e-commerce, commerce conducted over the Internet, most often via the World Wide Web. E-commerce can apply to purchases made through the Web or to business-to-business activities such as inventory transfers. A customer can order items from a vendor's Web site, paying with a credit card (the customer enters account information via the computer) or with a previously established "cybercash" account. The transaction information is transmitted (usually by modem) to a financial institution for payment clearance and to the vendor for order fulfillment. Personal and account information is kept confidential through the use of "secured transactions" that use encryption technology (see data encryption).

In an effort to further the development of e-commerce, the federal Electronic Signatures Act (2000) established uniform national standards for determining the circumstances under which contracts and notifications in electronic form are legally valid. Legal standards were also specified regarding the use of an electronic signature ("an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record"), but the law did not specify technological standards for implementing the act. The act gave electronic signatures a legal standing similar to that of paper signatures, allowing contracts and other agreements, such as those establishing a loan or brokerage account, to be signed on line.

Once consumers' worries eased about on-line credit card purchases, e-commerce grew rapidly in the late 1990s. In 1998 on-line retail ("e-tail") sales were $7.2 billion, double the amount in 1997. On-line retail ordering represented 15% of nonstore sales (which included catalogs, television sales, and direct sales) in 1998, but this constituted only 1% of total retail revenues that year. Books are the most popular on-line product order—with over half of Web shoppers ordering books (one on-line bookseller, Amazon.com, which started in 1995, had revenues of $610 million in 1998)—followed by software, audio compact discs, and personal computers. Other on-line commerce includes trading of stocks, purchases of airline tickets and groceries, and participation in auctions.

in full electronic commerce

business-to-consumer and business-to-business commerce conducted by way of the Internet or other electronic networks. E-commerce originated in a standard for the exchange of documents during the 1948–49 Berlin blockade and airlift. Various industries elaborated upon the system until the first general standard was published in 1975. The electronic data interchange (EDI) standard is unambiguous, independent of any particular machine, and flexible enough to handle most simple electronic transactions. In addition to standard forms for business-to-business transactions, e-commerce encompasses much wider activity—for example, the deployment of secure private networks (intranets) for sharing information within a company, as well as selective extensions of a company's intranet to collaborating business networks (extranets). A new form of cooperation known as a virtual company, actually a network of firms, each performing some of the processes needed to manufacture a product or deliver a service, has flourished.

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