1. Electronic Commerce Yong Choi School of Business CSU, Bakersfield

2. Definition of EC Electronic commerce (EC) is an emerging concept that describes the buying and selling of products, services and information via and the Internet and computer networks (EDI). E-Business?

3. History of EC 1970s: Electronic Funds Transfer (EFT) –Used by the banking industry to exchange account information over secured networks Late 1970s and early 1980s: Electronic Data Interchange (EDI) for e-commerce within companies –Used by businesses to transmit data from one business to another 1990s: the World Wide Web on the Internet provides easy-to- use technology for information publishing and dissemination –Cheaper to do business (economies of scale) –Enable diverse business activities (economies of scope)

4. Why business is interested in EC? Not just save cost and increase productivity –Paper check Vs. E-check Change the nature of competition –Etrade.com / Amazon.com Create new businesses –Citrix.com / Priceline.com

5. Ecommerce infrastructure Information superhighway infrastructure –Internet, LAN, WAN, routers, etc. –telecom, cable TV, wireless, etc. Messaging and information distribution infrastructure –HTML, XML, e-mail, HTTP, etc. Common business infrastructure –Security, authentication, electronic payment, directories, catalogs, etc.

6. E-COMMERCE BUSINESS MODELS 5-6

7. Some examples B2B: GM and suppliers (SCM) B2C: Amazon C2B: Priceline C2C: ebay G2C: Paying tax, Vehicle registration B2G: Lockheed (prodcuts/services to DoD)

8. 8 Intranet A private version of the Internet Use TCP/IP A network that uses a Web Browser as a universal applications client and that is accessible only by individuals within a particular enterprise

9. Public/External Internet Users Intranet Clients Servers ERP Legacy systems E-mail servers Web servers Databases Firewalls 9 The Intranet (cont.)

10. 10 Extranet A collection of Intranets (known as extended Intranet) Also use TCP/IP A network that links business partners to one another over the Internet by tying together their corporate intranet

11. 11 Enterprise Consumers Suppliers Clients Business Partners Distributors VPN Internet Intranet Extranet Intranet VPN Remote Employees The Extranet (cont.)

12. 12 E-Commerce Security Cryptography –Encryption and decryption of information Secret Key (symmetric) Cryptography Public Key (asymmetric) Cryptography Digital Signature

13. Cryptography Any information (such as order) in cyberspace must be delivered securely using cryptography technology. History of CryptographyCryptography Rewrite contents (encryption) so that they cannot be read without key –Encrypting function: Produces encrypted message –Decrypting function: Extracts original message Method –Secret key Cryptography –Public key Cryptography –Digital signature

14. 14 Secret Key Cryptography Use a single key –Key: a set of random numbers to encrypt/decrypt information Known as symmetric encryption or private key encryption The same key is used by sender and receiver Easy to use, suitable when only two distinctive parties are involved Less secure (than public key cryptography), when many parties are involved

15. 15 Secret Key Cryptography (symmetric) Scrambled Message Original Message Sender Internet Scrambled Message Key sender (= Key receiver ) Encryption Original Message Receiver Key receiver Decryption

16. 16 Public Key Cryptography Use a pair of key (public and private) Known as asymmetric encryption The public key –Known to all authorized users The private key –Known only to key’s owner Easy to use, more secure (than secret key cryptography), suitable when many parties are involved Requires sharing of both keys

17. 17 Sender Original Message Scrambled Message Public Key receiver Original Message Receiver Private Key receiver Internet Public Key Cryptography Mechanism Message

18. 18 Digital Signature Public key cryptography problem –Receiver cannot ensure that a message is actually coming from sender. Hussein’s subordinate can send a fake message using Hussein’s email system - which looks originated from real Hussein - to Bush.

19. 19 Digital Signature Goal –Guarantee that message must have originated with a certain entity (increase security) Idea –Encrypt digital signature with private key –Decrypt digital signature with public key Only owner of private key could have generated original signature

20. Sender Original Message Scrambled Message Private Key sender Original Message Receiver Public Key sender Internet Digital Signature Digital Signature