22-08-2012, 11:25 AM
EMTM 553: E-commerce Systems
e-payment (1).ppt (Size: 1.49 MB / Downloads: 180)
E-payment systems
To transfer money over the Internet
Methods of traditional payment
Check, credit card, or cash
Methods of electronic payment
Electronic cash, software wallets, smart cards, and credit/debit cards
Scrip is digital cash minted by third-party organizations
Requirements for e-payments
Atomicity
Money is not lost or created during a transfer
Good atomicity
Money and good are exchanged atomically
Non-repudiation
No party can deny its role in the transaction
Digital signatures
Desirable Properties of Digital Money
Universally accepted
Transferable electronically
Divisible
Non-forgeable, non-stealable
Private (no one except parties know the amount)
Anonymous (no one can identify the payer)
Work off-line (no on-line verification needed)
No known system satisfies all.
Types of E-payments
E-cash
Electronic wallets
Smart card
Credit card
Electronic Cash
Primary advantage is with purchase of items less than $10
Credit card transaction fees make small purchases unprofitable
Micropayments
Payments for items costing less than $1
Electronic Cash Issues
E-cash must allow spending only once
Must be anonymous, just like regular currency
Safeguards must be in place to prevent counterfeiting
Must be independent and freely transferable regardless of nationality or storage mechanism
Divisibility and Convenience
Complex transaction (checking with Bank)
Atomicity problem
Two storage methods
On-line
Individual does not have possession personally of electronic cash
Trusted third party, e.g. online bank, holds customers’ cash accounts
Off-line
Customer holds cash on smart card or software wallet
Fraud and double spending require tamper-proof encryption
Advantages and Disadvantages of Electronic Cash
Advantages
More efficient, eventually meaning lower prices
Lower transaction costs
Anybody can use it, unlike credit cards, and does not require special authorization
Disadvantages
Tax trail non-existent, like regular cash
Money laundering
Susceptible to forgery
Electronic Cash Security
Complex cryptographic algorithms prevent double spending
Anonymity is preserved unless double spending is attempted
Serial numbers can allow tracing to prevent money laundering
Does not prevent double spending, since the merchant or consumer could be at fault
Blind Signatures
Goal
to have the bank sign documents without knowing what they are signing.
Why?
Anonymity with Authentication
How to sign with blind fold?
How?
Basic: Sign anything
Cut and Choose
Problems
The bank honors anything I write down
Solution: the Cut-and-choose algorithm
Anonymous digital cash?
Protocol #1
Protocol #2
Protocol #3
Protocol #4
Past and Present E-cash Systems
E-cash not popular in U.S., but successful in Europe and Japan
Reasons for lack of U.S. success not clear
Manner of implementation too complicated
Lack of standards and interoperable software that will run easily on a variety of hardware and software systems
Past and Present E-cash Systems
Checkfree
Allows payment with online electronic checks
Clickshare
Designed for magazine and newspaper publishers
Miscast as a micropayment only system; only one of its features
Purchases are billed to a user’s ISP, who in turn bill the customer
Past and Present E-cash Systems
CyberCash
Combines features from cash and checks
Offers credit card, micropayment, and check payment services
Connects merchants directly with credit card processors to provide authorizations for transactions in real time
No delays in processing prevent insufficient e-cash to pay for the transaction
CyberCoins
Stored in CyberCash wallet, a software storage mechanism located on customer’s computer
Used to make purchases between .25c and $10
PayNow -- payments made directly from checking accounts
Past and Present E-cash Systems
DigiCash
Trailblazer in e-cash
Allowed customers to purchase goods and services using anonymous electronic cash
Recently entered Chapter 11 reorganization
Coin.Net
Electronic tokens stored on a customer’s computer is used to make purchases
Works by installing special plug-in to a customer’s web browser
Merchants do not need special software to accept eCoins.
eCoin server prevents double-spending and traces transactions, but consumer is anonymous to merchant
Aggregation
Used when individual transactions are too small for credit card (e.g. $2.00)
Consumer and Merchant sign up with Aggregator
Consumer makes purchase. Merchant notifies Aggregator.
Aggregator keeps Consumer’s account. When amount owed is large enough (or every month), charges to Consumer’s credit card
Aggregator sends money (less fees) to Merchant
QPASS, CyberCash, GlobeID
Past and Present E-cash Systems
MilliCent
Developed by Digital, now part of Compaq
Electronic scrip system
Participating merchant creates and sells own scrip to broker at a discount
Consumers register with broker and buy bulk generic scrip, usually with credit card
Customers buy by converting broker scrip to vendor-specific scrip, i.e. scrip that a particular merchant will accept
Customers can purchase items of very low value
Brokers required for two reasons:
Small payments require aggregation to insure profitability
System is easier to use -- customer need only deal with one broker for all their scrip needs
Electronic Wallets
Stores credit card, electronic cash, owner identification and address
Makes shopping easier and more efficient
Eliminates need to repeatedly enter identifying information into forms to purchase
Works in many different stores to speed checkout
Amazon.com one of the first online merchants to eliminate repeat form-filling for purchases
Electronic Wallets
Agile Wallet
Developed by CyberCash
Allows customers to enter credit card and identifying information once, stored on a central server
Information pops up in supported merchants’ payment pages, allowing one-click payment
Does not support smart cards or CyberCash, but company expects to soon
eWallet
Developed by Launchpad Technologies
Free wallet software that stores credit card and personal information on users’ computer, not on a central server; info is dragged into payment form from eWallet
Information is encrypted and password protected
Works with Netscape and Internet Explorer
Electronic Wallets
Microsoft Wallet
Comes pre-installed in Internet Explorer 4.0, but not in Netscape
All information is encrypted and password protected
Microsoft Wallet Merchant directory shows merchants setup to accept Microsoft Wallet