E-commerce, or electronic commerce, has to do with online shopping. E-commerce, however, is broader than just online retail. It encompasses a wide range of financial activity.

E-commerce involves the holding of transactions with the use of electronic systems and networks. Initially, it was limited to electronic funds transfer, then evolved with the use of automated teller machines and online banking. With the rise of the Internet, this has quickly become a popular method for conducting business, and now involves more activities, such as data mining.

The growing popularity of e-commerce has brought about developments in how banking and the transfer of funds is done. When a customer purchases either a product or service from a website, the online transaction is processed and the transfer of electronic funds is automatically managed.

In order to keep up with the demand, as well as reach out to a growing online market, many companies who have physical stores also have made their products available for sale online, either through direct transactions or through authorized distributors. Online catalogs are made available to consumers, and the process works similarly to that of mail-order transactions. This method of transacting business has also encouraged people who work from home to set up their own businesses online, thus avoiding the burden of setting up a physical store and operating expenses.

While shopping online may be very common these days, there is still an element of concern connected to participation in online transactions. Some people are still not very confident about disclosing certain information, such as their credit card details. Companies which process information of this type make sure that the data is encrypted and kept confidential.