II ePayments - The Enabler for eCommerce
Assuming identity can be guaranteed, deciding which payment
system to make available on the Internet is the next most important issue
holding back the growth of eCommerce. Obviously, paper notes and coins will not
work. The system must be electronic. Most people are already aware of
electronic payment systems such as American Express, Diners, JCB, MasterCard,
and Visa, and can rightly ask, "Why should we use anything else?"
Security is an essential attribute of these networks. They have been introduced
and accepted by buyers and sellers worldwide. Rather than inventing something
completely new, these existing systems offer an obvious starting point for an
ePayment system[1].
EFTPOS - The Virtual
Private Network
The bank payment associations such as Visa, MasterCard and
Europay have built a secure global network designed to carry authorization,
clearing and settlement data. These are all Virtual Private Networks. Core to
their design is an assurance of security necessary to protect sensitive payment
details while guaranteeing that no transactions are lost. Other networks, such
as those managed by S.W.I.F.T. and the ACH operators have a similarly
construction. All have well-defined messaging standards, comprehensive
operating procedures, and certification processes to assure security and
reliability.
The Internet - A Public
Utility
In contrast to the VPNs, the Internet has evolved as a
public utility with no inherent security or guarantee that transactions are
complete. Its power is to allow any
buyer to find a seller anywhere on the globe. Organizations see the Internet as
an extremely powerful distribution channel without the cost of building and managing
a physical storefront or the expense of running a global mail order and
telephone order operation.
Consumer Fear - The Brake to Exponential Growth
Media publicity about the ever-present reality of fraud over
the Internet has created suspicion and distrust in the minds of buyers about
entering their personal or their company credit card details onto the Internet.
The fear of fraud is real; particularly when one considers the open
architecture of the Internet and the ease this offers hackers and criminals to
intercept credit card data transiting the Internet. Fear has been fueled by
stories of hackers breaking into merchant web sites, collecting details for a
large number of credit cards and using this information to defraud card payment
systems. Stories also abound of people receiving erroneous bank statements, or
of fake ATMs being installed on high streets and in shopping malls to capture
PIN and the debit card details. The fact
that no viable and ready-to-market bank solutions are in sight only stimulates
this decline in the confidence of buyers.
In a recent informal meeting, it was pointed out that based
on a leading credit card organization’s transactions, 90+% of mail order and
telephone order fraud in Europe is Internet based. 15% of Internet clearing
volume is charged back while 50% of digital goods purchased over the Internet
are charged back. The solution, and the challenge, is to devise a way to use
this insecure environment while retaining all the advantages of the proven and
secure EFTPOS network.
The Internet Identification Requirements
To give organizations the confidence to reveal corporate
secrets, divulge privileged client information or grant access to powerful
transaction processing capabilities means it is essential to be able to trust
that people on the Internet are indeed who they claim to be. Furthermore, the
growth of one-to-one marketing has focused marketing strategies on segmenting
the client based down to one. To be
confident that access has been granted to the proper authorized party demands a
solution that can:
Assure the authenticity of the
employee or client
Assure the confidentiality of
privileged information
Assure the integrity of data
Assure the irrefutability of the
transaction
Internet Payment Security Requirements
The Internet is a user-friendly and open environment. For a
payment solution to be successful, it must maintain this ease and openness
without putting the current EFTPOS network at risk. This means finding a
payment transaction solution that can establish trust between buyer and seller
by addressing the following security issues:
Authenticity of the buyer and the
seller
Veracity through the use of PIN of the
identity of the card user
Confidentiality and privacy of
information relating to content of the Transaction
Integrity of transmission data
Irrefutability of the transaction.
Nevertheless, to be completely successful, the Internet
payment system must also be capable of dealing with the following additional
issues:
Guaranteed payment upon fulfilled
terms of delivery
Mobility that allows the buyer to
conduct business on the Internet from any point of interaction, regardless of
the device type or location
Support for an array of existing
payment products
Incorporation of an effective (i.e.
economical) micro-payment system
