Академический Документы
Профессиональный Документы
Культура Документы
Ashutosh Saxena and A. R. Dani, Institute for Development and Research in Banking Technology, IDRBT, Castle Hills, Road No. I , Masab Tank, Hydcrabad, (AP) INDIA. Einails (asaxena, ardani}@idrbt.ac.in Considering the strategic importance of Econinicrce, Ministry of Information Technology, Government of India - sponsorcd a project to develop Technologics for E-Commerce in the country. The research and devclopment activities were jointly carried out by IDRBT and CMC Ltd. Under this project integrated product suite for conducting end-to-cnd c-Commercc transaction using credit card and e-chequc with PKl technology for payment purposes and to address the perimeter security firewall and intruder detection system, wcrc devclopcd. The paper discusses various payment instruments and present onc of them namcly e-cheque protocol and development activities along with its usage and advantagcs over other.
Ah.vtmcf-
1. INTRODUCTION
Ovcr thc past decadc, applications of communications and information technologics havc bcgun to cmcrgc in practically every aspect of economic activity. Their predominance in modern industry and in society as a whole has creatcd what some have called a Digital Economy, whcrc growth, coinpetitivcncss and wcalth creation are increasingly dependent on rapid technological innovation. Electronic commcrcc is often considercd the economic engine for growth in the Digital Economy. Its scope and impacts rangc far bcyond Internet-bascd rctail distribution and clcctronic shopping, potcntially rcaching most if not all business-to-business /consumer/govemment relationships across the cconomy. e-commerce will provide new value by intcgrating information with the processcs to provide a uniticd view of thc business for customers, partners, and internal participants. Infonnation will be automatically and Instantly combined and delivcred in new ways to persuade, inform and improvc overall quality of scrvicc. Proccsscs will iiiovc fjstcr and inorc accurately, and interactions with ciistomcrs and partners will autoinatically generate information that will provide new insights for business strategies and decision-making. In fact, the predominance of coniputcr tcchnologics, and thc incrcasing scopc and utility of information nctworks such as the Intcrnct, have made possible the shifting of a vast range of industrial activities and processes to clectronic form. It is said that the Internet is the markctplacc of thc future. Although few years back thc Internct has bccn primarily uscd as a incans of publishing inforination about a companys goods and
~
services. many vendors have now begun to offer their products in electronic departmental stores. Use of ecommerce, electronic trading over the Internet or other open networks, is expected to increase at an impressive rate and holds out the prospect of huge profits. Analysts stated that the value of business-to-business e-commerce in the United States will grow from $1.2 trillion in year 2001 to $4.8 trillion by 2004 [ 11. The Nasscom-McKinsey report predicts that India has the potential to create an e-commerce value worth US$1.5 billion by 2004 and US$lO billion by 2010. Business-to-consumer and business-to-government ecommcrce arc also projectcd to expand significantly. For progressive corporations that find ways to capitalize on the business opportunities with this increasing volume represents, the rewards are considerablc, but of course, with a layer of security risks. Thus the major requirement for e-commcrce is to provide the highly secure and trusted environmcnt over the Internet for conducting commercial transactions. This reqGres autlicntication of transacting partics, privacy, message intcgrity and non-repudiation. Digital signatures and Public Key Infrastructure (PKI) technology address this requirement of e-commerce. For business organization, it is important to securc its intranct from the opcn network and provide selective access control and intrudcr detcction mechanism. Many of the above technologies, which provide necessary security are expensive and arc subjectcd to cxport controls, further these security products may havc trap doors. One of the most important components of e-commerce is-epayment method over Internet. The availablc payment technologies are expensive and are suitable for thc advanced countries. For Indian market, chcque is thc most widcly used paynicnt instrument and hencc needs to be available on the lntcmet. Internet comincrce providcs opportunity for Small Scale Industrics (SSI) to bc globally coinpctitive. It also hclps them to reach global customers without spcnding substantially on marketing or advertising activities. This can result in greater customer base and thereby increased production. It can also help them obtain the information on latest trends in market and tcchnology. It has to be notcd that SSI sector is one of the most important sector of Indian economy and that developing countries. It is also agreed now that the agricultural sector can also dcrive substantial bcncfits from the use of Intcrnet Commcrcc.
With credit cards; the payer does not actually pay the payee. Instcad. the issucr cxtcnds crcdit to thc payer, and the issuer pays the payec. Also, the acceptors of credit cards are I imi tcd . The inherent requirement of the extension of credit makes thc crcdit card unsuitablc for many types of business transactions. Diffcrent typcs of busincss requircnients, such as a two signatures, or diffcrent signers on the same account with different limits, cannot be supported by the credit card. The Credit Card has other disadvantages as well like I . High transaction cost - Onlinc conncctivity 2. Risk for issuing bank 3. Customer Risk - Card Number can be hacked (even from the Gateway) 4. Furthcr Crcdit Cards are not suitablc for high value transactions. The other problems are the two protocols SET and SSL are used for providing security. SET is costly to implement and SSL is easy to implcmcnt. Howcvcr SET cnsures that merchant will ncvcr gets thc Credit Card Number of buyer. This is not ensured in SSL. In addition to it SSL also suffers from the problem of default certificate. However in SET the implementation is complex. In the Credit Card Payment, the merchant is assured of payment once the positive acknowledgement is received from the gateways of banks and brand. However the acquirer bank makes payment to merchant only after lag of certain period of time. In other words there is some timc lag bctwccn thc timc of transaction and actual payment. In niany countries Credit Cards ate treated as the contract betwecn banks and customers. It does not enjoy same status as say papcr chcques. 3.2 Debit Card Dcbit cards face similar restrictions, as do credit cards. In addition, most debit cards carry low transaction limits. Most debit card transactions are in fact "off-line" transactions, with the actual financial processing occurs wcll after the transaction. While on-line debit card activity is processed immediately to the customer's and merchant's accounts. In Onlinc or Offlinc Debit Card Payments there is some time lag bctween the transaction time and actual payment. The Dcbit Cards are not suitable for high value business to business transactions. The issues how it should be regulated, how it is to be issued and other operational issues are still being discussed by diffcrent Central Banks. 3.3 Digital C d i mid Micro Payments Digital cash and micro payments reprcscnt two similar schools of new and emerging payments. Digital cash is sometimes also grouped with stored value products. A number of diffcrent digital cash-like systcnis havc bcen proposcd and arc in various phascs of developmcnt or trial. These systems are all based on proprietary approaches, and do not truly intcroperate. Some of the major players in this
arena arc: Digicash. Cybcrcash, Mondcx (Mastercard), Proton, and Visa Cash. The Digicash and Cybcrcash systems are designed for online use, while Mondex, Proton (used by American Express), and Visa Cash were initially designed as card-based systems to replace physical cash at the point of sale. Most of these systems are anonymous to the buyer. They are designed to reduce the use of cash, and in many cases, transfer of actual value from a bank account to thc user's card or system takes place. Micro paymcnts arc payments that are vcry low in valuc, with an upper threshold of either $ I O or $ 20 (no standard definition exists). The digital cash systems often target these transactions, the cquivalent to pocket changc. I n addition to thcse systcms, most notably Millicent, from Digital Equipment, hopc to makc valuc transfcr incxpcnsivc enough to be used for transactions below a penny in cost. These types of payment instruments have raised scveral legal issues. The regulatory issues about these type of paymcnt instruments arc still bcing debatcd and discusscd. 3.4 SET SET, Secure Electronic Transactions is the solution developed by Visa, Mastercard, and a host of other companics to sccure crcdit card transactions on thc Intcrnct. The system is endorsed by all thc major crcdit card companies and provides excellent security and structure for using credit cards and co-branded dcbit cards over the Internet. A large number of SET pilots arc undcrway in thc US and abroad, and thcse pilots are hclping to provide consumer, merchant, and financial institution reaction to the protocol and implementation issues. SET guarantecs that the crcdit card numbcr of the buyer will rcmain fully sccurcd. Evcn merchant does not sce it. Due to its complex and costly implementation vcry few Internet commerce sites support it. A site must have SET inark on its opcning pagc, so that buycr knows that thc site supports SET. 3.5 Electronic Cheque A Chequc is a signed paper docuincnt that is payer's order to his bank orders the signer's bank to pay an amount of money to a person specified in the cheque or bearer from the signer's account on or after a specificd date. An echeque is dematerialized form of paper cheque An c-cheque is an alternative emerging to fit a broader range of paymcnt applications at lowcr costs. Customers who prcfcr to writc cheques and havc thc float time of 12 to 48 hours bcfore the cheques are posted to their accounts will find that e-cheques provide the most secure means of meeting this goal while assuring the merchant that the e-chcques are drawn on a bank and that the customcr has authority to draw funds from the account. There exist a well defincd lcgal framework for dealing various aspects of cheque payment. Thc liabilities and responsibilities of various parties are wcll defined. This niakcs papcr cheques as one of the most important paymcnt instrument. Another advantage of cheque is that i t can be used in any payment transaction. Thc payers and payce can be individuals, organizations, companies, government departtncnts ctc.
1
A third advantagc of the Electronic Cheque is its efficiency and reliability. Because Electronic Cheques leverage the chequc scttlcmcnt structure already in place, banks will only nccd to makc a modcst investment to offer this new technology. With the technology in place, processing Electronic Chcques will bccome more efficient and reliable than paper chequcs because an Electronic Cheque .is cmbcddcd i n a filc containing account information, digital signaturcs and othcr data. Such clectronic detail cnables thc bank to verify and process each cheque automatically. In
ACKNOWLEDGEMENTS
The authors, who were actively involved right from the beginning till end of this project, acknowledgcs the cfforts and activities carried out by thcir collcagues in IDRBT and members in CMC Ltd, and for the pilot run, the other partners in this project Hyderabad Water Supply and Scwerage Board and Andhra Bank, as merchant cstablishmcnt and participating bank respectively arc also acknowledged. We also acknowlcdgc Ministry of. Information Technology (MIT), Government of India for the funding the major portion and Project Review Steering Group (PRSG) for their timely valuable suggestions and regular monitoring the activities, of thc projcct.
REFERENCES
1. U.S. B2B E-Commerce to Rcach $4.8 Trillion in
5.0 CONCLUSION
As part of this project [ 6 ] , thc following objcctivcs were achieved: Development of sccurity related products Development of e-payment methods Provide consultancy in the area of security Conduct Auditing of Security Conduct Training on Internet Commerce This helps for building a strategic c-commerce technology basc, from which Indian consumcr community and business organizations can benefit immensely. Autoiiiated Clcaring Housc (ACH) is the current system uscd for clcctronic funds transfers such as dircct deposit of payroll or automatic deduction of mortgages. While ACH works wcll for payments between established trading partners, it is not readily available in many other transaction situations. Unlike ACH, e-cheques can be used when payments must bc made dircctly between trading partners without a third party or significant pre-arrangement involving bank accounts. E-Cheques are well suited for secure business-to-business payments over the Internet. Elcctronic cheque, unlikc other systems; is bascd on the chcquc processing infrastructure and methodologies. Elcctronic Cheques do not, themselves, represent value, rather, they are an order to pay, and are used as
2004, Boston Consulting Group, September 6, 2000. SET is being published as an open specification for the industry. For more information on SET, sce h t tp :iiww w .sct g m g 3. Secure Socket Layer (SSL) developed by Netscape. For SSL 3.0, see more information on. I it 11) :iihonie .nctsca pc .coniicnvi ssi.;:i t itlcs .h t n i I. 4. Financial Scrvices Markup Languagc (FSML), developed by Financial Services Technology Consortium (FSTC). For more information, see http::iw\wi. fitc.orq 5 . Technologies for E-Commerce, Project Completion Report, November 200 I .
2.