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