A model for commercial transactions- Understanding the ways in which commercial transactions take place online across Internet requires understanding the way in which any commercial transaction takes place. There will be different types of transactions and differences also.

Establishing trust-Before any purchase can be made from retail store, a customer must enter it. The merchant may control access to the goods it offers in several different ways. It can sell to any and all come through an open storefront, or it can restrict its sales to a certain client. The customer also makes choices prior to entering a store. The degree to which the merchant will restrict access to its products will vary depending on the type of business.
The merchant and consumer each establish a level of trust in the other. The merchant trust that the customer is a potential purchases, capable of selecting and paying for some product offered the consumer trusts that the merchant may be offering the desired product and will be capable of delivering that the product if needed.
There are other identity issues that both buyer and seller are concerned with when first initiating contact. Many products have distribution limits. For example,
Prescription drugs may not be dispensed to anyone without a legitimate prescription
Alcoholic beverages may not be sold to minors and may be subject to other sales restrictions depending on the locality
Firearms and ammunition are subject to a wide range of restrictions varying by locality
Tobacco products may not be sold to minors
Adult entertainment products may be subject to local restrictions on sales to minors
Establishing trust between parties in a commercial transaction that takes place across a public network is difficult. Online transactions require mechanisms for establishing trust between prospective buyers and sellers.

Negotiating a deal-Determining the item to be purchased and the price to be charged are trivial matters in most retail stores. The buyer selects the desired item, and the price is usually clearly marked either on the item itself or near its display area. In most cases, this is all that is necessary. When we order products by phone from a catalog, we can refer to the price in the catalog. Ordering products over the Internet does not offer an explicit method to reference the offering price, nor does it offer an explicit method to reference the original order. Neither the buyer nor the seller should be able to repudiate the offered price or the products ordered, mechanisms to accomplish this are available for electronic commerce.

Payment and settlement- In store the transaction is completed as soon as the buyer pays for an item. The vendor takes a smaller risk when selling online, since credit cards can be authenticated through automated connections to settlement companies.

The Internet environment- Electronic Funds Transfer (EFT) is another field that is now reaching a mass market as ATMs, gas stations and supermarkets increasingly accept credit and debit cards.

Internet advantage- Despite Internet’s long existence as a non commercial research
network, its commercialization owes its apparent success to several factors:

The Internet is an open system

The Internet itself does not belong to anyone.

The WWW is Internet’s ‘killer app’