Chapter 13 Paying Via The Net Agenda

Chapter 13 Paying Via The Net

Agenda • • • Digital Payment Requirements Fraud Detection Online Payment Methods Online Payment Types The Future Payment

Digital Payment Requirements • • Acceptability Anonymity: privacy & untraceability Convertibility Efficiency Flexibility Integration Availability

Digital Payment Requirements • • • Reliability Scalability Security Integrity Authentication Usability

Agenda • • • Digital Payment Requirements Fraud Detection Online Payment Methods Online Payment Types The Future Payment

Fraud Detection • Methods • Products

Methods • Checksum for credit card no. • Verify the credit card no. and expiration date with card issuer • Check postal address with online services • Confirmation with e-mail address • Digital certificates for non-repudiation • Predefined purchase limits each time and per week

Methods • Confirmation web page for terms and conditions • Data base with credit card no. , e-mail address, and phone no. • Document the complete online transactions • Trustworthy logistics partner • Unique key for online shipping digital merchandise

Methods • Business rules for checking suspicious orders and credit card no.

Products • Fraud Shield by Clear. Commerce • Visa

Agenda • • • Digital Payment Requirements Fraud Detection Online Payment Methods Online Payment Types The Future Payment

Online Payment Methods • Pre-paid – Electronic cash systems – Smart cards • Instant-paid – Debit cards • Post-paid – – Credit cards Invoices Internet cheques Cash on delivery

Electronic cash systems • Saving digital money to the hard disk or floppy disk • Pros & cons – – – – Anonymity Security with encryption and digital signature Splitting value Internet usage only Easy to lose No anonymity with physical delivery No open standard

Electronic cash systems • Products – Digi. Cash – Net. Cash – Cyber. Coins – IBM micro payment – Milli. Cent

Smart Card • Embedded chips with encrypted digital money • Pros and cons – Use password to ensure the security – Cyber and real usage – Low transaction cost – No open standard

Smart Card • Types – Health Care – Phone – Debit • Products – Mondex – Visa. Cash

Instant-paid • Debit cards • Pros and cons – – – – Access to bank’s database Less fraud & error High security Complicated Need hardware & software Signature through fax High communication costs

Instant-paid • Product – Direct Debit

Credit Cards • Four players: customer, merchant, issuer and acquirer • Pros & cons – International – Low security – High transaction cost – Fraud

Credit Cards Security standards • Secure Socket Layer (SSL) – By Netscape – Encrypt traffic between the web browser and web server • Secure Electronic Transaction (SET) – By Visa and Master. Card – Public key encryption using digital certificates for both buyer and seller

Credit Cards Security standards • SET features – – High security Low visibility Standards Non-repudiation • Chip-secured Secure Electronic Transaction CSET – Use chip card for any network devices – Reduce cost and complexity for merchant

Invoices • Business-to-business • Usage reasons – High volume transaction – No need to reorganize the old process – Low transaction fee

Internet Cheques • Electronic cheques • Pros and cons – Require payer’s digital signature – Special software & network – Less manual steps • Systems – echeck by US Department of the Treasury

Cash on Delivery (COD) • Pros and cons – Require logistics party – More expensive – Extra cost paid by customer

Agenda • • • Digital Payment Requirements Fraud Detection Online Payment Methods Online Payment Types The Future Payment

Online Payment Types • Micro payments – Less than $5 – Electronic cash transaction • Consumer payments – Between &5 and $500 – Credit card transactions • Business payments – Over $500 – Direct debit or invoice transaction

Agenda • • • Digital Payment Requirements Fraud Detection Online Payment Methods Online Payment Types The Future Payment

The Future Payment • Projects – – Secure Electronic Marketplace for Europe (SEMPER) The Open Trading Protocol (OTP) Open Buying on the Internet Global Trust Enterprise • Goal – Internet payment infrastructure to achieve the digital payment requirements

Points to Remember • • • Digital Payment Requirements Fraud Detection Online Payment Methods Online Payment Types The Future Payment