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What is a Transaction in E-commerce?

Transaction in e-commerce is the process of exchanging goods or services for money between a buyer and seller. This process typically involves the buyer providing their payment details and the seller providing a receipt or other proof of purchase. It is the backbone of any e-commerce platform, and payment gateways or third-party payment processors often facilitate it.

Significance of Transaction in E-commerce 

Transaction in e-commerce is incredibly important as it is the cornerstone of the entire e-commerce process. Transactions assure customers that their payment and personal information will be securely handled and that their purchase will be fulfilled. The significance of the transaction includes –

1. Increased reach: E-commerce transactions increase their potential for sales and profits.

2. Improved customer experience: Customers can shop from their homes and easily compare prices and products.

3. Faster transactions: Customers can purchase items in a matter of minutes, rather than waiting days or weeks for their orders to arrive.

4. Increased security: E-commerce also provides customers an added layer of security. All transactions are encrypted, meaning personal information is kept safe and secure.

5. Easier access to information: Customers can quickly know more about a product or service before making a purchase.

Prerequisites to Calculate Transaction and How It Works

  1. A valid payment gateway
  2. A secure website
  3. Shopping cart software
  4. An inventory system
  5. A shipping system

Once these prerequisites are in place,calculating an e-commerce transaction is relatively straightforward. First, the customer selects the items they wish to purchase and adds them to the shopping cart. They then enter their payment information and shipping address. 

The web server then verifies the customer’s information, processes the payment, and sends the customer an email confirming the purchase. Finally, the merchant account transfers the payment to the merchant and the transaction is complete.

Use Case With Transaction

Let us assume a company ABC deals with books. To buy some books online, a customer needs to select some books from the website and enter the address where the books should be delivered. After verification, ABC will redirect the customer to the payment page, where he needs to fill in the payment details and complete the payment transaction. Upon successful transaction, ABC will send the books purchased to the buyer’s address. 

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