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Electronic Commerce Payment

  • CHAPTER ONE
  • INTRODUCTION

One of the most profound changes currently transpiring in the world of business is the introduction of Electronic Commerce (E-Commerce). The impact of E-Commerce on procurement, shopping, business collaboration, and customer services as well as on delivery of various services is so dramatic that almost every organization is affected. Besides, as E-Commerce is changing all business’ functional areas and their important tasks, ranging from advertising to paying bills, the nature of competition has also changed due to new online companies, new business models and the diversity of E-Commerce related products and services.

This research has been done to megore the B to C user’s acceptance of E-Commerce and E-Payment Systems in Saudi Arabia, and to suggest the features that suitable for those users in away to maximize the acceptance.

Key Words: Saudi Arabia, Electronic Commerce (E-Commerce), Electronic Payment System (E-Payment System).

  • RESEARCH QUESTIONS:

The research questions are:

  • What is the current situation of E-Commerce in Saudi Arabia?

In this Question the researcher are going to analyze the factors to increase the E-commerce practice in Saudi Arabia.

  • To analyze what is the barriers that facing the use of E-Payment system in Saudi Arabia?

In the second question the author will try to found the barrier that facing the customer and prospective customer in Saudi from the acceptance of using the E-Payment system more.

  • PROJECT STRUCTHURE:

This project includes six chapters in addition to its introduction. Below is a brief description of each:

  • Chapter two The chapter includes a brief about the history of Saudi Arabia, and then refer to clarify the political situation, commercial, educational and the information technology of the country.

The chapter followed by the definition of electronic trade and the history of inception, types, advantages, disadvantages. The chapter concludes by mentioning information on the development of e-commerce in Saudi Arabia

  • Chapter three; covers the literature review of the chosen application of E-commerce B to C followed by the definition of electronic payment systems and explanation of their types followed by indication to the subject of safety in the electronic payment systems. The chapter concludes with an explanation on the status of banks and E-Payment systems in Saudi Arabia followed by clarifying the barriers of E-commerce and E-Payment systems.
  • Chapter four; Cover the research methodology such as the process of data collection, questionnaire and the analysis tool will be used.
  • Chapter Five; is contain the describing, analyzing the data and the results of the analysis.
  • Chapter six; this chapter summarizes the study, lay out the conclusion and ends up with recommendations for future research.
  • Bibliography
  • RESEARCH METHODOLOGY

In this study the researcher will collect his data by the quantitative method where a questionnaire will be designed based on the factors which have been discovered from the literature review and then will be sent to random group in Saudi Arabia. The Data then will be analyzed to show the result and the findings.

  • CHAPTER TOW
  • INTRODUCTION

In this chapter the author going to cover the history of Saudi Arabia and the legal and political environment of the country, followed by explanation of the important factors that affect the e-commerce growth in any country which is the economy, education and technology level in Saudi Arabia .This chapter also will covered the detentions of E-commerce and the researcher will identify the E-commerce types, advantages, disadvantages and the current situation of e-commerce in Saudi Arabia.

  • HISTORY OF SAUDI ARABIA

Saudi Arabia which is the birth place of Islam and home to Islam’s two holiest shrines in Mecca and Medina is located in the Middle East bordering the Arab Gulf and the Red Sea. The king’s official title is the Custodian of the Two Holy Mosques. The modern Saudi State was founded in 1932 by king Abdul-Aziz bin Abdul-Rahman Al-Saud after 30 year campaign to unify most of the Arabian Peninsula. It is a large Middle Eastern nation that ranks as one of the world’s leading producers of petroleum, and exports more oil than any other nation.

  • POLITICAL & LEGAL ENVIRONMENT OF SAUDI ARABIA

Saudi Arabia is a monarchy based on Islam. The government is headed by the King, who is also the commander in chief of the military. The King appoints a Crown Prince to help him with his duties. The Crown Prince is second in line to the throne. The King governs with the help of the Council of Ministers, also called the Cabinet. There are 22 government ministries that are part of the Cabinet. Each ministry specializes in a different part of the government, such as foreign affairs, education and finance. The King is also advised by a legislative body called the Consultative Council (Majlis Al-Shura). The Council proposes new laws and amends existing ones. It consists of 150 members who are appointed by the King for four-year terms that can be renewed.

The country is divided into 13 provinces, with a governor and deputy governor in each one. Each province has its own council that advises the governor and deals with the development of the province. The judicial system is based on Islamic law (Shari’ah). The King is at the top of the legal system.

  • ECONOMIC ENVIRONMENT OF SAUDI ARABIA

Saudi Arabia is one of the top 20 largest export and import markets in the world.  Exports now represent all economic sectors.

Saudi Arabia’s commercial sector is growing fast. The reason behind that is the government encouragement for example the provision of long-term interest-free loans. The total estimated investments in Saudi Arabia are more than $54 billion. The Saudi Arabian General Investment Authority (SAGIA) propose to the private Companies a free consulting and support services and published lists of investment opportunities. In 2005 (SAGIA) announced the plan to open offices abroad in the following countries China, the United States, UK and Germany to attract more investment in infrastructure projects. The role of private companies account is equal to 48 percent of the nation’s GDP of $248.82 billion. They produce, distribute and sell domestic products and exports of non-oil products. Saudi Arabia is one of the top 20 exports and import in the world, and exports to 90 countries by six billion dollars per year from non-oil products only. On 2000 Saudi Arabia introduced a law for foreign investors and gives the same benefits, incentives and guarantees offered to Saudi individuals and companies. It also gives foreign investors the right to own property and real estate.(Royal Embassy of Saudi Arabia, 2008)

  • EDUCATION SYSTEM OF SAUDI ARABIA:

The Saudi educational system aims is to prepare students for life and work in the modern world, while meeting the country’s religious, social and economic needs.  Eliminating adult illiteracy is another major goal. General education in the Kingdom consists of three levels, six years of primary school and three years in intermediate and another three years in high school.

  • TECHNOLOGICAL ENVIRONMENT OF SAUDI ARABIA

In February 2008, the Council of Ministers agrees to permit three new companies to provide landline telephone service in the Saudi Arabia. In 2002 more than 5 million mobile phones in use in Saudi Arabia.

Internet usage is growing fast in Saudi Arabia. More lines are being provisioned for Internet access to hold the increasing demand, including high-speed service DSL. Saudi Home Computing Initiative is a supporting program that The Saudi Communication and Information Telecommunication Commission (CITC) adopted to helps Saudi citizens to own their personal computers and access the Internet through the.

. The King Fahd Satellite Communications City in Jeddah is ground station for Arab-Sat Satellites, the leading communication satellite in the Arab world. In 2007 Saudi Arabia announced plans to invest more than $64 billion to develop a solid information technology infrastructure.

  • WHAT IS E-Commerce?

E-Commerce can be defined as:

‘’it is about doing business electronically. It’s more than just buying and selling using the internet, though the Internet and World Wide Web play a fundamental role, but includes any form of business or administration transaction or information exchange executed using information and communication technology ‘’ (Rowley, 2002).

An another definition by UNCTAD is:

‘’ An electronic transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, Governments, and other public or private organizations, conducted over computer-mediated networks. The goods and services are ordered over those networks, but the payment and the ultimate delivery of the good or service may be conducted on or off line ‘’ (UNCTAD, 2007)

E-Commerce is the transfer of data across electronic networks and describes the buying, selling, and exchanging of products, services, and information via computer networks, primarily the Internet. However, as some people view the term `commerce’ as describing transactions conducted business partners, to them E-Commerce seems narrow. Therefore, many use the term Electronic Business (E-business) instead of E-Commerce, because it refers to a broad definition of E-Commerce. This includes not only buying and selling but also servicing customer, collaborating with business partners and conducting electronic transactions within an organization.

  • HISTORY OF E-Commerce

E-Commerce applications have said to have begun in the early 1970s with such innovations as electronic transfer of funds (ETF). However, it is believed that the applications were limited to large corporations and a few daring small businesses. Then came the electronic data interchange (EDI), which added other kinds of transaction processing and extended participation to all industries. In the mid- 1980s a deferent type of electronic commerce technology spread among customer in on line services that provide a new way of social interaction( example chat rooms and inter-relay chat IRC). (Kalakota and Whinston, 1997)

In early 1990s the World Wide Web came with a new method of E-Commerce by providing an easy-to-use technology solution to the information publishing and dissemination. The applications rapidly expanded in the 1990s since the commercialization of the Internet and the introduction of the web. (Kalakota and Whinston, 1997)

  • TYPES AND SCOPE OF E-Commerce

Many types of E-Commerce nowadays and more will come in the near future .These types are summarized below:

  • Business to Business E-Commerce: Tow or more business formulates transactions.
  • Business to customers (B2C): The sellers are companies or organizations and the buyers are individual customers.
  • Customers to business (C2B): the customers identify a need for a product or service and the companies or organizations participate to provide this need to customer.
  • Customer to Customer (C2C): a customer offers a product or service to other individuals.
  • Government to-citizens (G2C) and / or to others: the government provides services to their citizens by the use of E-Commerce technologies.
  • Mobile commerce (M-Commerce): When access to the E-Commerce done in a wireless environment, i.e. by using cell phones.

(Loshin and Vacca, 2004) argue that companies conduct E-commerce in four main areas:

  • Direct marketing, selling, and service.
  • Online banking and billing.
  • Secure distribution of information.
  • Value chain trading and corporate purchasing

The field of E-Commerce is very broad. There are many applications of E-Commerce such as home banking, shopping in electronic malls, buying stocks, finding a job, conducting an auction, collaborating electronically with business partners around the globe, and providing customer service. The implementation of various E-Commerce applications depends on four major support categories such as people, public policy, and marketing/advertising and supply chain logistics. In addition there has to be an Infrastructure support. The E-Commerce management in each organization coordinates the applications and infrastructure. In order to explain the relationships I have explained below the applications in the case of B2C E-Commerce.

  • ADVNTAGES OF E-COMMERCE

The Internet is a seemingly ever-expanding highway of electronic commerce with the number and value of transactions rising continually. In less than a decade, it has made a complete transformation in almost all walks of our day-to-day life, whether it is communicating with others, conducting routine banking, tracking our investment, paying for utility services, entertainment etc. The following are the benefits which, this powerful technological innovation has given to organizations, customers and society.

a)Benefits to Organizations

  • It has enabled an organization to expand its market place to national and international markets. In other words, with minimal capital outlay, a company can quickly locate more customers, the best suppliers, and the most suitable business partners worldwide.
  • It enables the companies to procure material and services from other companies rapidly and at less cost.
  • Shortens or even eliminates marketing distribution channels, making products cheaper and vendor’s profits higher.
  • Decreases (by as much as 90 percent) the cost of creating, processing, distributing, storing and retrieving information by digitizing the process.
  • Allows lower inventories by facilitating pull-type supply chain management. This allows product customization and reduces inventory costs.
  • E-commerce a useful tool to gather information on customers or potential customers. It’s also an exceptional form of marketing research that is fairly inexpensive (Pallab, 1996).
  • Lowers telecommunications costs because the Internet is much cheaper than value-added networks (VANs).
  • Helps small businesses compete against large companies.
  • Enables very specialized niche markets.

b)Benefits to Customers

  • It provides less expensive products and services by allowing customer to conduct quick online comparisons.
  • Gives customer more choices than they could easily locate otherwise.
  • E-commerce companies will also increase their accessibility, it creates a twenty- four hour operation, and this allows people to shop when it’s convenient to them (Pallab, 1996).
  • Delivers relevant and detailed information in seconds.
  • Enables customer to get customized products from PCs to cars at competitive prices.
  • Makes it possible for people to work and study at home.
  • Makes possible electronic auctions.
  • Allows customer to interact in electronic communities and to exchange ideas and compare experiences.

c)Benefits to Society

  • Enables individuals to work at home and to do less traveling, resulting in less road traffic and lower air pollution.
  • Allows some merchandise to be sold at lower prices, thereby increasing people’s standard of living.
  • Enables people in developing countries and rural areas to enjoy products and services that are otherwise not available.
  • DIS-ADVANTAGES OF E-COMMERCE
  • Lack of universally accepted standards for quality, security and reliability.
  • Need for special Web servers in addition to the network servers.
  • According to a Federal Express executive, many companies will break down before they upgrade to automation logistic systems (Wilson, 1999).
  • Difficulties in integrating the Internet and EC software with some existing (especially legacy) applications and databases.
  • Managing the time required for a customer to complete a transaction affects potential sales (Harvard Business Review, 2000)
  • Perceptions that EC is expensive and unsecured.
  • Customer resistance to changing from a real to a virtual store. People do not yet sufficiently trust paperless, faceless transactions.
  • E-COMMERCE IN SAUDI ARABIA

The statistical shows that the internet users in 2006 in Saudi Arabia is more than 4,600,000 user and it’s ranked the 40th country by users count (CIA fact book ,2006). This show a good number of users comparing to the country population which is approximately equal to 24.5 million, including an estimated 6.5 million foreign nationals (EIA , 2006).

The government of Saudi Arabia represented by the Ministry of commerce established since 1998 a new division and his functions is to follow the new changing and the development of E-Commerce in the world ,specify the needs an applications for Saudi Arabia , supervise the progress in E-commerce in Saudi Arabia (Ministry of Commerce , 2001) .The plan was set in 2000 for this division to do the following future steps :

  • Establish an Infrastructure to provide a safe environment to ensure the confidentiality of information.
  • Development of the electronic payments system needed to carry out all banking operations for electronic transactions.
  • Development of communications infrastructure in order to be ready to support e-commerce techniques.
  • Finding legal regulation and legislative necessary for the adoption of electronic transactions and contracts.
  • Providing government services electronically.
  • Support the deployment of the concepts and applications of E-commerce.( Ministry of Commerce In Saudi Arabia ,2001)

The Arab Advisors Group done major online and face to face surveys in E-commerce users spending in Saudi Arabia in 2007, The result shows that the Total number of E-commerce users in Saudi Arabia exceeded 3.5 million people which is represent 14.26 % of the Saudi population and the value of B2C e-commerce exceeded $3.2bn in 2007. (AME info, 2008)

  • CONCLUSION

In this chapter the author found that the Saudi Arabia is a growing country attempt to follow the leading countries but need more time and efforts to be done, also Saudi Arabia has a good base for a future expanding in the information technology. The author define the E-Commerce and the types .An explanation of the advantages and disadvantages where explained and finally the present situation of E-Commerce in Saudi Arabia presented with up-to-date fighers indicate that the use of E-commerce is growing rapidly.

  • CHAPTER THREE
  • INTRODUCTION

In this chapter the author will going to cover the literature review for the E-commerce and E-Payment system starting by explaining the type of E-commerce that is main focus in this project (B-TO-C) also the researcher will identify the E-commerce Amjad will continue the rest

Before analyzing the current situation of E-Commerce in Saudi Arabia, I would like to mention in brief as to what is E-Commerce, its history and scope, how it works, its basic advantages and disadvantages etc.

  • BUSINESS-TO-CONSUMER APPLICATIONS

There are many categories of business-to-consumer applications such as:

  • Electronic Retailing, store fronts and Malls – E-Commerce enables a person to buy from home, 24 hours a day, 7 days a week and also offers a wide variety of products and services, including the most unique items. Not only this, it enables a person to get a detailed information on products, which enables a person to search and select the products of their choice and even enables a person to compare it with competitor’s products and prices. Electronic retailing (e-tailing) is the direct sale of products through electronic store fronts or electronic malls, usually designed around an electronic catalog format and/or auctions.
  • Electronic storefronts – Hundreds of thousands of solo storefronts can be found on the Internet, each with its own Internet name and Website. There are 2 types of storefronts, general and specialized. Specialized sells one or few products, but the general storefronts sell many products. Goods that are generally bought are computers, and computer related products, books magazines, CDs, movies and videos, clothing and shoes, toys and food. Services that are bought online are travel services, stocks and bonds trading, electronic banking, insurance and job mathing. Directories and hyperlinks from other websites and intelligent search agents help buyers to find the best stores and products as per their choice and needs.
  • Electronic malls – An electronic mall also known as a cybermall or e-mall is a collection of individual shops under one Internet address. A vendor that is located in an e-mall gives up a certain amount of independence and each cybermall consists of thousands of vendors as that of a regular shopping mall. Example is shopping.yahoo.com and eshop.msn.com., and consists of thousands of products from thousands of vendors.

However there are some issues that the e-retailing faces which are summarized below:

  • In cases where the seller is a click-and-mortar company, it sometimes faces a conflict with its regular distributors when it tries to sell directly on line.
  • e-tailers face a difficult problem of shipping very small quantities to a large number of buyers. It becomes expensive, especially when returned items need to be handled.
  • Most purely online e-tailers are unable to survive because of problems such as customer acquisitions, order fulfillment, and forecasting demand. Online competition, especially in commodity type products becomes very fierce due to the ease of entry to the market place.
  • The dot.com companies in the earlier stages were enjoying unlimited funding. But as they were unable to generate profit quickly, dried up the source funds, and became bankrupt. Besides many were selling at or even below cost price with the objective of attracting many customers as well as advertisers to their sites.
  • ELECTRONIC PAYMENT SYSTEMS

Traditional, non-electronic payment systems are insufficient or inferior for doing business on the Internet. Therefore, electronic payment systems are used and in cyberspace also there are various methods by which a customer can pay for their purchases. In other words, electronic checks, electronic credit cards, electronic cash, smart cards, person-to-person payments, electronic funds transfer (EFT), e-wallets, and purchasing cards are the different instruments that are available and acceptable means of payment in cyberspace and each one has their payment mechanism which is summarized below:

  • Electronic checks –Kalakota and Whinston (1997) define them as

‘’ Electronic checks are modeled on paper checks. except that they are initiated electronically, use digital signatures for signing and endorsing, and require the use of digital certificates to authenticate the payer, the payer’s bank, and bank account‘’

These are similar to regular checks, and are used mostly in B2B. In this, the customer establishes a checking account with a bank, and the customer contacts a seller, buys a product or a service, and e-mails an encrypted electronic check. The merchant then deposits the check in his or her account, and money is debited from the buyer’s account and credited to the seller’s account. However, in this a signature is in digital form which can be verified. Properly signed and endorsed e-checks are exchanged between financial institutions through electronic clearinghouses.

  • Electronic credit cards – This type of payment handle 98% percent of all purchases until 2001 (Korper and Ellis, 2001) .Credit cards makes it possible to charge online payments from accounts, the buyer send his/her credit card number to the seller. As there is a possibility of hackers therefore, for security reasons, only cards with encrypted information used. Credit card details are encrypted by using Secure Socket Layer (SSL) protocol in the buyer’s computer, which is available in standard browsers. The secure payment request send by the internet to the merchant’s then to his/her bank for approval or decline in a proximately 20 seconds. (Korper and Ellis, 2001)

For example, when a person buys a product from Amazon, his/her credit information and purchase amount are encrypted in his browser and when this information arrives at Amazon, it is transferred automatically (encrypted) to VISA, Master card and so forth for authorization.

  • Electronic cash – This is the most prevalent consumer payment instrument and appears in two forms. The customer opens an account with a bank and receives special software for his or her PC. The customer buys `electronic money’ from the bank by using the software and the customer bank account is debited accordingly. The bank then sends a secured electronic money note this customer and the money is stored on the buyer’s PC which can be spent in any electronic store that accepts cash. The software is also used to transfer the e-cash from the buyer’s computer to the seller’s computer. The seller then deposit the e-cash in a bank, crediting his or her regular or electronic account, or the seller uses the e-cash to make a purchase elsewhere.(Norris and West,2001)
  • Smart cards – Even though some people refer to stored-value cards as smart cards actually they are not the same. The smart cards contain a microprocessor (chip) and can store a considerable amount of information (more than 100 times than that of a stored-value card) and can conduct processing and are also multipurpose (Korper and Ellis, 2001). In fact advanced smart cards also have the ability to transfer funds, pay bills, buy from vending machines, or pay for services such as those offered on television or PCs. For example, the VISA Cash Card allows one to buy goods or services at participating gas stations, fast-food outlets, pay phones, discount stores, post offices, convenience stores, and so forth and is an ideal one for micro payments also.
  • Person-to-person (P2P) payment – This is one of the newest and fastest growing payment schemes and enable the transfer of funds between two individuals for a variety of purposes like repaying money borrowed from a friend, sending money to student at college, paying for an item purchased at an on-line auction, or sending a gift to a family member. For example, if a person wants to send money to someone over the Internet, first he has to select a service and open up an account with the service by giving his/her e-mail address and this entails creating a user name, a password, and provides the service with a credit card or bank account number. Then a person adds funds from his credit card or bank account to his P2P account. Once the account has been funded he is ready to send money and then he can access PayPal with his user name and password and specify the e-mail address of the person to receive the money, along with the amount that he wants to send. Then an e-mail is sent to the payee’s e-mail address which will contain a link back to the service’s Web site. When the recipient clicks on the link, he or she will be taken to the service and will be asked to set up an account to which the money that was sent has to be credited. The recipient then can credit the money from this account to either his or her credit card or bank account.
  • Electronic funds transfer – It is the electronic transfer of money to and from financial institutions using telecommunication networks. Examples of this are interbank transactions around the globe, direct deposit of salaries in employees’ accounts, and payment of utility bills etc.
  • Electronic wallets – This is a software component that is downloaded to a user’s PC and in which the user stores credit card numbers and other personal information. When the user shops at a merchant who accepts the e-wallet, the user can perform one-click shopping, with the e-wallet automatically filling in the necessary information. Electronic wallets support many types of credit cards, digital cash, paper and digital checks, and purchase order.(Korper and Ellis , 2001)
  • SECURITY IN ELECTRONIC PAYMENTS

To make the payments secure, it is essential to comply with some of the security requirements mentioned below:

  • Authentication – Firstly, the buyer, the seller, and the paying institutions must be assured of the identity of the parties with whom they are dealing.
  • Integrity – It is necessary to ensure that data and information transmitted such as payment information, reply to queries, and personal data, are not altered or destroyed during transmission and insure that the content received match the one which is sent.(Kalakota and Whinston, 1997)
  • Privacy – It’s vital that the financial institutions and buyers insure that the customer information’s are safe and confidential many customers would want their identity to be secured it is essential to maintain privacy. (Kalakota and Whinston, 1997)
  • Security – Customers want to be sure that it is safe to provide a credit card number on the Internet.

To fulfill the above mentioned security requirements, there are various methods and mechanisms. However, the primary mechanism is encryption, which is often part of the most useful security schemes.

  • BANKING AND E-PAYMENT SYSTEMS IN SAUDI ARABIA

Saudi Arabia has thirteen commercial banks. Saudi banks provide corporate banking, retail, brokerage facilities, investment services, and derivative transactions in addition to credit cards, ATMs and point-of-sale transactions. There are also banks provide Islamic banking services. This is banking system consistent with the principles of Islamic law. It prohibits usury, the collection and payment of interest and trading in financial risk.

Saudi Arabia also has a stock market and The total value of shares traded annually is some SR 60 billion [US $16 billion]. The Saudi stock exchange (Tadawul) is one of the most highly capitalized stock exchanges in the Arab world. (TADAWUL ,2007)

The banking and finance sector is managed by a number of government agencies. The Ministry of Finance supervises economic policies. The Saudi Arabian Monetary Association (SAMA) manages fiscal policy, issues the country’s currency, the Saudi Riyal and oversees the nation’s commercial banks. Banking system in Saudi Arabia started only in March 1961 when the Saudi Riyal was introduced. In Saudi Arabia, The Saudi Arabian Monetary Agency (SAMA) which was established in 1952 plays the role of central bank. The commercial banks working Saudi Arabia are connected to SAMA through the joint network. (Essayyad and Madani, 2003)

In order to keep a reality check on growth in consumer lending, the Saudi Arabian Monetary Authority (SAMA) introduced guidelines on consumer lending in March 2006. The ratio of credit deployment to GDP for Saudi Arabia is low compared to other GCC countries. Saudi Arabia’s ratio as at the end of 2005 is around 39 per cent. The penetration level in terms of deposit-to-GDP ratio for Saudi Arabia is low and at the end of 2005, the ratio stood at around 43 percent. (Gulf News , 2006).

Saudi Arabian Monetary Agency established the SADAD payment system in 2004 to facilitate and streamline bill payment transactions of end customer through all channels of the country’s banks as the national Electronic Bill Presentment and Payment service provider for Saudi Arabia. SAMA has mandated that all banks must accept bill payments at their branches irrespective of whether the person is a customer of that bank or not.

Before the establishment of SADAD bill payment system in Saudi Arabia was very slow and inefficient. Approximately 60 to 70% of the bills are paid in cash at the bank branches, which resulted in high costs to banks for front office payment processing, IT integration and reconciliation etc. In addition customer queue for a long time at bank’s front office desks before paying their bills. Bill presentment and collection was also largely manual and paper based creating significant inefficiencies and overheads for billers and banks. (SADAD, Nd )

SAMA works to rationalize all these connections through SADAD which is a single platform that link different billers and banks to enable the customer to use the electronic payment channels of any bank. SADAD is now facilitating the payment of high volume periodic/repetitive bills such as utility bills, phone bills etc., and customer initiated payments, such as traffic fines etc. (SADAD , n.d)

A new E-payment method is an advance multi-function secured e-payment services card Known as ONECARD established by a Saudi company name National Technology Group this card enable customer in Saudi Arabia for shopping online easily and it’s available to buy from local stores and bookshops.(OneCard , 2004)

  • BARRIERS TO THE USE OF E-COMMERCE AND E-PAYMENT SYSTEM IN SAUDI ARABIA

Many businesses who launched B2C E-commerce in the early stages, seemed to ignore the customer orientation and other factors influencing customer behavior when create business strategies. (Anckar and D’Incau, 2002)

From the previous information’s about the Saudi Arabia E-payment and it’s clear that the basic infrastructure for electronic payment system is available in Saudi Arabia but the number of Internet users is only 17.0% from the population of the country which is still low. (Internet World Status, 2008).The question was raise in the author mind what is the barriers for using an E-commerce which is also leed to the use of E-payment systems?.

The answer for this question is laying beneath the understand of the customer behavior .According to the Theory of Reasons Action (TRA), behavior, e.g. the use or rejection of technology, is verify by the person’s aim to act the behavior, and this aim is influenced by the persons’ attitude and subjective norm. Subjective norms are defined as “the person’s perception that most people who are important to him think he should or should not perform the behaviour in question”, (Fishbein & Ajzen, 1975). Attitude to a behaviour is determined by believes and evaluation of consequences of the behaviour. Figure 3.2 describes the theory components and their relationships.

Figure 1.1 Theory of Reasoned Action (TRA). (Fishbein & Ajzen ,1975)

A survey done by Abrazhevich about the users attitudes towards electronic payment systems revealed that the ease of use, convertibility of founds, security and trust are among the most important features.(Abrazhevich , 2002)

One of the issues might be a barrier to the use of E-Payment systems in Saudi Arabia is the compatibility with the Islamic Sharia and free of interest usury.(Zainul and et al., 2004).

In a survey done in Europe by the European Commission about the Public opinion on issues relating to business to consumer E-Commerce the question was what is the most thing you concern about when you buy online , and the answers indicate that the most three important thing is secuarity of payment , ability to get refund and delivery .Another question asked in the same previous survey to the people who have not bought anything from the internet about the reasons for that ,the top three reasons was not have an access to the internet , not interested in buying anything in the internet ,did not trust the internet. (European Commission , 2004)

In the opinion of the author it’s vital to examine the Saudi Arabia users about the barriers previously raised to understand the best practice for E-Commerce and E-Payment systems in Saudi Arabia.

  • CONCLUSION

It’s clear to the author that the B to C E-Commerce applications has many shapes and forms enabling the E-Commerce to expand more and one of the main Factors for this expanding is the technology and ease of using the E-Payment system while maintaining the security and confidentiality. Saudi Arabia has a good banking structure enabling the E-Payment system to Expand in the future taking into account aspects of the specificity of Saudi culture .This conclusion will be examine buy the questioner the author attempt to do in the next chapter.

  • CHAPTER FOUR
  • INTRODUCTION

This chapter presents a description of the research methodology used throughout the study supported by a justification for the selection. During a brief description about the data and description of the questionnaire which has been used. The second part will be about a description of the data analysis method which will be used to analyze the data in this study.

  • DATA COLLECTION:

Usually data can be collected through two sources: primary sources and secondary sources. Primary data sources include surveys, observations, and interviews. Secondary data sources include Newspapers, Books, Journals, Internet, etc. After turning the practical idea into a research question and reviewing the necessary literature, the method of research must be considered. The methodology which will be selected should be the one that will be the most effective one to collect the data needed to answer the research questions, or to test the hypothesis. Data collection methods are mainly divided under two major methodological methods, quantitative and qualitative methodology. Each method contains several type of “data collection technique”.

Quantitative research is ‘an objective approach which includes collecting and analyzing numerical data and applying statistical tests’ (Collis and Hussey, 2003). The emphasis of quantitative research is on collecting and analyzing numerical data. It concentrates on measuring the scale, range, frequency, etc, of phenomena. This type of research, although harder to design initially, is usually highly detailed and structured, and results can be easily collated and presented statistically. Qualitative research is a subjective approach which includes examining and reflecting on perceptions in order to gain an understanding of social and human activities’ (Collis and Hussey, 2003). The research strategy in the research project will be a Quantitative approaches as the researcher doesn’t have enough time to carry further investigations because of the geographic boundaries and to do face to face interviews with the selected sample so the E-mail survey will be the best choice to go for.

  • QUESTIONNAIRE:

To collect data for the research project a research questionnaire will be designed and then distributed. The questionnaire included different sections seeking information about many aspects of E-Commerce and E-Payment Systems factors. Multiple-choice and scale-type questions will be used to collect response. In addition, open questions were used to collect subjective information. The Licker scale of 1 to 5 will be used to rate the critical barriers .

According to Robson (2002), the advantages of a questionnaire are as follows:

  • It can be one of the least resources intensive.
  • It is simple to use – basic awareness training being sufficient to get things started.
  • It can readily involve many people within the organization.
  • The questions asked can be customized to suit the organization.
  • It enables to receive feedback which can be segmented by function and by level.
  • It can be used in parallel with the workshop approach to provide a more balanced view of deployment team.
  • It give a good visual indication if results are graphed.

In fact, the questionnaire has several weaknesses, mainly the low response rate. Low response rates are problematic in that they reduce confidence about the extent to which survey findings generalize the population from which the survey is drawn. Response errors are another problem. A third problem area arises from the conceptual inadequacy and administrative errors that can be caused by the researcher (Saunders and at al, 2002).

  • DATA ANALYSES:

To have a good interpretation of the data, it is important that data is organized in such a way that it may be analyzed efficiently. There are a number of computer programs that can be used to analyze survey research. These programs allow users to quickly sort information and look at the data from different angles. Computer software programs with database spreadsheets are widely available. Microsoft Access and Microsoft Excel are just a few of the available programs that can be used. More advanced statistical programs such as SPSS (statistical package for social science) is also suitable for data storage, but they require greater technical skill to use the more sophisticated statistical analyses. For quantitative data analysis the researcher will use (Microsoft Excel), as the researcher has the previous skill to use this program.

  • CONCLUSION:

In this chapter the author described the data collection and analysis method which used in this study to get the best information, bearing in mind the time which is limited for a research of this kind.

The researcher chooses to use the Quantitative method to collect his data by distributing a questionnaire to the targeted group; the questionnaire is going to include a multiple question based on the barriers which have been discovered from the literature. Furthermore, after collecting the data the researcher is going to analyses the data using Microsoft Excel software to show the data in a good way so it can be useful and easy to understand.

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