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October, 2004 e-Commerce 101 1

e-Commerce 101


FACT OR FICTION ??? VISA processed 5,200 credit card transactions per VISA processed 5,200 credit card transactions per

minute this past Holiday Season?minute this past Holiday Season?

The first ATM machine was developed in 1939?The first ATM machine was developed in 1939?

The first Universal Credit Card for use in The first Universal Credit Card for use in restaurants was issued in 1930?restaurants was issued in 1930?


Introduction ….


FACT OR FICTION ??? VISA processed 5,200 credit card VISA processed 5,200 credit card

transactions per minute this past transactions per minute this past Holiday Season?Holiday Season?

FICTION: VISA processed over 5,200 FICTION: VISA processed over 5,200 transactions PER SECOND this past transactions PER SECOND this past Holiday Season!Holiday Season!


FACT OR FICTION ??? The first ATM machine was developed The first ATM machine was developed

in 1939?in 1939?

FACT: Luther George Simjiian FACT: Luther George Simjiian patented, the Bankamatic, a not so patented, the Bankamatic, a not so workable version of today’s ATMworkable version of today’s ATM..


FACT OR FICTION ??? The first Universal Credit Card for use The first Universal Credit Card for use

in restaurants was issued in 1930?in restaurants was issued in 1930?

FICTION: In 1950, FICTION: In 1950, Frank McNamara, Frank McNamara, the founder of Diners’ Club, is the founder of Diners’ Club, is credited with having invented the credited with having invented the first universal credit card for use in first universal credit card for use in restaurants in 1950.restaurants in 1950.


e-Commerce 101:

Course Objective

We will provide an overview of We will provide an overview of electronic credit card payment electronic credit card payment processing concepts, architecture, processing concepts, architecture, experiences, partners, internal experiences, partners, internal resources, and the eCommerce resources, and the eCommerce services we provide. services we provide.


e-Commerce 101:

Outline Definition of e-Commerce.Definition of e-Commerce.

Credit card payment processing concepts, Credit card payment processing concepts, fee’s and security. fee’s and security.

e-Commerce Web Applications.e-Commerce Web Applications.

Getting Started.Getting Started.

e-Commerce at PSU (History, Services, e-Commerce at PSU (History, Services, Architecture) Architecture)

Q & AQ & A


e-Commerce Definitions…


Definitions of e-Commerce… ON-LINE Perspective:ON-LINE Perspective:

The buying and selling of products and services by businesses and consumers over the internet.The buying and selling of products and services by businesses and consumers over the internet.

COMMUNICATION Perspective:COMMUNICATION Perspective: The delivery of information, products/services, or payments via Telephone lines, computer networks, or any other meansThe delivery of information, products/services, or payments via Telephone lines, computer networks, or any other means


Definitions of e-Commerce: BUSINESS PROCESS Perspective:BUSINESS PROCESS Perspective:

The application of technology toward the automation of business transactions and workflows. The application of technology toward the automation of business transactions and workflows.

BUSINESS SERVICE Perspective:BUSINESS SERVICE Perspective: A tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and A tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and

increasing the speed of service delivery.increasing the speed of service delivery.


Presentation’s perspective:Presentation’s perspective: The process of providing the capability of buying and selling products and information on the Internet and other on-line services ….The process of providing the capability of buying and selling products and information on the Internet and other on-line services ….

OR SIMPLY STATEDOR SIMPLY STATED Collection of Payment for Goods and Services over the internet!Collection of Payment for Goods and Services over the internet!

Definitions of e-Commerce:


Credit Card Payment Processing Concepts, Fee’s

and Security


Payment Processing: Defined

On-Line Payment ProcessingOn-Line Payment ProcessingCoordinating the flow of secured transactions among a Coordinating the flow of secured transactions among a

complex network of processors and financial institutionscomplex network of processors and financial institutions


Payment Processing: Components

Cardholder Issuing Bank

Cardholder / Customer

Processor

Credit Card Associations

¨

Settlement

Acquiring Bank

Payment Gateway

Merchant BankMerchant


Payment Processing: Phases

AUTHORIZATIONAUTHORIZATION

andand

SETTLEMENTSETTLEMENT


Payment Processing: Phases

Verifies that the card is activeVerifies that the card is active

AUTHORIZATIONAUTHORIZATION

Verifies Cardholder has creditVerifies Cardholder has creditCardholder’s Open-To-Buy is reducedCardholder’s Open-To-Buy is reduced

Collect Cardholder name – record keepingCollect Cardholder name – record keeping


Payment Processing: Phases SETTLEMENTSETTLEMENT (Batch Deposit) (Batch Deposit)Capture authorizations in batchCapture authorizations in batch

Cardholder account is chargedCardholder account is charged

$$ deposited to Merchant Bank Acct$$ deposited to Merchant Bank Acct


Putting it all together: Authorization


Payment Gateway

Processor


ProcessorPayment Gateway

Merchant

Merchant


Putting it all together: Settlement


Payment Gateway


Processor

Acquiring Bank

Merchant Bank

Merchant


Transaction Processing: Design Considerations

BankBank

ProcessorProcessorPayment Payment Gateway Gateway

(Verisign)(Verisign)

22 <Authorize><Authorize>22

Card Card Issuing Issuing BankBank

22

33

33

33

<Reconciliation>

““Checkout”Checkout”

<Web App><Web App>

ShopperShopper

ShopperShopper

ShopperShopper

11

Financial

System

Merchant Bank

(Deposit)

6

6

55 5555

<Settle><Settle>

5544 44

44

““Process Process Order”Order”


Payment Processing: Fee

Bank Processing Fee StructureBank Processing Fee Structure


Payment Processing: Fees

Application FeeApplication Fee

Discount RateDiscount Rate

Transaction FeesTransaction Fees

Monthly FeesMonthly Fees

Credit Card Associations

¨

Acquiring Bank


Payment Processing: Security

Fraud and SecurityFraud and Security


Payment Processing: Security

Visa CISPVisa CISP Cardholder Information Security ProgramCardholder Information Security Program

http://usa.visa.comhttp://usa.visa.com (Search: CISP) (Search: CISP)

Verified by Visa ProgramVerified by Visa Program

MasterCard Site Data Protection ServiceMasterCard Site Data Protection Service

¨


Payment Processing: Fraud

Card Present vs. Card Not PresentCard Present vs. Card Not Present

Authorization vs. Address Verification (AVS)Authorization vs. Address Verification (AVS)

Card Verification Value (CVV)Card Verification Value (CVV)

Fraud Protection ProgramsFraud Protection Programs


Payment Processing: Summary

Coordinating the flow of Coordinating the flow of secured transactions among a secured transactions among a complex network of processors complex network of processors and financial institutionsand financial institutions


e-Commerce Web Applications….


e-Commerce Web Applications Extension of Brick and Mortar…Extension of Brick and Mortar… Design Considerations…Design Considerations…

Navigation and Shopping Flow…Navigation and Shopping Flow… Home PageHome Page Registration / Logon / Address BkRegistration / Logon / Address Bk Category PageCategory Page Product PageProduct Page Shopping CartsShopping Carts


e-Commerce Web Applications Order Processing …Order Processing …

Checkout…Checkout… PROCESS PAYMENT…PROCESS PAYMENT… Order AcknowledgementOrder Acknowledgement Customer ServiceCustomer ServiceSecurity and Privacy statement .. Security and Privacy statement ..


e-Commerce Web Applications

On Line Store examples …On Line Store examples … Amazon…Amazon… LL Bean…LL Bean… U.S. Post Office…U.S. Post Office…Yukon Jack….Yukon Jack….


Getting Started…


Getting Started…..

Define your ObjectivesDefine your Objectives Identify ResourcesIdentify Resources

Select Bank Processing PartnersSelect Bank Processing Partners

Merchant BankMerchant Bank

Acquiring Bank/ProcessorAcquiring Bank/Processor

Payment GatewayPayment Gateway

Spring, 2004 e-Commerce 101 34

Getting Started: Gateway

Payment Gateway

ProcessorAcquiring

Bank

Web Site

Merchant

Direct ConnectDirect Connect

Spring, 2004 e-Commerce 101 35

Getting Started: Financial Partners

Payment Gateway

Payment GatewayPayment Gateway VeriSignVeriSign CyberSourceCyberSource SurePaySurePay NOVANOVA

VitalVital

PaymentechPaymentech First DataFirst Data

ProcessorAcquiring

Bank

Processor/BankProcessor/Bank


Getting Started…..

Start Small….Start Small….

Architect your solution…Architect your solution…

See Resource list ….See Resource list ….


e-Commerce at PSU:Administrative Information

Services (AIS)


Turn your Web Applications into Gold with e-

Commerce….


E-Commerce at PSU Collection of Payment for Goods and Services over the internet….Collection of Payment for Goods and Services over the internet….

Collection Methods for PSU includes Visa, MasterCard, Discover and Collection Methods for PSU includes Visa, MasterCard, Discover and American Express… American Express…

The Future….. The Future…..


What does AIS provide?

FN07 Policy Credit Card Sales (Internet)FN07 Policy Credit Card Sales (Internet)

AIS provides Infrastructure: Hardware, AIS provides Infrastructure: Hardware, Software, Support ..Software, Support ..

AIS operates the PSU Central Payment AIS operates the PSU Central Payment Processing Server…Processing Server…


What does AIS provide? Make life easier and more secure for PSU departments and customers….Make life easier and more secure for PSU departments and customers….

Provide Services to e-Commerce enable applicationsProvide Services to e-Commerce enable applicationsComply to VISA CISP ProgramComply to VISA CISP ProgramEliminate storing Credit Card numbers around PSU Eliminate storing Credit Card numbers around PSU


History

1999 2000 2001 2002 2003 2004


Who uses e-Commerce?

API - 15+ e-Commerce enabled Web Apps – APIAPI - 15+ e-Commerce enabled Web Apps – APIAdmissions, Registrar, Tuition, etc.Admissions, Registrar, Tuition, etc.

100+ e-Commerce Accounts 100+ e-Commerce Accounts (Merchants)…(Merchants)…

ePay – Virtual Credit Card TerminalePay – Virtual Credit Card Terminal

eStore – 12 Stores (30 events)eStore – 12 Stores (30 events)


Purchase a transcript from the registrar’s office…Purchase a transcript from the registrar’s office…Pay Undergraduate and Graduate School admissions fees Pay Undergraduate and Graduate School admissions fees Apply payments to the Students Account via eLion (Parents and students)Apply payments to the Students Account via eLion (Parents and students)

…a Credit Card can be used at Penn State to…


Make Donations to the Penn State Alumni department…Make Donations to the Penn State Alumni department…Apply points to the ID + meal plans Apply points to the ID + meal plans Pay your Penn State Fitness Pass fees Pay your Penn State Fitness Pass fees Purchase items from the Penn State Golf Store, Palmer Art Museum and Pennsylvania State Data Center…Purchase items from the Penn State Golf Store, Palmer Art Museum and Pennsylvania State Data Center…



Pay registration fees for Conferences, Sport Camps, Scientific meetings, PASDC, College for Kids programs, and events…Pay registration fees for Conferences, Sport Camps, Scientific meetings, PASDC, College for Kids programs, and events…Order ‘Get Well’ and ‘All Occasion’ Gift baskets from Penn State food servicesOrder ‘Get Well’ and ‘All Occasion’ Gift baskets from Penn State food servicesPurchase DVD’s and other media from WPSX…Purchase DVD’s and other media from WPSX…




Purchase meat from the Ag Sciences Meat lab…Purchase meat from the Ag Sciences Meat lab…Make Tuition payments at several commonwealth locations….Make Tuition payments at several commonwealth locations….Complete Housing and Food Service purchases …Complete Housing and Food Service purchases …Pay for Printing and Copy services at University Park…Pay for Printing and Copy services at University Park…


PSU e-Commerce Services

ePay, Merchant Admin, ePay, Merchant Admin, API, and eStoreAPI, and eStore


ePay

““Virtual” Credit Card Virtual” Credit Card TerminalTerminal

Replaces Bank Processor Replaces Bank Processor Leased MachineLeased Machine

Saves $$Saves $$ History ToolHistory Tool Secure, Easy to UseSecure, Easy to Use


Merchant Admin

Provide Tools for:Provide Tools for: Generating / emailing receiptsGenerating / emailing receipts Issuing CreditsIssuing Credits ReportingReporting


API’s

For calling Credit Card Payment For calling Credit Card Payment Services – Authorize and DepositServices – Authorize and Deposit

UP and Commonwealth Locations can UP and Commonwealth Locations can use to create their own e-Commerce use to create their own e-Commerce applicationsapplications


Services: eStore Hosting

AIS provides “Framework” for Hosting AIS provides “Framework” for Hosting Penn State e-Commerce StoresPenn State e-Commerce Stores

Host the Website (Shopping Catalog)Host the Website (Shopping Catalog) Maintain hardware and softwareMaintain hardware and software

Handle Payment ProcessingHandle Payment Processing

Small departments ….Small departments ….


Services: eStore Hosting

Home PageHome Page Product PageProduct Page CheckoutCheckout Order StatusOrder Status Shopping CartShopping Cart Help/FAQHelp/FAQ


Other e-Commerce Services

e-Commerce Home Pagee-Commerce Home Pagehttp://ais.its.psu.edu/e-Commerce

e-Commerce Users Group (EUG)e-Commerce Users Group (EUG)


Other e-Commerce Services

e-Commerce Statistics available to e-Commerce Statistics available to Financial OfficersFinancial Officers

ITS Training Seminar – “Getting ITS Training Seminar – “Getting Started with e-Commerce”Started with e-Commerce”Twice per semesterTwice per semester


PSU e-Commerce Architecture


WebSphere Commerce Components WebSphere Commerce Business WebSphere Commerce Business

Edition 5.5Edition 5.5 Payments 5.5Payments 5.5 DB2DB2 WAS 5.0WAS 5.0 I H S (Apache Web Server)I H S (Apache Web Server)


WebSphere Commerce Components WebSphere Commerce Studio 5.0WebSphere Commerce Studio 5.0

JAVA / J2EEJAVA / J2EE JSP, EJB, etc.JSP, EJB, etc.

Commerce (eStore Hosting)Commerce (eStore Hosting) W2K W2K

October, 2004

e-Commerce Payment Architecture

““Checkout”Checkout”

<Web App><Web App>

StudentStudent

ShopperShopper

ePayePayAPIAPI

““Process Process Order”Order”

PSUPSU

PAY MGRPAY MGR

Cas

sett

eC

asse

tte

BankBank

Processor – AProcessor – A

Cas

sett

eC

asse

tte

ACHACH

Cas

sett

eC

asse

tte

BankBank

Processor – BProcessor – B

WebWeb

ServicesServices

WebWeb

ServicesServices

Business/Student Info SystemsBusiness/Student Info Systems

GatewayGatewayGatewayGateway


e-Commerce Resources


Resources - FT e-Commerce Consultant (Manager)e-Commerce Consultant (Manager) e-Commerce Consultant (Operations)e-Commerce Consultant (Operations) Developer (2 – Java/Asp)Developer (2 – Java/Asp)

DB2 Data base administratorDB2 Data base administrator Server Administration (W2K)Server Administration (W2K)

Resources - Supporting


e-Commerce 101:

Outline Definition of e-Commerce.Definition of e-Commerce.

Credit card payment processing concepts, Credit card payment processing concepts, fee’s and security. fee’s and security.

e-Commerce Web Applications.e-Commerce Web Applications.

Getting Started.Getting Started.

e-Commerce at PSU (History, Services, e-Commerce at PSU (History, Services, Architecture) Architecture)

Q & AQ & A


Q & A

http://ais.its.psu.edu/eCommercehttp://ais.its.psu.edu/eCommerce

mea1

Education

online payment processing

bank merchant bank merchant

credit card transactions

transaction processing

universal credit card

stated collection of

ecommerce definitions

merchant bank acct