WWWWWW

ELC 200

DAY 26

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

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

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Assignment # 8

• Due April 27 At 2 PM

• Complete Discussion Questions on Page 500 of the text

• Turn in well formatted Word Document

4WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall

NTERNET SECURITY PROTOCOLS & STANDARDS

• Web Application– Secure Socket Layer (SSL)– Secure Hypertext Transfer Protocol (S-HTTP)

• E-Commerce– Secure Electronic Transaction (SET)

• E-Mail– PGP– S/MIME

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SSL

• Operates between application and transport layers

• Most widely used standard for online data encryption

• Provide services:– Server authentication– Client authentication– Encrypted SSL connection

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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

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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

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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

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S/MIME

• Provides security for different data types and attachments to e-mails

• Two key attributes:– Digital signature– Digital envelope

• Performs authentication using x.509 digital certificates

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GOVERNMENT REGULATIONS

• National Security Agency (NSA)

• National Computer Security Center (NCSC)

• National Institute of Standards and Technology (NIST)

• Office of Defense Trade Controls (DTC)

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Chapter 15

E-Payments: Getting the Money

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OBJECTIVES

• Brief History of Money

• Features of Real-World Cash

• Electronic Money

• Internet-based Systems

• Electronic Payment Media

• Issues and Implications

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BRIEF HISTORY OF MONEY

• Barter

• Medium of Exchange– Tokens– Notational Money– Credit System

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FEATURES OF REAL-WORLD CASH

• Convenience

• Wide Acceptance

• Anonymity

• No Hidden Cost of Use

• No Audit Trail

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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

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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)

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ICES TEST

• Interoperability– Ability to move between system

• Conservation– Temporal consistency and durability

• Economy– Cost of use

• Scalability– Multiple users

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TRANSACTION PROPERTIES

Token

Atom

icity

Consistency

Isolation

Durability

Interoperability C

onservation

Econom

y

Scalability

Cash Y Y Y Y Y Y N Y Y

Check N Y Y N Y N Y N Y

Credit Card N N Y N Y N - N Y

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ELC 200

DAY 27

20WWWWWW Awad –Electronic Commerce 2/e© 2004 Pearson Prentice Hall

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

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INTERNET-BASED PAYMENTS

• Electronic Cash

• Credit Cards

• Debit Cards

• Smart Cards

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NONTECHNICAL PROPERTIES

• Acceptability

• Ease of Integration

• Customer Base

• Ease of Use and Access

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ELECTRONIC TRANSACTION SYSTEMS

• CyberCash– http://www.cybercash.com/– Bought by Verisign

• Netbill– http://www.netbill.com/

• First Virtual– No longer in internet payment systems

Internet Service Providers: Internet-Based Payments

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SECURE ELECTRONIC TRANSACTIONS (SET)

• http://www.setco.org/

• Confidentiality

• Integrity

• Authentication

• Interoperability

Internet Service Providers: Internet-Based Payments

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SET

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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

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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

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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

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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

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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

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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

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ACHCustomer’s

BankMerchant’sBank

Customer Merchant

Step 1

Step 3

Step 4

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).

ACHProvider

ACHProvider

Step 2

Step 1

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Check Numbers

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ISSUES & IMPLICATIONS

• Consumer Needs

• Corporate Processes

• Corporate Strategy

• Regulation of Competition

• Economics & Social Processes

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Chapter 15

E-Payments: Getting the Money