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eCommerce and Online payments


Title: Portaaliprojektin Ohjausryhm Author: ay07840 Last modified by: Ari Koponen Created Date: 6/18/2004 1:44:47 PM Document presentation format – PowerPoint PPT presentation

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Title: eCommerce and Online payments

Research Seminar on Telecommunications
Business T-109.7510 spring 2006
  • eCommerce and Online payments
  • Ari Koponen

  • eCommerce and different eCommerce types
  • Online Payments
  • Security Issues related to Online Payment
  • SSL SET protocols
  • Case Finnair
  • Conclusions

What is e-Commerce ?
  • Conducting of business transactions
  • Sharing of business information, delivery of
  • Maintaining business and customer relationships
    via an electronic network
  • E-Commerce affects the way that business
    interactions occur, influences how end customers
    negotiate, order, and pay for goods and services

What is e-Commerce ?
  • Majority of businesses have a presence on the Web
  • Global market has attracted millions of
    businesses and organizations to the Internet and
  • E-commerce enables businesses to provide services
    to customers, partners, employees, and the
    general public.
  • Internet is driving the development of a new
    generation of information systems.

e-Commerce Benefits
  • Easy comparison shopping
  • Reduced costs and increased competition
  • Convenience
  • 24 7 365 operation
  • Global access
  • Lower entry barriers
  • Increased market (customer) knowledge

e-Commerce Disadvantages
  • Hidden costs
  • Vulnerability to technical failure
  • Lack of security
  • Invasion of privacy
  • Low service levels
  • Legal issues

Tradional vs. eCommerce
Can reach all 275 million people in the US, or a
large portion of the world
Usually a local event. Reaching 10-50K people
Website can process millions of orders per day
1 Seller can handle only hundred of people per
Can take up to 7 business days
Traditionally or Instantly by email or download
pick up in Person, Mail
IT cost of the webpage
Employee salaries
Different eCommerce types
  • Business to Consumer (B2C)
  • Retail Sales
  • Customer Support
  • 24 x 7 access to customers
  • Global marketing
  • Mass customization of products/services
  • Lower costs and higher profits
  • No reduced storefront related costs
  • Eliminate the middleman (wholesale)
  • Business process efficiencies
  • Technical Challenges
  • International commerce
  • Multi-lingual content management
  • Cost effective distribution and fulfillment

Different eCommerce types
  • Business to business (B2B)
  • Many issues are the same as for B2C electronic
    commerce, but
  • Larger volume orders ongoing contracts
  • Established, focused relationships
  • Joint-planning and partnerships
  • More precise record keeping (e.g. shipping docs,
    funds transfer)
  • Integration with internal systems desirable
  • Integration along the value chain (with
    suppliers) desirable)
  • Automating supply
  • Increasing business efficiency
  • Technical Challenges
  • International commerce
  • Automation of custom, non-consistent processes

Different eCommerce types
  • Consumer to Consumer (C2C)
  • Individual selling to individual By means of
    electronic auctions or classified ads
  • Auctions where buyers and sellers will probably
    never meet face-to-face 
  • Sellers post descriptions and buyers submit bids

eCommerce and different eCommerce types
  • Mobile Commerce (m-Commerce)
  • Access to
  • information, goods and services any time and in
    any place by mobile device.
  • Purchase of
  • tickets for events, public transport, pay for
    parking or carwash, download music or games.
  • m-commerce features 
  • Portability - The customer can access services
    and be reached anywhere anytime.
  • Trustworthiness - Sensitive information can be
    stored securely on the mobile device, secure
    transactions can be carried out.
  • Localization - Information and services can be
    adapted to the users position.
  • Access to user profiles - Information and
    services can be adapted to the users

eCommerce success area
  • Adult
  • Travel / Tourism
  • Retail - items that dont need personal touch -
    objectivity in product quality and performance
  • music, books, gifts, Computers, electronic items
  • Auctions
  • Real Estate - houses and investment properties.
  • Customer support services
  • More efficient and effective processes between
  • (B 2 B)

eCommerce, not so successful areas
  • Items which require touch and trial
  • Luxury goods
  • Clothes - beyond T-shirts
  • Groceries - it works for some people but market
    is restricted
  • Note Many OFF line factors determine success of
    Online service.
  • i.e. if the target segment is elderly gt they
    rather do business the old fashion way (money in
    the mattress)

  • eCommerce and different eCommerce types
  • Online Payments
  • Security Issues related to Online Payment
  • SSL SET protocols
  • Case Finnair
  • Conclusions

Online payments methods
  • Virtual credit cards
  • ePayment systems in which a credit card issuer
    gives a special transaction number that can be
    used online in place of regular credit card
  • eWallets
  • Software component in which a user stores credit
    card numbers and other personal information when
    shopping online, the user simply clicks the
    eWallet to automatically fill in information
    needed to make a purchase
  • Smart cards
  • Electronic card containing an embedded microchip
    that enables predefined operations or the
    addition, deletion, or manipulation of
    information on the card
  • Used to purchase products and services, control
    access to accounts
  • eCash (digital cash)
  • eCash is purchased from an online currency server
  • Digital equivalent of paper currency and coins,
    which enables secure and anonymous purchase of
    low-priced items

Online payments software
  • Software has typically following components
  • Front-end
  • For Visitors and Customers
  • Web-based by definition
  • Backend
  • For enterprise business managers
  • Merchandisers, Account Managers, Customer
    Support, etc.
  • Middleware
  • To interface with existing systems
  • Customer, Inventory, Credit, Payment and Order
    Processing systems

High Level Online Purchasing Architecture
Local Processing
Home Pages
Order processing, Inventory, payment
Back-end Integration
Front-end Integration
Supply Chain Management
Business layer
External Partner Network
Order processing, Inventory, payment
  • eCommerce and different eCommerce types
  • Online Payments
  • Security Issues related to Online Payment
  • SSL SET protocols
  • Case Finnair
  • Conclusions

Internet Fraud Statistics, 2005 (USA)
  • The total loss in 2005 was 13,863,003,
    significantly higher than the 5,787,170 reported
    losts in 2004.
  • The average loss in 2005 was 1,917, also much
    higher than the 895 average loss in 2004.
  • Source National Internet Fraud Watch Information
    Center. Data is on complaints by consumers.

Internet Fraud Statistics, 2005 (USA)
  • Instance compl. Average Loss
  • Auctions 42 1155
  • Goods never delivered or misrepresented
  • General Merchandise 30 2528
  • Goods never delivered or misrepresented
  • Nigerian Scam 8 6937
  • False promises of riches
  • Fake Checks 6 4361
  • Consumers paid with phony checks
  • Lotteries 4 2919
  • Requests for payment to claim lottery
  • Info / Adult services 1 504
  • Cost and terms of services not disclosed
  • Source National Internet Fraud Watch Information
  • Data is on complaints by consumers.

Type of problems 2004
  • Delivery 41
  • Partial or non-delivery
  • Product 25
  • Non Working, not what was ordered
  • Price Payment 8
  • Hidden Cost
  • Redress 7
  • Problem solving, warranty
  • Contract Terms 6
  • Return Policy
  • Other 13

What makes Online Payment more safe?
  • Integrity
  • Data is not changed during the transaction
  • Non-repudiation
  • is a way to guarantee that the sender of a
    message cannot later deny having sent the message
    and that the recipient cannot deny having
    received the message.
  • Digital signatures
  • Authenticity
  • Identify yourself and prove that.
  • Confidentiality
  • ensures that information can be read only by
    authorized entities.
  • Privacy
  • Deals with the rights of individuals and
    organizations to determine the who, what, when,
    where, and how of data use
  • Availability
  • Services is available with reasonable response
    time for those (and only those) whom are
    authorized to use them.

  • eCommerce and different eCommerce types
  • Online Payments
  • Security Issues related to Online Payment
  • SSL SET protocols
  • Case Finnair
  • Conclusions

SSL ,Security Socket Layer
  • Developed by Netscape (1994...)
  • Meanwhile extended to Transport Layer Security
  • Works at TCP level
  • Applications includes
  • Handshake, Alert, Cipher Spec Change
  • Packets encoded by SSL Record Protocol
  • Implemented in web server, browser

SSL ,Security Socket Layer
  • SSL was created with 3 primary goals in mind
  • Prevent a third party from listening in on a
    web transaction.
  • Ensure that data hasnt been tampered with, while
    in route from source to destination.
  • Finally, both parties want to be sure that they
    are communicating with whom they think they are
    communicating with.

SET , Secure Electronic Transactions
  • Developed by Visa and MasterCard
  • Designed to protect credit card transactions
  • Confidentiality
  • all messages encrypted
  • Trust
  • all parties must have digital certificates
  • Privacy
  • information made available only when and where

SET Transaction
  • eCommerce and different eCommerce types
  • Online Payments
  • Security Issues related to Online Payment
  • SSL SET protocols
  • Case Finnair
  • Conclusions

Case Finnair
  • Booking Enginewas replaced by Amadeus Planitgo
  • Between March and Decembers 2005, there were
    237950 internet bookings
  • January February 2006, 68179 bookings
  • Travelers Touch Points
  • internet campaigns, Finnair plus online,
    Internet Booking Engine
  • Contact center, booking, cancellations, changes
  • IVR (Interactive Voice Response), schedule info,
  • WAP/ SMS services, Schedules, Flight status,
    access to Finnair Plus, eCheck-In
  • Customer feedback (APJ), Customer feedback
  • email, phone, and letter or via the web site

  • eCommerce and different eCommerce types
  • Online Payments
  • Security Issues related to Online Payment
  • SSL SET protocols
  • Case Finnair
  • Conclusions

  • From eCommerce to eBusiness
  • It covers business processes along the whole
    value chain
  • There is expectations for exponential growth.
  • Must in the future for Companies
  • Building a trust is essential
  • Fraud fight is a continues process