Unless you have been living under a rock for the last few years, you have probably heard about e-commerce. And you have heard about it from several different angles. You may have:

• heard about all of the companies that offer e-commerce because you have been bombarded by their TV and radio ads

• read all of the news stories about the shift to e-commerce and the hype that has developed around e-commerce companies

• seen the huge valuations that Web companies get in the stock market, even when they don't make a profit

• purchased something on the Web, so you have direct personal experience with e-commerce
   

Still, you may feel like you don't understand e-commerce at all. What is all the hype about? Why the huge valuations? And most importantly, is there a way for you to participate? If you have an e-commerce idea, how might you get started implementing it? If you have had questions like these, then this article will help out by exposing you to the entire e-commerce space.

Auditors of today are challenged to build into their audit plans and programs the necessary controls to manage and mitigate the risks introduced by rapidly changing technologies.

Auditor auditing e-commerce activities should have knowledge at least on the following issues related directly to e-commerce environment:

• technologies needed for e-business

• special risks in e-business

• cryptography for confidentiality and authentication

• understanding public key infrastructures (PKI)

• digital signatures

• certificates and certifying authorities

• e-business applications controls

• the e-business application development cycle

• auditing an e-business implementation

• living with the added risk of e-business
   

Technology will soon enable automatic audits. Computer generated audits are becoming the norm and a more efficient audit includes less interruption to a client's business, less paper consumption and less time spent redeveloping work papers. Businesses and investors are most interested in real-time data - for audits to be effective they must evolve to meet this market demand.

Several auditing companies provide today e-commerce focused services and there are also lots of seminars and other type of training available for auditors wanting to specialise in e-commerce. You can even do online courses on auditing. Local business communities are often very good sources of information concerning specialised business related training.

E-Commerce Tools: Merchant Accounts
Since e-commerce is usually at the heart of an online business, let's go into some more detail about the tools required to make it happen. Basically, if you want to sell products and collect payment electronically, you're going to have to have:

1. a merchant account -- an account that lets you collect payment via credit card
2. software to collect information -- shopping cart programs
3. software to process the transaction and send information to all of the involved parties (your bank, their bank, etc.)
4. a secure server -- SSL (secure socket layer) will encrypt the data and send it to a secure server where it can't be intercepted by a third party.

Merchant Accounts
A Merchant Account allows you to accept and process credit card payments either manually by "swiping" or "keying in" a card number, or through your Web site. There are many charges associated with accepting credit cards including:

1. a "discount rate" -- usually a 1-4 percent charge based on the sale amount (although online rates can be much higher)
2. a transaction charge -- a $.20-$.40 charge per transaction
3. a monthly minimum charge -- a flat rate that is charged if the minimum is not met
4. a "statement fee" -- a monthly fee charged regardless of the amount of charges in a month
5. setup fees
6. application fees
7. batch header fees -- fees that are charged for a batch of transactions, usually every time a terminal is closed out. Some systems automatically "batch out" at the end of the day and you may be charged whether you had any transactions or not!
8. and... there are also a few fees for special circumstances.

If you don't plan on accepting credit cards then you don't have to worry about a merchant account. On one hand, with the increase in credit card fraud you may be saving yourself a lot of headaches by not accepting credit cards. On the other hand, some statistics say that you will be turning away 80 percent of your sales by not accepting credit cards. It really comes down to what you're selling and how you're delivering it. If it is a service that must be delivered then you may do just as well (and save money) by invoicing and requesting payment by check, wire transfer, or money order. If you're selling products directly on-line then you probably need to go the merchant account route.

If you have had problems getting a merchant account, you can also try going through an Independent Sales Organization (ISO) for electronic funds processing. These firms usually provide many options for transactions both electronically and in-person. Concord EFS is one vendor, but many others exist.

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