Online Transaction Processing – Steps, Stages, and Security

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Online Transactions and Security of e-Transactions

Online transaction is a payment method in which the transfer of funds or money happens online over electronic fund transfer. The online transaction process (OLTP) is secure and password protected. Three steps involved in the online transaction are Registration, Placing an order, and, Payment. Let us learn more about the different stages of Online Transactions in detail.

Online Transactions

Online Transaction

Online transaction processing (OLTP) is an information system that facilitates and manages transaction-oriented applications, typically for data entry and retrieval transaction processing. So online transaction is done with the help of the internet. It can’t take place without a proper internet connection.

Online transactions occur when a process of buying and selling takes place through the internet. When a consumer purchases a product or a service online, he/she pays for it through online transactions. Let’s find out more about it.

Stages of Online Transaction

There are three stages of Online Transactions

  • Pre-purchase/Sale: In this stage, the product or service is advertised online with some details for the customers.
  • Purchase/Sale: When a customer likes a particular product or service, he/she buys it and makes the payment online
  • Delivery Stage: This is the final stage where the goods bought are delivered to the consumer.

Steps Involved in Online Transaction

The following are the steps involved in Online Transaction:

1. Registration

  • The consumer has to register online on a particular website to buy a particular good or service.
  • The customer’s email id, name, address, and other details are saved and are safe with the website.
  • For security reasons, the buyer’s ‘Account’ and his ‘Shopping Cart’ is password protected.

2. Placing an Order

  • When a customer likes a product or a service, he/she puts the product in the ‘shopping cart’.
  • The shopping cart gives a record of all the items selected by the buyer to be purchased, the number of units or quantity desired to be bought per item selected, and the price for each item.
  • The buyer then proceeds to the payment option after selecting all the products.

3. Payment
The buyer then has to select the payment option, he/she has various payment options. These payment pages are secured with very high-level encryptions so that the personal financial information that you enter (bank/card details) stay completely secure. Some ways in which you can make this payment are:

Cash On Delivery: The Cash on Delivery option lets the buyer pay when he/she receives the product. Here, the payment is made at the doorstep. The customer can pay in cash, or by debit or credit card.

Cheque: In this type of payment, the buyer sends a cheque to the seller and the seller sends the product after the realization of the cheque.

Net Banking Transfer: Here, the payment is transferred from the buyer’s account to the seller’s account electronically i.e. through the internet. After the payment is received by the seller, the seller dispatches the goods to the buyer.

Credit or Debit Card: The buyer has to send his debit card or credit card details to the seller, and a particular amount will be deducted from his/her account.

Digital Cash: Digital Cash is a form of electronic currency that exists only in cyberspace and has no real physical properties. Here the money in the buyer’s bank account is converted into a code that is saved on a microchip, a smart card, or on the hard drive of his computer. When he makes a purchase, he needs to mention that particular code to the website, and thereafter the transaction is duly processed.


Question 1.
What is e-commerce?
a. it refers to the use of the computer network
b. it refers to the idea of extracting business intelligence
c. both a and b
d. it refers to the buying and selling of goods and services
The correct answer is the option ”d”.
E-commerce is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet.

Question 2.
In which of the following, personal digital assistants (PDAs) are used for buying and selling of goods and services?
a. E-commerce
b. M-commerce
c. V-commerce
d. All of the above
The correct answer is the option “b”. M-commerce (Mobile Commerce) is the buying and selling of goods and services through wireless handheld devices such as cellular telephones and personal digital assistants (PDAs)