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 ClearCommerce

• 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– DigiCash– NetCash– CyberCoins– IBM micro payment– MilliCent

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– VisaCash

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 MasterCard– 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 C-SET– 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