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