ELC 200 DAY 26

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 2 Agenda Quiz 4 (last) will be April 30 Chap 13, 14, & 15 Assignment 8 on next slide Should be progressing on Framework Finish Lecture/Discuss E-security & Encryption Lecture Discuss Payment Systems

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 3 Assignment # 8 Due April 27 At 2 PM Complete Discussion Questions on Page 500 of the text Turn in well formatted Word Document

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 4 NTERNET SECURITY PROTOCOLS & STANDARDS Web Application –Secure Socket Layer (SSL) –Secure Hypertext Transfer Protocol (S-HTTP) E-Commerce –Secure Electronic Transaction (SET) –PGP –S/MIME

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 5 SSL Operates between application and transport layers Most widely used standard for online data encryption Provide services: –Server authentication –Client authentication –Encrypted SSL connection

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 6 S-HTTP Secure Web transactions Provides transaction confidentiality, integrity and nonrepudiation of origin Able to integrate with HTTP applications Mainly used for intranet communications Does not require digital certificates / public keys

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 7 SET One protocol used for handling funds transfer from credit card issuers to a merchant’s bank account Provide confidentiality, authentication and integrity of payment card transmissions Requires customers to have digital certificate and digital wallet

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 8 PGP Encrypts the data with one-time algorithm, then encrypts the key to the algorithm using public-key cryptography Supports public-key encryption, symmetric- key encryption and digital signatures Supports other standards, e.g. SSL

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 9 S/MIME Provides security for different data types and attachments to s Two key attributes: –Digital signature –Digital envelope Performs authentication using x.509 digital certificates

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 10 GOVERNMENT REGULATIONS National Security Agency (NSA) National Computer Security Center (NCSC) National Institute of Standards and Technology (NIST) Office of Defense Trade Controls (DTC)

Chapter 15 E-Payments: Getting the Money

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 12 OBJECTIVES Brief History of Money Features of Real-World Cash Electronic Money Internet-based Systems Electronic Payment Media Issues and Implications

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 13 BRIEF HISTORY OF MONEY Barter Medium of Exchange –Tokens –Notational Money –Credit System

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 14 FEATURES OF REAL-WORLD CASH Convenience Wide Acceptance Anonymity No Hidden Cost of Use No Audit Trail

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 15 ELECTRONIC MONEY (E-Money) Identified and Online (+I+L) –Credit cards and debit cards Identified and Offline (+I-L) –Check Anonymous and Online (-I+L) –Cash payments Anonymous and Offline (-I-L) –Electronic cash

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 16 ACID TEST Atomicity –All or nothing Consistency –All agree Isolation –Doesn’t effect other transactions Durability –Can go back to previous state (i.e. reversible)

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 17 ICES TEST Interoperability –Ability to move between system Conservation –Temporal consistency and durability Economy –Cost of use Scalability –Multiple users

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 18 TRANSACTION PROPERTIES TokenAtomicityConsistencyIsolationDurabilityInteroperabilityConservationEconomyScalability CashYYYYYYNYY CheckNYYNYNYNY Credit CardNNYNYN-NY

ELC 200 DAY 27

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 20 Agenda Quiz 4 (last) will be April 30 Chap 13, 14, & 15 Augusto will be giving his presentation Assignment 8 Due Should be progressing on Framework –Everything Due May 4 at 10AM Lecture/Discuss Payment Systems

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 21 INTERNET-BASED PAYMENTS Electronic Cash Credit Cards Debit Cards Smart Cards

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 22 NONTECHNICAL PROPERTIES Acceptability Ease of Integration Customer Base Ease of Use and Access

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 23 ELECTRONIC TRANSACTION SYSTEMS CyberCash – –Bought by Verisign Netbill – First Virtual –No longer in internet payment systems Internet Service Providers: Internet-Based Payments

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 24 SECURE ELECTRONIC TRANSACTIONS (SET) Confidentiality Integrity Authentication Interoperability Internet Service Providers: Internet-Based Payments

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 25 SET

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 26 ELECTRONIC PAYMENT MEDIA Trusted Third Party –CyberCash Notational Fund Transfer-related Type –Credit Card (SET) Digital Cash/ Electronic Money –Anonymous & untraceable digital cash –David Chaum Internet Service Providers: Electronic Payment Media

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 27 CREDIT CARDS Transactional cost paid by merchants –2-5 cents per transaction –Monthly fees Shopping Cart Credit Card Processing Services Risks of Using Credit Cards Credit Card Laundering

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 28 DEBIT CARDS Convenience Widely Accepted Easy Application No Grace Payment Period Less Protection for Undelivered Items –No limits of liability like credit Card Risks for Merchants - Overspent Customers –2-3 day processing versus immediate for credit cards Use of PIN creates online transaction –Hard to dispute! Higher transaction fee for merchants

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 29 SMART CARDS Provide users the ability to make a purchase Hold user’s cash, ID information and keys Provide authentication of transaction Contain encryption and decryption of messages Enhance data portability Similar to electronic purse

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 30 DIGICASH & E-WALLET No audit trail Offers true digital economy Resistance from the Treasury Department E-wallet –A carrier of e-cash –A simple and secure way of carrying currency electronically

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 31 ELECTRONIC FUNDS TRANFER & AUTOMATED CLEARING HOUSE Electronic Funds Transfer (EFT) –A computer-based system that facilitates the transfer of money between two financial institutions overnight Automated Clearing House (ACH) –Involves more than one financial institution routing to debit and credit the correct accounts

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 32 ACH Customer’s Bank Merchant’s Bank CustomerMerchant Step 1 Step 3 Step 4 Step 5 Step 1: The Customer sends payment information to the ACH Provider (probably through a link at the merchant’s website). The information should include the information from the MICR line of Customer’s check (the ABA routing number of the Customer’s Bank and the Customer’s account number at the bank). Step 2: Based on the commitment to pay represented by that information, the Merchant completes the transaction. It might ship the goods at that time, or it might wait a few days to receive payment. Step 3: The ACH Provider sends the ACH debit entry to the Customer’s Bank. Step 4: The Customer’s Bank responds to that entry by removing funds form the Customer’s account and sending them to the Merchant’s Bank (through ACH network). ACH Provider ACH Provider Step 2 Step 1

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 33 Check Numbers

Awad –Electronic Commerce 2/e © 2004 Pearson Prentice Hall 34 ISSUES & IMPLICATIONS Consumer Needs Corporate Processes Corporate Strategy Regulation of Competition Economics & Social Processes

Chapter 15 E-Payments: Getting the Money