Explain in brief the steps involved in Online Transactions.

Answer: Online Transactions.

Online transactions occur when a process of buying and selling takes place through the internet. Transactions between the buyer and seller that are carried out and completed with the help of internet are called online business transactions.

Stages of Online Transaction: 

There are three stages involved to ensure successful completion of online transaction. The task of an online transaction starts from the initial contact phase and often ends after the goods/ services are delivered.

Pre purchase/Sale: 

This is a stage of product demonstration where the products/services are displayed over the internet and information about the same is given for the perusal of the potential customers. Products are advertized on the internet in this stage.


At this stage, the buyer selects the products/services, finalizes with the seller the price of the product and makes the payment.

Delivery Stage:

This is the final stage where the goods bought are delivered to the consumer.

Steps involved in Online Transaction:

The steps involved in online transaction are as follows:


Registration is required for making online transactions. A buyer who is trying to make an online purchase has to first register himself with the website or the online vendor by filling up a  registration form. The registration form has basic details like name, e‐mail ID, password, etc. For security reasons, the buyer’s ‘Account’ and his ‘Shopping Cart’ are password protected.

Placing an Order:

The online buyer browses through the online store and selects the goods displayed in the website. The buyer then puts the selected goods in his ‘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.

iii. Payment:

The buyer is then required to make the payment to authenticate the purchase. He can do so with the help of various payment mechanisms viz. Cash on Delivery, Cheque, Net Banking Transfer, Credit or Debit cards, Digital Cash.

Cash on Delivery:

In this mode of payment, the buyer makes cash payment when the goods are physically delivered to him.


In this mode of payment, the buyer sends 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 Cards:

Here the payment is made through the buyer’s credit/debit card. The buyer has to share the details of his credit / debit card on the payment gateway to make the payment, after the payment is received by the seller, the seller dispatches the goods to the buyer. Credit / Debit cards are also known as ‘plastic money’.

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 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. It is accepted by all leading e‐commerce websites. The digital cash numbers are unique and it is highly secure and anonymous.

For e.g.: The railway smart card is used to buy tickets. It provides a faster way of buying railway tickets without standing in long queues.

What is Net Banking Transfer?

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