What you'll learn
ICT is at the heart of how modern businesses buy, sell, pay staff and communicate. This guide covers the main applications you need to know: e-commerce and online shopping, electronic point of sale (EPOS) and stock control, online banking and cash machines, booking systems, payroll, customer databases and loyalty schemes, electronic payments including contactless, and communication tools such as email and video conferencing. It also covers teleworking, cloud services for business, data protection responsibilities, and how businesses protect themselves against fraud.
Exam questions in this area are usually applied: an online retailer's stock is wrong, a bank replaces counter staff with machines, a shop is considering selling online only. You will be expected to explain how the system works, its benefits and drawbacks for the business, its customers and its staff, and to reach a balanced judgement.
Key terms and definitions
E-commerce — Buying and selling goods and services over the internet.
EPOS (electronic point of sale) — A computerised till system that scans products, records sales and updates stock levels.
EFTPOS (electronic funds transfer at point of sale) — Paying by card at a till, with money transferred electronically.
Stock control system — A system that records how many of each product a business holds and when to reorder.
Online banking — Managing a bank account over the internet: checking balances, paying bills and transferring money.
ATM (automated teller machine) — A cash machine that lets customers withdraw money and check balances outside a branch.
Booking system — A system that records reservations for seats, rooms or appointments and prevents double booking.
Payroll system — A system that calculates employees' pay, tax and deductions.
Loyalty card — A card that rewards repeat customers and records their purchases.
Teleworking — Working from home or away from the office using ICT.
Video conferencing — Holding meetings using video and audio over a network.
Audit trail — A record of who did what and when in a system.
Hard copy — A printed version of a document. Soft copy — the digital version.
Core concepts
E-commerce
Businesses sell online through their own websites and through online marketplaces.
For the business, e-commerce offers a worldwide market, trading 24 hours a day, lower premises costs than shops, easy collection of customer data, and an online catalogue that can be updated instantly with prices, photos and stock levels.
For customers, it offers convenience, wider choice, easy price comparison and home delivery.
Drawbacks include delivery costs and delays, the cost of handling returns, customers being unable to see or try products, the need for website development, security and customer support, intense price competition, and the risk of fraud. Some customers still prefer to pay by cash or shop in person. Moving online-only does not automatically cut total costs, because spending shifts to warehousing, delivery, returns, advertising and IT.
Online shops ask customers to create accounts so that delivery and payment details can be stored for faster checkout, orders can be tracked, and purchase histories used for recommendations. Recommendation systems that analyse purchase history can boost sales, but they raise privacy concerns about how much the business knows about customers.
Secure websites use HTTPS, which encrypts card details between the browser and the server. A padlock symbol shows the connection is encrypted.
EPOS and stock control
At an EPOS till, a barcode is scanned and the computer looks up the product's description and price in the stock database, adds it to the bill, and reduces the stock level automatically. When stock falls to a set reorder level, the system can automatically produce an order to the supplier.
Benefits: faster checkouts, fewer pricing errors, accurate real-time stock information, automatic reordering, and sales data that show which products sell well and when.
Limitations: the system only knows what is scanned. Theft, damaged goods, items misplaced and mis-scanned products mean the stock figure on the computer can differ from what is actually on the shelf, so physical stock checks are still needed. A fixed reorder level may not suit seasonal demand — a shop may run short before a holiday if reorder levels are not adjusted. Installing EPOS also has a set-up cost and requires staff training, which a very small shop may find difficult.
A business that sells both in-store and online must keep a single, real-time stock record shared by both channels; otherwise the website may sell an item that has already been sold in the shop.
Banking and payments
Online banking lets customers check balances, pay bills and transfer money without visiting a branch, at any time. Banks save on branch costs. However, some customers — often older people or those without internet access — find it hard to use, and it creates new risks such as fraud and phishing.
ATMs provide cash and balance checks outside branch hours. They require the card (something you have) and a PIN (something you know), so a stolen card alone is not enough.
Contactless card and phone payments are quick and reduce queues. There are usually limits on single contactless payments to reduce the risk from lost or stolen cards.
Booking systems
Airlines, cinemas, theatres, hotels and doctors' surgeries use online booking systems. When a customer selects a seat, the system locks it for that transaction so no one else can book it at the same time. Once payment is confirmed, the record is updated immediately. This prevents double booking, lets customers book at any time, and gives the business an accurate, real-time picture of availability.
Payroll and customer databases
A payroll system uses data such as hours worked, pay rates and tax codes to calculate pay, tax and deductions automatically, produce payslips and transfer wages to bank accounts. It is fast and accurate, but errors in the input data still produce wrong pay.
A customer database stores contact details and purchase histories, supporting marketing, customer service and loyalty schemes. Loyalty cards reward customers to encourage repeat visits while giving the business detailed data about what each customer buys.
Communication
Email is fast, cheap and can include attachments; it is far cheaper than sending letters. Video conferencing lets people in different places meet face to face on screen, cutting travel costs and time, though it depends on reliable connections and lacks some of the personal contact of meeting in person.
Teleworking lets employees work from home. Employees save commuting time and gain flexibility; the business may save office costs and recruit from a wider area. Drawbacks include isolation, difficulty separating work and home life, harder supervision, and security risks when company data is used outside the office.
Data protection and security
A business holding personal data about customers has a legal responsibility to keep it secure, accurate, used only for stated purposes and not kept longer than necessary. A breach can bring fines and loss of trust.
Protective measures include encryption, strong authentication, access rights, firewalls, regular backups and audit trails, which record who accessed or changed data, helping detect and investigate fraud. Daily backups of transaction databases ensure that if a system fails, little data is lost.
Staff training is as important as technical measures, because many breaches start with human error: clicking a phishing link, using a weak password, or emailing a customer list to a personal account to work at home. That last action takes data outside the company's protection and may break data protection law.
Phishing — fraudulent emails or messages pretending to be from trusted organisations to trick people into revealing details — is one of the most common threats to businesses and their customers.
Cloud services for business
Many businesses now run accounts, email and file storage in the cloud. Benefits include lower hardware costs, access from anywhere and automatic updates. Concerns include dependence on internet access, ongoing subscription fees, and trusting another company with confidential financial data.
Worked examples
Example 1: Stock discrepancy
A supermarket's EPOS system shows 40 units of a product in stock, but only 32 are on the shelf. Suggest reasons. (2 marks)
Answer: Some items may have been stolen or damaged without being recorded (1), or products may have been scanned incorrectly or misplaced elsewhere in the store (1).
Example 2: Preventing double booking
Explain how an online cinema booking system prevents two customers from booking the same seat.
Answer: When the first customer selects the seat, the system locks that seat's record for the duration of the transaction, so it shows as unavailable to others. When payment is confirmed, the seat is recorded as sold immediately in the central database, so no other customer can book it.
Example 3: Bank replaces counters
A bank replaces most of its counter staff with ATMs and online banking. Evaluate the impact.
Answer: The bank saves on wages and branch costs, and customers can bank at any time. However, staff lose jobs or must retrain, and customers who are not confident online, such as some older people, may find services harder to access. Fraud risks such as phishing grow. The change benefits most customers and the bank financially, but the bank should keep some face-to-face or phone support for those who need it.
Example 4: Recognising a data protection issue
An employee emails the company's customer list to their personal email account to work on at home. Why is this a serious concern?
Answer: The personal account is outside the company's security controls, so the customer data could be lost, accessed or leaked. The company remains legally responsible for that personal data, so this could breach data protection law and damage customer trust.
Common mistakes and how to avoid them
- Saying EPOS "always" knows the exact stock. Theft, damage and errors mean physical checks are still needed.
- Listing only benefits of e-commerce. Include costs, delivery, returns and customers who prefer shops.
- Forgetting the staff and customer perspectives. Good answers consider the business, customers and employees.
- Describing a booking system without explaining how double booking is prevented. Mention record locking and real-time updates.
- Treating security as purely technical. Mention staff training.
Exam technique for "ICT Applications in Business and Commerce"
- For "describe how" questions, give the steps in order: scan → look up → update stock → reorder.
- For "evaluate" questions, structure your answer by stakeholder — business, customers, employees — then give a judgement.
- Use correct terms (EPOS, reorder level, audit trail, two-factor authentication) rather than vague phrases.
- Link every benefit to an outcome: "faster checkouts, so queues are shorter and customers are happier".
Quick revision summary
- E-commerce: global, 24/7, lower premises costs; but delivery, returns, competition and security costs.
- EPOS scans, prices and updates stock automatically; reorder levels trigger orders; physical checks still needed.
- Online banking and ATMs give round-the-clock access; card + PIN; contactless is quick with limits.
- Booking systems lock records to prevent double booking.
- Payroll calculates pay automatically; loyalty cards reward customers and gather data.
- Email, video conferencing and teleworking save time and travel but bring isolation and security issues.
- Businesses must protect personal data: encryption, access rights, backups, audit trails and staff training.