1. E-commerce business. technology. society. Kenneth C. Laudon
Carol Guercio Traver
Copyright © 2010 Pearson Education, Inc.

2. Chapter 5 Online Security and Payment Systems
Copyright © 2009 Pearson Education, Inc.
Copyright © 2010 Pearson Education, Inc.

3. Security Threats in the E-commerce Environment
Three key points of vulnerability:
Client
Server
Communications pipeline
Copyright © 2010 Pearson Education, Inc.

4. A Typical E-commerce Transaction
Copyright © 2010 Pearson Education, Inc.

5. Vulnerable Points in an E-commerce Environment
Copyright © 2010 Pearson Education, Inc.

6. Most Common Security Threats
Malicious code
Viruses
Worms
Trojan horses
Bots, botnets
Unwanted programs
Browser parasites
Adware
Spyware
Copyright © 2010 Pearson Education, Inc.

7. Most Common Security Threats
Phishing
Deceptive online attempt to obtain confidential information
Social engineering, scams, spoofing legitimate Web sites
Use information to commit fraudulent acts (access checking accounts), steal identity
Hacking and cyber vandalism
Hackers vs. crackers
Cybervandalism: intentionally disrupting, defacing, destroying Web site
Types of hackers: white hats, black hats, grey hats
Copyright © 2010 Pearson Education, Inc.

8. Most Common Security Threats
Credit card fraud/theft
Fear of stolen credit card information discourages online purchases
Hackers target merchant servers; use data to establish credit under false identity
Online companies at higher risk than offline
Spoofing: misrepresenting self by using fake address
Pharming: spoofing a Web site
Redirecting a Web link to a new, fake Web site
Spam/junk Web sites
Copyright © 2010 Pearson Education, Inc.

9. Most Common Security Threats
Denial of service (DoS) attack
Hackers flood site with useless traffic to overwhelm network
Distributed denial of service (DDoS) attack
Hackers use multiple computers to attack target network
Sniffing
Eavesdropping program that monitors information traveling over a network
Insider jobs
Single largest financial threat
Poorly designed server and client software
Copyright © 2010 Pearson Education, Inc.

10. Technology Solutions Protecting Internet communications Encryption
Securing channels of communication
SSL, S-HTTP, VPNs
Protecting networks
Firewalls
Protecting servers and clients
Antivirus software
Copyright © 2010 Pearson Education, Inc.

11. Tools Available to Achieve Site Security
Copyright © 2010 Pearson Education, Inc.

12. Transforms data into cipher text readable only by sender and receiver
Encryption
Encryption
Transforms data into cipher text readable only by sender and receiver
Secures stored information and information transmission
Provides 4 key dimensions of e-commerce security:
Message integrity – Provides assurance that the message has not been altered.
Nonrepudiation – prevents the user from denying he or she sent the message.
Authentication – provides verification of the identity of the person sending the message.
Confidentiality – gives assurance that the message was not read by others.
Copyright © 2010 Pearson Education, Inc.

13. Symmetric Key Encryption
Sender and receiver use same digital key to encrypt and decrypt message
Requires different set of keys for each transaction
Strength of encryption
Length of binary key used to encrypt data
Advanced Encryption Standard (AES)
Most widely used symmetric key encryption
Uses 128-, 192-, and 256-bit encryption keys
Other standards use keys with up to 2,048 bits
Copyright © 2010 Pearson Education, Inc.

14. Public Key Encryption Uses two mathematically related digital keys
Public key (widely disseminated)
Private key (kept secret by owner)
Both keys used to encrypt and decrypt message
Once key used to encrypt message, same key cannot be used to decrypt message
Sender uses recipient’s public key to encrypt message; recipient uses his/her private key to decrypt it
Copyright © 2010 Pearson Education, Inc.

15. Public Key Cryptography—A Simple Case
Copyright © 2010 Pearson Education, Inc.

16. Public Key Encryption Using Digital Signatures and Hash Digests
Hash function:
Mathematical algorithm that produces fixed-length number called message or hash digest
Hash digest of message sent to recipient along with message to verify integrity
Hash digest and message encrypted with recipient’s public key
Entire cipher text then encrypted with recipient’s private key—creating digital signature—for authenticity, nonrepudiation
Copyright © 2010 Pearson Education, Inc.

17. Public Key Cryptography with Digital Signatures
Copyright © 2010 Pearson Education, Inc.

18. Digital Envelopes Addresses weaknesses of:
Public key encryption
Computationally slow, decreased transmission speed, increased processing time
Symmetric key encryption
Insecure transmission lines
Uses symmetric key encryption to encrypt document
Uses public key encryption to encrypt and send symmetric key
Copyright © 2010 Pearson Education, Inc.

19. Creating a Digital Envelope
Copyright © 2010 Pearson Education, Inc.

20. Digital Certificates and Public Key Infrastructure (PKI)
Digital certificate includes:
Name of subject/company
Subject’s public key
Digital certificate serial number
Expiration date, issuance date
Digital signature of certification authority (trusted third party institution) that issues certificate
Public Key Infrastructure (PKI):
CAs and digital certificate procedures that are accepted by all parties
Copyright © 2010 Pearson Education, Inc.

21. Digital Certificates and Certification Authorities
Copyright © 2010 Pearson Education, Inc.

22. Limits to Encryption Solutions
Doesn’t protect storage of private key
PKI not effective against insiders, employees
Protection of private keys by individuals may be haphazard
No guarantee that verifying computer of merchant is secure
CAs are unregulated, self-selecting organizations
Copyright © 2010 Pearson Education, Inc.

23. Securing Channels of Communication
Secure Sockets Layer (SSL):
Establishes a secure, negotiated client-server session in which URL of requested document, along with contents, is encrypted
S-HTTP:
Provides a secure message-oriented communications protocol designed for use in conjunction with HTTP
Virtual Private Network (VPN):
Allows remote users to securely access internal network via the Internet, using Point-to-Point Tunneling Protocol (PPTP)
Copyright © 2010 Pearson Education, Inc.

24. Proxy servers (proxies)
Protecting Networks
Firewall
Hardware or software that filters packets
Prevents some packets from entering the network based on security policy
Two main methods:
Packet filters
Application gateways
Proxy servers (proxies)
Software servers that handle all communications originating from or being sent to the Internet
Copyright © 2010 Pearson Education, Inc.

25. Firewalls and Proxy Servers
Figure 5.13, Page 301
Copyright © 2010 Pearson Education, Inc.

26. Protecting Servers and Clients
Operating system security enhancements
Upgrades, patches
Anti-virus software
Easiest and least expensive way to prevent threats to system integrity
Requires daily updates
Copyright © 2010 Pearson Education, Inc.

27. Types of Payment Systems
Cash
Most common form of payment in terms of number of transactions
Instantly convertible into other forms of value without intermediation
Checking transfer
Second most common payment form in the United States in terms of number of transactions
Credit card
Credit card associations (Visa, MasterCard)
Issuing banks (CitiBank)
Processing centers (verify account and balance)
Copyright © 2010 Pearson Education, Inc.

28. Types of Payment Systems
Stored Value
Funds deposited into account, from which funds are paid out or withdrawn as needed, e.g., debit cards
Peer-to-peer payment systems
Accumulating Balance
Accounts that accumulate expenditures and to which consumers make period payments
E.g., utility, phone, American Express accounts
Copyright © 2010 Pearson Education, Inc.

29. E-commerce Payment Systems
Credit cards
55% of online payments in 2009
Debit cards
28% of online payments in 2009
Limitations of online credit card payment
Security
Cost
Social equity
Copyright © 2010 Pearson Education, Inc.

30. How an Online Credit Transaction Works
Copyright © 2010 Pearson Education, Inc.

31. E-commerce Payment Systems
Digital wallets
Emulates functionality of wallet by authenticating consumer
Storing and transferring value
Securing payment process from consumer to merchant
Early efforts failed to popularize the idea of a digital wallet
Digital cash
Value storage and exchange using tokens
User deposits money in banks
Bank would send digital token and user spend these on merchant site
Eg. DigiCash
Copyright © 2010 Pearson Education, Inc.

32. E-commerce Payment Systems
Online stored value systems
Based on value stored in a consumer’s bank, checking, or credit card account
PayPal, smart cards
Digital accumulated balance payment
Users accumulate a debit balance for which they are billed at the end of the month
Digital checking:
Extends functionality of existing checking accounts for use online
Copyright © 2010 Pearson Education, Inc.

33. Wireless Payment Systems
Use of mobile handsets as payment devices well- established in Europe, Japan, South Korea
Japanese mobile payment systems
E-money (stored value)
Mobile debit cards
Mobile credit cards
Not as well established yet in the United States
Majority of purchases are digital content for use on cell phone
Copyright © 2010 Pearson Education, Inc.

34. Electronic Billing Presentment and Payment (EBPP)
Online payment systems for monthly bills
40% + of households in 2009 used some EBPP; expected to grow significantly
Two competing EBPP business models:
Biller-direct (dominant model)
Consolidator
Both models are supported by EBPP infrastructure providers
Copyright © 2010 Pearson Education, Inc.