Internet Commerce:
Understanding Payments, Security and
Storefronts
presented by:
David Strom
Port Washington NY USA
[email protected], +1 (516) 944-3407
(c) David Strom and Stephanie Denny, 1998
1
Why This Tutorial
A
successful web storefront must accommodate
the common forms of electronic payment in use
today
 Good storefront design and tactics will increase
sales
 Tough to evaluate various payment systems,
standards and products
(c) David Strom and Stephanie Denny, 1998
2
What This Course is Not About
 Mathematics
of Public Key Cryptography
 In-depth discussion of Visa® and MasterCard®
operating regulations for eCommerce
 Legal advice for eCommerce issues related to
operating a web storefront
 Writing your own storefront systems from
scratch
 In-depth on security issues
(c) David Strom and Stephanie Denny, 1998
3
For future reference
 Copy
of this presentation (Powerpoint) and
resources:
www.strom.com/pubwork/ecommerce
(c) David Strom and Stephanie Denny, 1998
4
Course Topics
 Good
and bad web storefront design, defining
successful eCommerce ventures
 What are relevant eCommerce standards and
why should I care?
 Overview and demonstration of payment
systems that are working on the Internet today
 Choosing service providers or suites
 Installing and operating your own storefront
(c) David Strom and Stephanie Denny, 1998
5
Course Approach
 Overview
of major payment systems and
storefront products
 Give real-life examples and online demos
 Help relate information to your own situation
 Provide insight into different approaches,
technologies
 Discuss pros and cons of each
 Multiple Q&A sessions
(c) David Strom and Stephanie Denny, 1998
6
My Background
 I’ve
been involved in the Internet for some time
 Have used most of the products we demonstrate
 Have consulted to a few of the vendors, but still
have strong opinions
(c) David Strom and Stephanie Denny, 1998
7
My Beliefs
 My
perspective is from the consumer’s
viewpoint, as well as from the merchant’s
 I believe that eCommerce is the next
evolutionary step in the web
 Most eCommerce has had accidental success to
date
(c) David Strom and Stephanie Denny, 1998
8
Topic 1: Introduction to Internet
Marketing
 Advantages
and disadvantages
 Speed of adoption is immense!
 Different kinds of approaches
(c) David Strom and Stephanie Denny, 1998
9
Internet Marketing
 Look

good to the public,
be on the cutting edge
 Supplement

be real-time
 Focus

on global niches,
be high-content
 Avoid

traditional channels,
the trailing edge,
the competition is already doing it
(c) David Strom and Stephanie Denny, 1998
10
Advantages
 Direct,
one-to-one marketing opportunity
 Allows you to learn useful information and
build customer relationships
 Relatively inexpensive medium compared to
advertising, direct mail or telemarketing
 Capacity to be a major distribution channel
 Results are measurable, sometimes
(c) David Strom and Stephanie Denny, 1998
11
Challenges
 Most
say that eCommerce is taking off, just
differ on the rate!
 How do we convince the general public that
they will really like eCommerce?
 Focus initially has been on business-to-business
uses
(c) David Strom and Stephanie Denny, 1998
12
Obstacles to Wide Deployment
 Easy
forms of payment
 Trust in the system
 Perceived benefits outweigh the risk (What’s in
it for me?)
 Technology and infrastructure still primitive
(c) David Strom and Stephanie Denny, 1998
13
One Example: Domain Names!
 Typo.net
 AmericaOffline.com
 Sell
ad space on things like:
amazom.com
 www.eartlink.net

 Is
the Internet a great place or what?
(c) David Strom and Stephanie Denny, 1998
14
Time To Reach a Mass Market
 VCRs:
30 years
 TV: 25 years
 Cell phones: 15 years
 Credit cards, ATMs: 10 years
 Internet usage: <10 years!!
(c) David Strom and Stephanie Denny, 1998
15
Some Conclusions
 Consumer

control of privacy is essential
most folks simply want the choice of opting out
 The
granularity of control must be fine, e.g.,
over number and frequency;
 over categories of interests; and/or
 over (indirect) dissemination to third-parties

 Regardless,

there are likely legal issues,
when maintaining/using a consumer database
(c) David Strom and Stephanie Denny, 1998
16
Topic 2: What Becomes Success?
 Overview
of eCommerce market
 Review physical storefront success factors
 Propose some definitions
 Define success for the web
 Draw up five eCommerce principles
(c) David Strom and Stephanie Denny, 1998
17
Overview of eCommerce Market
 Predictions
 Success
factors
 Five principles
(c) David Strom and Stephanie Denny, 1998
18
eCommerce Revenue Predictions
are Wide-Ranging
S o u rce
1996 (B $U S )
2000 est. (B $ U S )
ID C
$2.2
94
F o rrester
1.4
117
Ju p iter
.7
15.6
D ataq u est
6.4
56
(c) David Strom and Stephanie Denny, 1998
19
Not to mention all the PC sales
 Gateway
sells $4MM /day
 Dell sells $5MM/day
 Compaq sells $6MM/day (including resellers)
 That’s $4 Billion/yr right there!
(c) David Strom and Stephanie Denny, 1998
20
Let’s Keep Our Perspective
 Size
of US movie industry -- $6B!
 Size of adult video rentals - $6B!
 Total US music sales -- $6B!

(Forrester says $288M in 1998 online music+books)
(c) David Strom and Stephanie Denny, 1998
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Ticketmaster
 US$5
million/month via the web in sales
 Started 11/96
 Generating lots of new buyers, who wouldn’t
ordinarily use their service
(c) David Strom and Stephanie Denny, 1998
22
Then there is Disney.com
 Web
site Daily Blast signing up 15k
members/month
 Sales via web are equal to 3x-5x of physical
Disney store!
(c) David Strom and Stephanie Denny, 1998
23
And of Course, There is the Porn
Industry
 “However,
extensive interviews with adult site
owners yield a picture of a highly charged
market of approximately 10,000 sites generating
about $1 billion in revenue per year, most
through electronic credit card transactions.”

From Interactive Week
(c) David Strom and Stephanie Denny, 1998
24
Sad State of Today’s eCommerce
Marketplace
 Poor
quality tools
 Hard-to-find stores
 Limited payment methods
 Credit card snooping perceptions
 Older browser versions can’t view latest sites
(c) David Strom and Stephanie Denny, 1998
25
Case in Point: Buying a Bike Rack
 Item
not carried: outdated catalog
 Telesales not familiar with web
 No cross-sell or substitutions online
 Needed three phone calls to complete purchase
(c) David Strom and Stephanie Denny, 1998
26
Let’s Learn From the “Real
World”
 Compare
what works for physical stores
 Try to extend to the web
(c) David Strom and Stephanie Denny, 1998
27
Critical Success Factors for
Physical Storefronts
 Location
 Branding
 Good
service
 Good product selection
 Proper pricing and margins
 Traffic
(c) David Strom and Stephanie Denny, 1998
28
First Problem:
 None
of these translate on the ‘net!
(c) David Strom and Stephanie Denny, 1998
29
Now Try to Agree on Definitions
for Web Stores
 What
determines a good location?
Position on a search page
 Nearness to popular destination
 Ad on a popular server

 What
determines branding?
Memorable domain name
 Popular search category destination

(c) David Strom and Stephanie Denny, 1998
30
An Example of bad location:
Montana Meats

www.imt.net/~lingerie/buffalo/buffalo.html
 Can’t
they afford their own domain name?
 www.company.com/~anything is BAD NEWS!
(c) David Strom and Stephanie Denny, 1998
31
Another Case: Buying Toner and
Batteries

www.cartridgesusa.com, www.batterybarn.com
 Catalog
shows pictures of parts
 Easy to find relevant item
 But payment acknowledgement incomplete
(c) David Strom and Stephanie Denny, 1998
32
Determining Traffic
 Hard
to do -- is it hits, page views, registered
users?
 [HITS = How Idiots Track Success]
 Hard to measure -- do you count gifs? Use log
files?
 No general agreement on any metrics!
(c) David Strom and Stephanie Denny, 1998
33
Traditional Advertising Doesn’t
Apply Anymore
 Can’t
measure anything
 Every site has its own banner sizes
 The Web is not TV
(c) David Strom and Stephanie Denny, 1998
34
One Working Definition of
Success:
 SURVIVAL!
 If
a site is still running after 12 months, and
getting more traffic, it is a success.
(c) David Strom and Stephanie Denny, 1998
35
Does a site actually have to sell
something?
 Many
actual eCommerce sites don’t do the
complete transaction (Cisco)
 Require faxes or telephone calls!
 Some merely have catalogs
 A good example: Singapore Power Authority
www.spower.com.sg/readmeter.cgi?cmd=form
(c) David Strom and Stephanie Denny, 1998
36
Good eCommerce Examples
 Easy
to find merchandize
 Good service
 Individual customization is key
 Simple navigation
 Make payments easy
(c) David Strom and Stephanie Denny, 1998
37
AMP Connect
 Have
customers in 100 countries
 Speak many languages
 Produce 400 catalogs covering 135,000 items
 Mailings cost US$7MM/yr
 Fax back cost US$800,000/yr
 But you can’t buy anything directly!
(c) David Strom and Stephanie Denny, 1998
38
Solution: “Step Searching”
 Saqqara.com
software to enhance Oracle
database
 Provide user feedback as they type in the query
 Show how many matches in the database
 Different mechanisms for searching:
by part number
 by alphabetical names
 by part family
 by picture even

(c) David Strom and Stephanie Denny, 1998
39
AMP
connect.ampincorporated.com
(c) David Strom and Stephanie Denny, 1998
40
AMP Connect (con’t)
 And
can set to list parts that are available in
specific countries!
 Updated daily with over 200 item changes
 Detailed drawings saves time for customers to
pick the right item
 Saved AMP over US$5MM in production costs
 Saved US$1MM in translation costs
(c) David Strom and Stephanie Denny, 1998
41
First Principle of eCommerce:
 Make
it easy to buy!
(c) David Strom and Stephanie Denny, 1998
42
Amazon.com





Services frequent readers with a variety of programs
 Editorial comments
 If you liked this book, you’ll like...
 Notification of new books by author, topic
 Simplified “1 Click” ordering
Uses simple pages and email
Associates program for commission kickbacks
Gift certificates via email
And ... lots of books to choose from
(c) David Strom and Stephanie Denny, 1998
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Amazon
(c) David Strom and Stephanie Denny, 1998
44
Update your directories!
 This
one is almost a year old
 www.asiapage.com/alist.html#jewellery
(c) David Strom and Stephanie Denny, 1998
45
Second Principle of eCommerce:
 Deliver
solid service!
(c) David Strom and Stephanie Denny, 1998
46
Dell
 Most
notable site for computer buyers
 Customize the features you want via a web form
 Simplifies and personalizes the shopping
experience
 WYSIWYB (buy)
 >US$5MM/day in sales!
(c) David Strom and Stephanie Denny, 1998
47
Dell
(c) David Strom and Stephanie Denny, 1998
48
Canadiantire.com
 eFlyer
uses email notification along with web
forms
 Customize exactly what coupons and deals are
sent to you
(c) David Strom and Stephanie Denny, 1998
49
Third Principle of eCommerce:
 Individual
customization is key
(c) David Strom and Stephanie Denny, 1998
50
BMW Motors
 Example
of what not to do
 Use gratuitous graphics
 Cheesy low-res videos
 Toys, not tools
(c) David Strom and Stephanie Denny, 1998
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BMW
(c) David Strom and Stephanie Denny, 1998
52
Compare with Subaru
 Find
specific information about each car
 Can price options to your particular needs
(c) David Strom and Stephanie Denny, 1998
53
A better example: fishing licenses
 Simple,
quick, and does the job with a
minimum of clutter

www.permit.com
(c) David Strom and Stephanie Denny, 1998
54
Fourth Principle of eCommerce:
 Make
navigation simple!
 Use small graphics, site maps, indexes
 Avoid graphics just to display text
 Avoid plug-ins to complete purchase process
 Avoid link and button clutter, frames
(c) David Strom and Stephanie Denny, 1998
55
How NOT to Design a Payment
Screen

www.netmar.com/new/norderform.shtml
(c) David Strom and Stephanie Denny, 1998
56
Common mistakes with payments
 Provide
too few or too many order confirmation
pages
 Confusing methods and misplaced buttons on
order page
 Make it hard for customers to buy things
 Don’t make your customers read error screens
(c) David Strom and Stephanie Denny, 1998
57
Fifth Principle of eCommerce:
 Make
payments easy!
(c) David Strom and Stephanie Denny, 1998
58
Topic 3: eCommerce Standards
 SSL
(encrypted transactions)
 SET (authenticate buyers)
 OFX (bill presentment)
 OBI (exchange purchase orders)
(c) David Strom and Stephanie Denny, 1998
59
Some Disclaimers
 Standards
are still in motion
 Multiple approaches means they don’t always
work as intended
 May be eclipsed by events (eg, SET) and
consumer behavior
 Moral: lots of programming still required!
(c) David Strom and Stephanie Denny, 1998
60
SSL: Encrypt Transactions
 Why
encrypt?
 Principles of cryptosystems
 Understand certificate management
(c) David Strom and Stephanie Denny, 1998
61
Why Encrypt? TRUST!
 Ensure
your customer is authorized to use his
account
 Customer wants to make sure you are the legit
seller
 Ensure payment is received
 Ensure goods are received
(c) David Strom and Stephanie Denny, 1998
62
Four Principles of Cryptosystems
 Privacy
of message contents
 Authentication of parties involved
 Integrity of data transmitted
 Non-repudiation of transactions
(c) David Strom and Stephanie Denny, 1998
63
Privacy
Privacy means that the message contents cannot
be seen by anyone but the intended parties
 Accomplished through the use of encryption

(c) David Strom and Stephanie Denny, 1998
64
Authentication
Authentication means that each party involved
in the transaction is identified as legitimate
 Accomplished through the use of certificates

A certificate is a notarized public key (like a passport
or a driver’s license)
 Issued by a trusted third party called a Certificate
Authority
 Binds the certificate owner to the public key within
the certificate

(c) David Strom and Stephanie Denny, 1998
65
Integrity
Integrity of data means that it cannot be altered
by anyone during transmission, to avoid a
“man in the middle” attack
 Encryption allows only the intended recipient
to open the digital envelope
 A digital envelope (or ”hash”) = contents of an
encrypted message + digital signature

(c) David Strom and Stephanie Denny, 1998
66
Non-repudiation
Non-repudiation means both parties to the
transaction are ensured that the message is
genuine and cannot be disputed
 Parties are identified with certificates that have
been notarized by a trusted Certificate
Authority
 It will be much harder for customers to claim
they never placed the order

(c) David Strom and Stephanie Denny, 1998
67
Why Should You Get a
Certificate?
You want those who visit your web site to know
you are a legitimate business
 A certificate is required to operate a secure
server (SSL)

(c) David Strom and Stephanie Denny, 1998
68
Certificate Authorities (CAs)
Trusted third parties, similar to notaries
 Can be external or internal (server is managed
within your own company)
 Choice of a CA may depend on your merchant
server software

(c) David Strom and Stephanie Denny, 1998
69
Public Key Cryptography
Customer’s
Private Key



Customer’s
Public Key
Merchant’s
Public Key
Merchant’s
Private Key
Public keys are shared and widely distributed
Private keys are kept secret by the holder of the key
Both pairs of keys are required to complete secure
transaction
(c) David Strom and Stephanie Denny, 1998
70
Public and Private Key Pairs
A
public key is disclosed and widely
distributed with no adverse affects
 Used to encrypt or decrypt information
 Works only in conjunction with its paired
private key
(c) David Strom and Stephanie Denny, 1998
71
Public and Private Key Pairs
A
private key is held and used only by its
owner
 If a private key is compromised, it must be
replaced immediately

Today’s real-world example: lost or stolen credit
cards must be blocked and replaced
(c) David Strom and Stephanie Denny, 1998
72
Public and Private Key Pairs
 Real-world
example: Dual control of keys for
your safe deposit box — it can only be opened
with two keys — yours as well as the bank’s
(c) David Strom and Stephanie Denny, 1998
73
Steps in Certificate Creation
Refer to you server software documentation for
selection of a CA and instructions
 Generally, you will do the following:

Generate a key pair of public and private keys
 Send the public key and other information to CA
 CA verifies information provided
 Upon verification, CA creates a certificate containing
public key and expiration date
 The Certificate is sent back to applicant and may be
posted publicly, if appropriate

(c) David Strom and Stephanie Denny, 1998
74
Examples of Certificate
Authorities

VeriSign

www.Verisign.com
 GTE


CyberTrust Solutions, Inc.
www.cybertrust.gte.com
Thawte Consulting

www.thawte.com
(c) David Strom and Stephanie Denny, 1998
75
Certificate Creation

Demo of key generation and certificate request
(c) David Strom and Stephanie Denny, 1998
76
Different Classes of Certs
 Class
1 (unambiguos name, email,
PIN/encryption recommended)
 Class 2 (adds address check for US/Canada,
required PIN/encryption)
 Class 3 (adds document check, recommends
tokens)
(c) David Strom and Stephanie Denny, 1998
77
Certificate Management

Once public key certificates are issued, they
must be managed to maintain integrity
They contain expiration dates
 They may be revoked for various reasons
 Upon expiration, certificates must be renewed or
reissued


This is a consideration for using an external CA,
as opposed to managing an internal CA
(c) David Strom and Stephanie Denny, 1998
78
How is this accomplished?
 Secure
servers and browsers
Capable of strong encryption (up to 128 bit)
 40 bit encryption is no longer considered adequate
for financial transactions

 Digital
certificates
 Ensure
the identity of the certificate holder
 Also called digital IDs
 The
common protocol in use today is Secure
Sockets Layer (SSL)
(c) David Strom and Stephanie Denny, 1998
79
Secure Sockets Layer Protocol
(SSL)
 Authenticates

the merchant server
Merchant Certificate obtained from trusted
Certificate Authority
 Provides
privacy through encryption of the
message for both the sender and receiver

Secure “pipe” negotiates maximum encryption
compatible at browser and server for each message
transmitted
 Ensures

integrity of data transmitted
Message authenticity check (algorithm)
(c) David Strom and Stephanie Denny, 1998
80
Secure Sockets Layer Protocol
(SSL)
Merchant’s Certificate (Digital ID) can be viewed by any secure browser
 https://
in the URL = a secure connection
 SSL allows customers to verify who the
merchant is
 The merchant’s digital ID does not certify the
integrity of the merchant
(c) David Strom and Stephanie Denny, 1998
81
Secure Sockets Layer Protocol
(SSL)
Customer Order with
Payment Information
Encrypted
order sent
 SSL
Customer order decrypted
at merchant server
encrypts the customer order, which
includes the payment information
 This data is sent from the customer to the
merchant via a secure “pipe”
(c) David Strom and Stephanie Denny, 1998
82
What SSL Doesn’t Encrypt
 Once
the data arrives on the secure server, it
could be stored in an insecure location!
 Or if someone has physical access to your
desktop or server
(c) David Strom and Stephanie Denny, 1998
83
SSL: How do you get a certificate
for your merchant server?
 Apply

to Certificate Authority
Instructions built into merchant server software
 You
will be asked to provide valid business
license and other ID
 Cost is dependent upon level of certification
(c) David Strom and Stephanie Denny, 1998
84
Encryption Strength
 It
is illegal to export outside the US products
containing encryption that is stronger than 40
bits
 It is not illegal to use encryption stronger than
40 bits internationally
 Financial institutions do not consider 40-bit
encryption adequate for Internet transactions
(c) David Strom and Stephanie Denny, 1998
85
Encryption Strength
 Newer
browser and server software are capable
of 128-bit encryption
 128-bit encryption is exponentially stronger
than 40-bit encryption
(c) David Strom and Stephanie Denny, 1998
86
SET: Authenticate Buyers
 What
is the protocol
 How it works
 Advantages and disadvantages
(c) David Strom and Stephanie Denny, 1998
87
What is SET protocol?
 Secure
Electronic Transaction protocol is a
common standard that was developed jointly by
Visa, MasterCard and other partners to ensure
the processing of secure transactions.
 Based on RSA encryption
 Uses public and private key pairs that have a
mathematical relationship
(c) David Strom and Stephanie Denny, 1998
88
How is SET Different from SSL?
 Digital
certificates for SET will be paymentspecific
Merchants will be certified as legitimate to accept
branded payment card transactions
 Cardholders will be certified as valid account holders
 Merchants will not see customer’s account number (it
will only be passed to the acquirer)

(c) David Strom and Stephanie Denny, 1998
89
How is SET Different from SSL?
With SET:
Merchant Server gets Customer’s Digital ID
minus the account number + Customer Order
Customer’s Digital ID
related to a specific account
+ Customer Order info
Acquirer gets order receipt +
Customer’s Digital ID with account number
(c) David Strom and Stephanie Denny, 1998
90
The Mechanics of SET
(1) Payment info sent from user to merchant
 (2) Merchant confirms, fees charged
 (3) Transaction to bank, funds debited/credited
 (4) Merchant sends item to user (from
Computerworld)

(c) David Strom and Stephanie Denny, 1998
91
How Will Certificates (Digital
IDs) be Issued for eCommerce?
 Hierarchy
of trust for certificate issuance
Visa and MasterCard will designate a Certificate
Authority to hold the Trusted Root
 Merchants will obtain certificates from banks’ or
acquirers’ Certificate Authority, then store on SET
server software
 Cardholders will obtain certificates (digital IDs)
from their banks’ Certificate Authority, then store in
electronic wallet

(c) David Strom and Stephanie Denny, 1998
92
MasterCard® Example of a
SET Transaction
http://www.mastercard.com/set/screen1.html
(c) David Strom and Stephanie Denny, 1998
93
MasterCard® Example of a
SET Transaction
http://www.mastercard.com/set/screen2.html
(c) David Strom and Stephanie Denny, 1998
94
MasterCard® Example of a
SET Transaction
http://www.mastercard.com/set/screen3.html
(c) David Strom and Stephanie Denny, 1998
95
MasterCard® Example of a
SET Transaction
http://www.mastercard.com/set/screen4.html
(c) David Strom and Stephanie Denny, 1998
96
MasterCard® Example of a
SET Transaction
http://www.mastercard.com/set/screen5.html
(c) David Strom and Stephanie Denny, 1998
97
SSL vs. SET

SSL
Server authentication




Not tied to payment method

Encrypted message to
merchant includes account
number


Message authenticity check
(MAC)
(c) David Strom and Stephanie Denny, 1998
Encrypted message does not
pass account number to
merchant
Integrity

98
Digital certificate tied to
certain payment method
Privacy

Integrity
Merchant certificate tied to
accept payment brands
Customer authentication

Privacy


Merchant certificate as
legitimate business
Possible for client
authentication



SET
Server authentication
Hash/message envelope
SET — the Answer to eCommerce
 SET
has been proposed as the answer to secure
and interoperable eCommerce
It is not currently mandated by Visa and MasterCard
 There are big implementation issues for all
concerned

 The
SET protocol is definitely more secure than
SSL
 However...
(c) David Strom and Stephanie Denny, 1998
99
SET — the Answer to eCommerce
 Implementation
of SET has some big
drawbacks:
Lack of interoperability among systems
 Management of public key infrastructure
 Distribution of digital certificates requires action on
the part of the consumer

 And
who will pay for all this?
 Meanwhile, eCommerce goes on
(c) David Strom and Stephanie Denny, 1998
100
The Future of SET
 Non-repudiation
of transactions through digital
certificates for both merchant and customer
 SET may be the industry standard for payments,
but yet to be implemented
 It will be far more difficult for a customer to
claim no knowledge of a transaction
 Many demonstrations this fall and winter
(c) David Strom and Stephanie Denny, 1998
101
Electronic Bill Presentment
Saves on paper (typical bill cost $1 in postage
and processing, EBP saves half) but requires
lots of coordinated systems
 Can show bills with nice fonts, interactive
applications
 Is separate process from the actual payment
system

(c) David Strom and Stephanie Denny, 1998
102
Electronic Bill Presentment Issues
Does the processor use EBP with merchant
bank?
 Can users browsers support these new
applications

Java applets
 Active X controls etc.


Reconciliation requires access to both dispute
and payout information
(c) David Strom and Stephanie Denny, 1998
103
Microsoft’s MSFDC
A means to standardize on presentment
 All customer data maintained by MSFDC
 Have both web-based access and special
consumer-based software
 Former “Marble” server, read white paper at:

www.microsoft.com/finserv/marblewp.htm

Requires NT, SQL Server, IIS, etc.
(c) David Strom and Stephanie Denny, 1998
104
Other EBP efforts
Open Financial Exchange (www.ofx.net)
 www.Integrion.Net
 CheckFree’s E-Bill (getbills.checkfree.com)

(c) David Strom and Stephanie Denny, 1998
105
eBill
 Most
popular and in widest practice
 Schwab and Intuit/Quicken are supporters
 Most threatened by MSFDC
(c) David Strom and Stephanie Denny, 1998
106
OFX
 Started
with Intuit
 Trying to standarize on too much at once:
data transfers
 account inquiries
 financial applications and transactions

 Verisign
Financial Server (US$1200)
digitalid.verisign.com/ofxIntro.htm
(c) David Strom and Stephanie Denny, 1998
107
Integrion
 Banking-intensive
plus IBM
 No other software supporter, BUT…
 Combining forces with CheckFree
 Trying to establish their “Gold Standard” vs.
OFX
 Leave choice of how much customer data is
maintained up to the merchant
(c) David Strom and Stephanie Denny, 1998
108
What about OBI?
 Open
Buying on the Internet
 A bunch of standards: SSL, X12 EDI, X.509 PKI
 Exchange of purchase order info
 Unresolved issues:
who owns the catalog?
 how much infrastructure is really needed?
 knitting together a solid solution is more than
enumerating standards!

(c) David Strom and Stephanie Denny, 1998
109
Topic 4: Introduction to Payment
Systems
 Structure,
properties and roles
 Different devices
Credit Cards
 Electronic Wallets
 CyberCash

 Setting
up a merchant account
 Privacy issues
(c) David Strom and Stephanie Denny, 1998
110
Payment Basics
Issuer
Consumer
Access Point
Acquirer
BANK
Merchant
Access Point
• deposit & withdrawal
• transaction status inquiry
• authentication
• problem resolution
Consumer
(c) David Strom and Stephanie Denny, 1998
• purchase & refund
• transaction status inquiry
• authentication
• problem resolution
111
Merchant
Hierarchy
 Payment

Clearing house between acquirers and issuers
 Acquirer

System (clearing house)
(third-party processor)
Authorizes, processes and settles for merchant bank
 Merchant

Bank
Accepts merchant deposit
 Merchant

Accepts authorized cardholder transaction
(c) David Strom and Stephanie Denny, 1998
112
Difference Payment Pieces
 System:
provides processing and settlement of
transactions
 Gateway: software/services to support
eCommerce merchants, acquirers
 Device: initiates transaction from credit/debit
card
(c) David Strom and Stephanie Denny, 1998
113
Attributes of Superior Payment
Systems
 Universal,
world-wide acceptance
 Recognized value
 Reliability of transactions
 Ease of use to customer
 Capacity for quick settlement and collection
(c) David Strom and Stephanie Denny, 1998
114
Requirements
 Mass
appeal
 Easy payment by the customer
 Have acceptable risk to bank and merchant
 Accommodate changes, cancellations and
returns
(c) David Strom and Stephanie Denny, 1998
115
Let’s Consider the Customer
 Changes
the order
 Doesn’t fill out all fields even when asked
 Mistype credit card and other data
 Cancels order entirely or never finishes order
process
(c) David Strom and Stephanie Denny, 1998
116
Objectives in Offering Payment
Choices
 Customers
like choices, but remember: they are
here to buy stuff!
 Make it safe for everyone involved: customer,
merchant, and banks
 Consider how easy it is for your customer to
use, not just how easy it is for you to manage
 Payments in a virtual world should imitate
those in the real world
(c) David Strom and Stephanie Denny, 1998
117
Properties of Payment Systems
 Transaction
cost
 Transaction directionality
 Real-time authorization/validation
 System scalability
 Privacy
(c) David Strom and Stephanie Denny, 1998
118
Three Real-World Examples
C ost
C a s h v e ry lo w
C heck
lo w
C a r d m o d e ra te
D ir e c tio n V a lid a tio n
S c a le
P r iv a c y
tw o -w a y
no
e x tre m e
yes
o n e -w a y
m ayb e
h ig h
no
o n e -w a y
yes
h ig h
no
(c) David Strom and Stephanie Denny, 1998
119
Other Properties
 How
much software does the buyer need to
install?
Does it come with the desktop operating system?
 Does it come with the browser or other software?

 What
third-party clearinghouse is used?
Provide trusted relationships
 Reduce risk, complexity in processing

(c) David Strom and Stephanie Denny, 1998
120
Virtual Money is the Currency of
the Future
 That
future is already here
 This idea is scary to many people
Consumers (they can’t “see” it)
 Banks (many bankers don’t understand it)
 Acquirers (they want to know the difference)
 The Government (they can’t control it)

 It
is not unlike MO/TO transactions today
(c) David Strom and Stephanie Denny, 1998
121
The Way Things are on the Web
Today
 Some
payments are authorized off-line, through
traditional POS terminals

E-mail message to customer later (hopefully),
confirming order and shipping information
 Many
merchant servers connect with payment
authorization systems

Authorization is real-time during the web session,
and the sale is completed with secure server and
browser software
(c) David Strom and Stephanie Denny, 1998
122
The Way Things are on the Web
Today: Secure and Un-Secure
 Secure
transactions via secure browsers and
servers with SSL
 Un-secure transactions with lack of proper
encryption (account numbers sent “in the
clear”) via e-mail messages
 Un-secure transactions due to “export” versions
of browser and/or server software
(c) David Strom and Stephanie Denny, 1998
123
The Way Things are on the Web
Today
 Secure
transactions do not guarantee the
validity of the customer account information
A high percentage of credit charge-backs for MO/TO
transactions are for “merchandise not received”
 Address verification services can help protect you,
and in some cases are required

(c) David Strom and Stephanie Denny, 1998
124
Examples of Payment Systems
(Clearing Houses)
 Federal
Reserve System for clearing checks
 Visa and MasterCard transaction networks
 American Express
 Novus (Discover)
(c) David Strom and Stephanie Denny, 1998
125
Examples of Acquirers
(Processors)
 First
Data Corp.
 Paymentech
 National Data Corp.
 Bank of America Merchant Services
 Many processors (acquirers) process multiple
brands as part of their service
(c) David Strom and Stephanie Denny, 1998
126
Internet Payment Devices
 Credit
cards, debit cards
 Off-line accounts
 Electronic cash
 Electronic checks
(c) David Strom and Stephanie Denny, 1998
127
A Taxonomy of Approaches
transmit “16+4” over the Internet?
no
yes
yes
buyer encrypts?
buyer signs?
yes
S-HTTP
PGP
no
plaintext
no
GlobeID
SSL
128
no
synchronous?
yes
CyberCash
SET
(c) David Strom and Stephanie Denny, 1998
yes
no
merchant decrypts?
yes
buyer confirms?
off-line alias
no
VirtualPIN
Different Ways to Capture
Customer
 Online
 Post-authorization
 Batch
(c) David Strom and Stephanie Denny, 1998
129
Online Capture
 Happens
simultaneously with authorization of
transaction
 Fastest method of capture for online merchants
who can guarantee same-day shipment of goods
(c) David Strom and Stephanie Denny, 1998
130
Post-Authorization Capture
 Capture
is a separate step from authorization of
transaction; post-auth message instructs bank to
capture transaction
 Example of use is for delayed shipping of
merchandise
(c) David Strom and Stephanie Denny, 1998
131
Batch Capture
 Transactions
are captured in a batch mode after
authorization (like post-auth capture)
 Multiple authorizations are submitted at one
time for capture
 The batch is transmitted through gateway
(CyberCash) to the bank for funds transfer and
merchant account reconciliation
(c) David Strom and Stephanie Denny, 1998
132
Credit cards, debit cards
 JCB,
Visa, MasterCard, Discover, American
Express
 Buyer gets card from issuing bank
 Merchant is sponsored by acquiring bank
 Merchant knows buyer and authorizes payment
(c) David Strom and Stephanie Denny, 1998
133
How Credit Cards Work
 Transactions
authorized against customer’s line
of credit at issuer (promise to pay)
 At point of settlement, cardholder’s account is
charged and merchant’s account is credited
 Transactions subject to chargeback to merchant
under certain conditions
Lack of proper authorization
 Lack of proper identification / address verification

(c) David Strom and Stephanie Denny, 1998
134
Plaintext Transaction Process
buyer
(c) David Strom and Stephanie Denny, 1998
trans
merchant
16+4
135
16+4
S-HTTP/SSL Features
Supply 16+4 in encrypted form
 Require merchant to have a cert signed by a
trusted third-party
 Requirement of client-side cert is a trade-off:

yes: buyer must “register” before making purchase
(S-HTTP, SSLv3); or,
 no: no assurance as to buyer’s identity (SSL)


Merchant site becomes a credit card repository
(c) David Strom and Stephanie Denny, 1998
136
SSL Transaction Process
buyer
(c) David Strom and Stephanie Denny, 1998
trans
E(16+4)
merchant
137
16+4
“Off-line” Accounts
 Electronic
wallets
CyberCash® Wallet
 Microsoft® Wallet
 Verifone® vWALLET
 GlobeSET Wallet

SM
 All
these may provide access to credit, debit,
e-cash or electronic check accounts
(c) David Strom and Stephanie Denny, 1998
138
“Off-line” Account Services
 Credit
card and other account numbers are
stored by the service provider in a database, and
are not transmitted to the merchant
 Instead, a “PIN” is used by the customer at the
point of purchase (cross-reference for actual
account number)
 Consumer must initiate account set-up in
advance of making any purchases
(c) David Strom and Stephanie Denny, 1998
139
How Electronic Wallets Work
Today




Consumer must initiate request for electronic “wallet”
software
Credit card or other account numbers are given to
provider one time before any purchases are made
Account numbers, stored by provider in a database, are
not transmitted; instead, a “PIN” is used to pay
Closed system: only available to participating
merchants and cardholders who have signed up in
advance
(c) David Strom and Stephanie Denny, 1998
140
How Electronic Wallets Will
Work in the Future
 With
SET protocol, will contain digital IDs with
encrypted account information
 Since digital IDs will be tied to specific
accounts, wallets will keep track of all that
information
 At that point, wallets will be widely distributed
and universally accepted
(c) David Strom and Stephanie Denny, 1998
141
Interoperability is the Key
 Wallets
will become widely used when the
following events occur:
Mass distribution of wallets to consumers is easily
made
 Will be accepted by all merchants, regardless of
wallet brand or payment brand

(c) David Strom and Stephanie Denny, 1998
142
Visa® Example of Electronic
Wallet
www.visa.com/cgi-bin/vee/nt/sec/no_shock/virt_wallet_L.html?2+0
(c) David Strom and Stephanie Denny, 1998
143
Visa® Example of Wallet
Registration (Digital ID)
www.visa.com/cgi-bin/vee/nt/sec/no_shock/registering_L.html
(c) David Strom and Stephanie Denny, 1998
144
Other Wallet Examples
 GlobeSET
 Microsoft
Wallet (in Win98, IE 4.01) (both SSL
and SET)
(c) David Strom and Stephanie Denny, 1998
145
Some Problems with Wallets
Not transferable to other wallets or other PCs
 Not available for use at many web storefronts
 Just solve a small part of the overall payment
process

(c) David Strom and Stephanie Denny, 1998
146
CyberCash System
 Three
systems: CyberCash, CyberCoin,
CyberCheck
 CyberCash operates a gateway between acquirer
and the Internet
 Merchants given the choice of capture via:
SSL; or
 the CyberCash Wallet

 If
wallet-based, merchant doesn’t see 16+4
(c) David Strom and Stephanie Denny, 1998
147
How It Works
 Buyer’s
wallet receives invoice from merchant’s
server
 Buyer’s wallet sends sales order to merchant’s
server:
signed with buyer’s public key; and,
 includes 16+4 encrypted with gateway’s public key

(c) David Strom and Stephanie Denny, 1998
148
How It Works (cont.)
 Merchant
sends transaction to gateway:
signed with merchant’s public key; and,
 includes buyer’s sales order

 Gateway
verifies signature, and:
decrypts 16+4 using its private key;
 submits transaction into credit card network; and,
 returns results to merchant who tells buyer

(c) David Strom and Stephanie Denny, 1998
149
CyberCash System Transaction
Process
buyer
S(trans)
merchant
E(16+4)
(c) David Strom and Stephanie Denny, 1998
S(trans)
E(16+4)
150
3rd-party
trans
16+4
CyberCash System Properties
C ost
m odest
D ir e c tio n V a lid a tio n
o n e -w a y
(c) David Strom and Stephanie Denny, 1998
yes
151
S c a le
P r iv a c y
m odest
no
What’s in a CyberCash Wallet?
 Credit
card accounts
 Debit card accounts
 PayNow™ check service (for electronic payments
from checking account; like debit cards)
 CyberCoin account (for “micro-payments”)
(c) David Strom and Stephanie Denny, 1998
152
CyberCash Secure Internet Credit
Card Payment
http://a.dn.cybercash.com/cybercash/info/sixsteps.html
(c) David Strom and Stephanie Denny, 1998
153
CyberCash as a Merchant Service
Provider
 CyberCash
provides the merchant with
CashRegister software to authorize and process
payments
 CyberCash is neither an acquirer nor a bank,
but is a provider of payment software for
eCommerce (a gateway)
 CyberCash provides an advanced level of
encryption for financial information passed
from their database to acquirers (not SSL)
(c) David Strom and Stephanie Denny, 1998
154
CyberCash CashRegister®
Software
 Integrates
with a variety of operating systems
and merchant storefront software
 Can be used with or without consumer wallets
 Non-wallet transactions use SSL
 $500 initial fee, $50/month plus 10
cents/transaction
 Some programming required perl (Unix) or
VBScript (NT)
(c) David Strom and Stephanie Denny, 1998
155
CyberCash CashRegister®
Software
 However,
you must still arrange for a merchant
deposit account with your bank or independent
service provider
 If you are having trouble setting up a merchant
account with a bank, contact CyberCash for
assistance
(c) David Strom and Stephanie Denny, 1998
156
Credit Card Payment Demo
 Credit
card transaction with CyberCash —
No Wallet
 CyberCash Wallet transaction
(c) David Strom and Stephanie Denny, 1998
157
CyberCash Benefits
 CashRegister
Software is free to merchant
 Supports wallet and non-wallet payments
 No additional charges to merchant — fees to
CyberCash are paid by acquirers
 CyberCash is presently the largest gateway
service provider for Internet merchants
 Their products will evolve
(c) David Strom and Stephanie Denny, 1998
158
Electronic Cash (e-cash)
 CyberCoin®
Service of CyberCash, part of Wallet
 Currently available with Microsoft Wallet

 Mondex®
Licensed by MasterCard International, Inc.
 Smart card-based system

 Digicash®
(c) David Strom and Stephanie Denny, 1998
159
Mark Twain Bank is Worth Looking At:
www.marktwain.com/digifaq.html#Help
Look at their customer support disclaimer —they get an “A” for honesty!
(c) David Strom and Stephanie Denny, 1998
160
SSL Payment Systems
ICVerify, www.icverify.com
 PCAuthorize, www.tellan.com
 Worldpay/PSI, www.psi.net/worldpay
 AuthorizeNet, www.authorizenet.com
 Internet Secure, www.internetsecure.com

 Check
out
www.ihtmlmerchant.com/creditcard.htm
(c) David Strom and Stephanie Denny, 1998
161
Other Merchant Providers to
Consider
 Online

Financial Services (OFS)
http://ofs.web-charge.com/signup1.html
 Internet

www.internetsecure.com
 Redi

Secure
Check / Redi Charge
www.redi-check.com
 Merchant

Account Services
Provo, Utah 1-801-765-1111
(c) David Strom and Stephanie Denny, 1998
162
ICVerify Process
Customer submits 16+4 through SSL browser
connection
 Merchant swre records to a file
 ICVerify submits to bank
 ICVerify receives response from bank, creates
answer file
 Merchant swre retrieves answer, sends response to
customer
 No per transaction fee!

(c) David Strom and Stephanie Denny, 1998
163
Supported Merchant Servers for
ICVerify
MS Site Server Commerce
 Oracle Payment
 Mercantec SoftCart
 Internet Factory Merchant
 InterShop Online

(c) David Strom and Stephanie Denny, 1998
164
ICVerify Demo

www.icverify.com/library/downloads/icvdemo20.
html
(c) David Strom and Stephanie Denny, 1998
165
Setting up Merchant Account
 Providers
to consider
 How to compare services
 Choices in setting up account, fees
(c) David Strom and Stephanie Denny, 1998
166
All Merchant Providers Are Not
the Same
 Compare
services
Which cards do they authorize?
 Do they provide electronic check services?
 Do they provide check guarantee services?

 Compare
prices
Start-up fees
 Monthly discount fees
 Other service fees (per transaction)
 Statement generation fees

(c) David Strom and Stephanie Denny, 1998
167
Choices for Setting Up a
Merchant Account
 Go
to your local bank and set up your own
merchant account -- If they’ll take you, this may
give you the best discount rate
 Join Costco warehouse membership store,
Executive Membership is $125, <2% plus 25
cents/transaction (www.costco.com/exec/credit.html)
 Contract with CSP and process through them
 Buy a software suite that includes merchant
account set-up
(c) David Strom and Stephanie Denny, 1998
168
Range of Credit Card Fees
Your Bank
CSP
Discount Rate: 1.5% - 5.0%
Application Fee: $100 - $300
Discount Rate: 1.5% - 5.0%
Per Transaction:
.20 - .30
Monthly Fee:
$10 - $25
(service / statement fee)
Chargeback Fee: Up to $25
Chargeback Reserves:
Up to 10% of sales, for up
to six months
(c) David Strom and Stephanie Denny, 1998
169
Regulations governing electronic
commerce transactions
 Visa
/ MasterCard Operating Regs
Credit Card Rules for acquirers and merchants
 Fair Credit Billing Act
 Debit Card Rules
 Regulation E

 Consumer

Can Internet Protection Act be far behind?
 Privacy

Telephone Protection Act
Principles
Yet to be mandated, but inevitable; and generally a
good idea
(c) David Strom and Stephanie Denny, 1998
170
What About Privacy?
 Anonymity
issues
 Confidentiality issues
 Disclosure issues

Name and address info
 Disclosure of transaction to a third party
 Merchant’s identity
(c) David Strom and Stephanie Denny, 1998
171
Privacy Issues for the Consumer
 Most
people just want to be asked for their
permission
 Your customers don’t object so much if you use
their information to sell them other products
you may offer
 But many object if you sell or rent their names
to someone else
(c) David Strom and Stephanie Denny, 1998
172
“Data Mining”: How much is
enough?
 You
have the opportunity to build a customer
database for future sales
 To what degree do you slice and dice?
 If you slice too fine, are you missing
opportunities?
 This leads to more privacy issues
(c) David Strom and Stephanie Denny, 1998
173
Topic 5: Choosing the Right
eCommerce Path
(c) David Strom and Stephanie Denny, 1998
174
Three Approaches:
 Outsource
to a CSP
 Buy suite of software
 DIY
(c) David Strom and Stephanie Denny, 1998
175
Find an CSP
 More
ISPs are offering eCommerce solutions
 Have to use their software standards and
payment schemes
 Could be pricey
 Just catching on in USA
(c) David Strom and Stephanie Denny, 1998
176
Evaluating CSPs
 Do
they offer storefront design?
 Have in-house programmers?
 Hosting of your own web server machine?
 How many payment systems do they support?
 What kinds of accounting reports do they offer?
(c) David Strom and Stephanie Denny, 1998
177
The Catch-22 of CSPs:
 To
be successful, a provider has to promote his
products via the Internet and have detailed
descriptions on their own web sites!
 But try to find this information isn’t easy.
(c) David Strom and Stephanie Denny, 1998
178
Some CSP Examples









www.psi.net/web/ecommerce.shtml
www.Best.com/bizcomm.html
www.Brainlink.com/html/saleslink.htm
www.Earthlink.net/company/webservices.html
IBM: mypage.ihost.com
www.Netcom.com
business.Mindspring.com/prod-svc/smbiz/
www.Mindrush.com/
www.outer.net/ONCommerce (OuterNet)
(c) David Strom and Stephanie Denny, 1998
179
Price Comparison for CSP hosting
P ro v id er
S etu p fee (U S $)
M o n th ly fee
(U S $)
IB M
260
55
E arth lin k
624
194
P rem iu m P lu s
N etco m
450
300
C o m m erce S ite,
cred it card s
M in d sp rin g
175
324
C o m m ercial
A d v an tag e,
cred it card s,
C y b ercash
(c) David Strom and Stephanie Denny, 1998
180
P lan n am e,
p ay m en t
o p tio n s
B ro n ze, cred it
card s
Price Comparison assumptions
 10
Mb disk storage
 Single email account
 InterNIC $100 fee included for domain name
(c) David Strom and Stephanie Denny, 1998
181
New CSP Approaches:
 GeoShop
 ViaWeb/Yahoo
 iCat
 Encanto
 Tripod
(c) David Strom and Stephanie Denny, 1998
182
GeoShop
 Builds
on GeoCities “communities” but for
merchants (www.geocities.com/join/geoshops)
 $25/month for just commercial listings
 $180/month (or more!) for actual transactions

working with Internet Commerce Services Corp. who
uses Open Market Transact servers
(c) David Strom and Stephanie Denny, 1998
183
ViaWeb/Yahoo
 $100/month
(<50 items) or $300/month options
 CyberCash processing $500 setup
 Solid reporting and admin options
(c) David Strom and Stephanie Denny, 1998
184
iCat Commerce Online Hosting
Solution
 Free
for <10 items, $99/mo. for 100 items
 No per-transaction fees
 Email and browser-based notifications of
purchase completion
 Advanced items like upsell, featured products,
cybercash gateways
(c) David Strom and Stephanie Denny, 1998
185
Encanto
 Turnkey
server/software for under $2000!
 Payment gateway included ($50 initial,
$20/month)
 Web storefront, shopping cart, catalog system
 Secure cert required
 All managed via browser, steps are clearly
documented
 Demo at www.encanto.com/ego/demo
(c) David Strom and Stephanie Denny, 1998
186
One Way to Support Lots of
Payment Systems
 Wired-2-Shop

www.wired-2shop.com/TestDrive/Admin/PaymentList.asp
(c) David Strom and Stephanie Denny, 1998
187
The Suite Approach
 Leading
contenders
 What is part of the suite and what isn’t
 Prices and platforms
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188
Popular eCommerce Suites
V en d o r, P ro d u ct
V ersio n
P rice
P la tfo rm
IC a t
E lec C o m m S u ite
3 .0
$ 3 5 00 $ 1 0 ,00 0
N T, 95,
S o la ris, Irix
IB M
N et.C o m m erce
3 .1
$ 5 0 00 $ 2 0 ,00 0
M icro so ft
S iteS erv e r C o m m erce
3 .0
$ 4 6 00
N T , A IX ,
S o la ris,
A S/400,
S/390
NT
IB M / L o tu s
D o m in o M erch a n t
2 .0
$ 3 5 00 $ 9 0 00
(c) David Strom and Stephanie Denny, 1998
189
NT
Popular eCommerce Suites (con’t)
V en d o r, P ro d u ct
V ersio n
P rice
P la tfo rm
O M T ra n sa ct
O p en M a rk et
4 .0
$ 2 5 0 ,0 0 0
U n ix
In tersh o p O n lin e
In tersh o p
3 .0
$ 5 0 00
NT
U n ix
W eb S ite P ro
O 'R eilly
2 .3
$800
N T, 95
(c) David Strom and Stephanie Denny, 1998
190
Four Typical Elements
 Catalog
 Storefront
designer
 Ordering/inventory system
 Shopping cart/check out system
(c) David Strom and Stephanie Denny, 1998
191
The Cold Hard Reality of Suites
 Suites
are nothing more than collection of
products
 Lack integration among various elements
 Difficult to setup, customize, and use
 Require you to live “inside” their structure
 Limited payment options
 Sounds like early MS Office
(c) David Strom and Stephanie Denny, 1998
192
Payment Systems Included in
Each Suite
 Microsoft:
Verifone, Buy Now
 IBM (Net.Commerce): Verifone, SET/eTill
 Domino Merchant: CyberCash, Verifone
 iCat: CyberCash, CheckFree, others
 OpenMarket: Verifone
 WebSite Pro: IC Verify, PC Authorize,
CyberCash, others
 Intershop: CyberCash, ICVerify, others
(c) David Strom and Stephanie Denny, 1998
193
Sample Stores Included in Each
Suite
 Microsoft:
4 stores
 IBM: eMall, simple and advanced sample stores
 Domino: 1 store
 iCat: 1 hardware store
 OpenMarket: none
 WebSite Pro: 1 bookstore
 Intershop: 3 stores
(c) David Strom and Stephanie Denny, 1998
194
Databases Supported in Each
Suite
 Microsoft:
SQL Server
 IBM:
DB2
 Domino: Notes
 iCat: 4D, Sybase SQL Anywhere
 WebSite: Access
 Intershop: Sybase SQL 11
(c) David Strom and Stephanie Denny, 1998
195
Dealing With ODBC
 Have
to understand how to set up data sources
 Intimate knowledge of your data structure
 Re-install ODBC drivers at least once!
 Best to start with built-in database
(c) David Strom and Stephanie Denny, 1998
196
Store Wizards Included in Each
Suite
 Net.Commerce
(the best)
 WebSite Pro (but doesn’t do much)
 Intershop (various wizards)
 MS Commerce (although you’ll really need to
know COM!)
(c) David Strom and Stephanie Denny, 1998
197
Tips
 Don’t
install anything before making sure you
have everything!
 Downloads for free, but they expire
 Can you export existing files to these systems?
(c) David Strom and Stephanie Denny, 1998
198
WebSite Professional
website.ora.com
 Version
2, shipping since 9/97
 US$799!
 NT
(or 95)
 Supports seven different payment processors:
SSL, CyberCash
 One sample store (bookstore)
(c) David Strom and Stephanie Denny, 1998
199
Sample storefront
 http://merchant.inline.net/admin/
(c) David Strom and Stephanie Denny, 1998
200
WebSite Configuration Sheet
(c) David Strom and Stephanie Denny, 1998
201
Store Properties
 Only
can operate a single payment system
 Run on a series of Access databases
 Built-in tax table, but for N.Americans!
 Well documented data structures in typical
O’Reilly fashion
(c) David Strom and Stephanie Denny, 1998
202
Recommendations
 Lowest
priced suite by far!
 iHTML is robust, but will take some learning
 Nice store setup and organization of catalog
 Good low-end solution
(c) David Strom and Stephanie Denny, 1998
203
Intershop
 demo
at 207.90.184.82 (admin/admin for store)
 Includes Sybase SQL 11
 US$5000, includes 3 mos. support
(c) David Strom and Stephanie Denny, 1998
204
Seven Different Managers
 Catalog
 Products
 Store
 Purchases
 Inventory
 Customers
 Admin
(c) David Strom and Stephanie Denny, 1998
205
Characteristics
 Everything
managed via browser, which can get
tedious
 But you already have a database behind it
(c) David Strom and Stephanie Denny, 1998
206
Payment Options galore
(c) David Strom and Stephanie Denny, 1998
207
Recommendations
 Most
flexible payment options of any suite
 Better at processing orders than site creation
 Not good for large catalogs
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208
Microsoft SiteServer Commerce
 Still
evolving
 More of a development platform than a suite
 Closely tied to IIS, SQL Server et al.
(c) David Strom and Stephanie Denny, 1998
209
Shopping with MS Commerce
(c) David Strom and Stephanie Denny, 1998
210
Recommendations
 If
you are going to use any other MS apps
 If you believe developers will follow
 If you must stay on the cutting edge of MS
products
 Use with ClearCommerce.com front end if
possible
(c) David Strom and Stephanie Denny, 1998
211
Commerce Server Specifics
 NT,
fast Pentium with 128 M RAM essential
 US$5000
 www.microsoft.com/commerce
(c) David Strom and Stephanie Denny, 1998
212
iCat Electronic Commerce Suite
 Two
different versions: Standard and Pro
 Pro (also runs on Solaris, Irix) and multi-user
database, performance enhancements, wider
payment options
(c) David Strom and Stephanie Denny, 1998
213
iCat Process
 Use
four-step process
 Make changes to staging db
 Use designer and built-in catalog
 Then post changes to production db
(c) David Strom and Stephanie Denny, 1998
214
Recommendations
 No
wizards, all browser-based forms
 Tedious but straightforward
 Lots of third-party add-on tools
 Best for people new to db or the ‘net
 Best if you don’t have computer-based
accounting system yet
 Used in their own hosting service
(c) David Strom and Stephanie Denny, 1998
215
iCat Specifics
 NT,
fast Pentium with 128 M of RAM
 US$9000 for professional version
 www.icat.com
(c) David Strom and Stephanie Denny, 1998
216
IBM Net.Commerce
(c) David Strom and Stephanie Denny, 1998
217
Included
 IBM’s
Go Web Server
 DB2 database
 Shopping trolley system
 Credit card verifier, eTill software
(c) David Strom and Stephanie Denny, 1998
218
Several ways to setup your store
 Use
nine-step wizard with populated catalog
 Use wizard with empty catalog
 Start from scratch
 Import existing databases
(c) David Strom and Stephanie Denny, 1998
219
Recommendations
 Great
if you already use DB2 for inventories
 Most security-conscious suite
 More depth than iCat
 Start with all IBM defaults to save time
(c) David Strom and Stephanie Denny, 1998
220
Net.Commerce Specifics
 NT,
fast Pentium with 64 M of RAM
 AIX, 390, OS/400, Solaris
 US$5000 Basic, $20,000 Pro
 www.internet.ibm.com/net.commerce
(c) David Strom and Stephanie Denny, 1998
221
Latest features
 “Intelligent
Catalog”
 Java-based wizards to setup and manage store
 Recognizes shopping preferences and upsells
 Improved SET payment server, ad tracking
partnerships
 Integration with Domino Merchant
 Screencam demo
(c) David Strom and Stephanie Denny, 1998
222
Domino Merchant v2.0
 Uses
Notes server, but not Notes clients
 Payments, catalogs, wizards galore
 Easiest to setup, difficult to add products
 A good entry-level product for now
 Screencam demo
(c) David Strom and Stephanie Denny, 1998
223
OpenMarket
 High
end solution
 Worldnet offers hosting of OM servers
 Still needs customization!
(c) David Strom and Stephanie Denny, 1998
224
Recommendations
 If
you can afford it ....
 Really the price covers lots of consulting time
 High transactions and throughput needs
 Use with Icoms.com front end service ($1000 +
$100/month)
(c) David Strom and Stephanie Denny, 1998
225
OpenMarket Specifics
 Various
Unix
 US$250,000 and up!
 www.openmarket.com
(c) David Strom and Stephanie Denny, 1998
226
Isn’t somebody missing from the
suite party?
 Netscape
 Oracle
(c) David Strom and Stephanie Denny, 1998
227
Topic 6: Installing and Operating
Your Own Storefront
 What
you need to know
 What you need to buy
(c) David Strom and Stephanie Denny, 1998
228
One DIY solution
 IIS
 PerlShop
shopping cart
 ClearCommerce CSP
 First American Payment Systems
 Verisign certificates
 Fees: $800 setup, $500/yr, $50/month
 What took longest to work: perl scripts to make
credit card payments!
(c) David Strom and Stephanie Denny, 1998
229
The 90s Help Wanted
 Wanted:
Webmaster
 Required skills: High proficiency in various
web based programming, development tools,
CGI, cookies, DNS, eCommerce, FTP, HTML 2.0
through 3.02, IIS Server admin, Javascript, Java,
MS SQL, Netscape server admin, NT Server
admin, perl, Unix admin, web security
(c) David Strom and Stephanie Denny, 1998
230
You Need to be a Superhero:
 Part
web designer
 Internet technologist
 SQL database admin
 Payment system maven
(c) David Strom and Stephanie Denny, 1998
231
Things You’ll Need to Discover
 Are
your sales and marketing staff web-savvy?
 Is your accounting system adaptable to web
purchases?
 How do you reconcile these accounts?
 Does your business owner understand Internet
culture?
 Can anyone find you
(c) David Strom and Stephanie Denny, 1998
232
The Most Under-rated Skill:
 PATIENCE!
(c) David Strom and Stephanie Denny, 1998
233
Do it Yourself Path
Traditional merchant banking approach
 More risk, especially when your payment
system is on the ‘net

(c) David Strom and Stephanie Denny, 1998
234
Steps Involved for DIY’ers
Get a web server
 Get merchant software
 Integrate with your back end systems

catalogs
 inventory
 customer accounts


Be prepared to do lots of coding
(c) David Strom and Stephanie Denny, 1998
235
Components Needed to Operate a
Web Storefront
 Database
of items to sell and current inventories
 Secure web server
 Searchable catalog server
 Connections to backend payments and financial
servers
 Shopping cart system
 Checkout/payment system
 Don’t forget about security!
(c) David Strom and Stephanie Denny, 1998
236
Which Database Server?
 Pick
before anything else
 Core of your store revolves around the database:
inventory system
 accounting system
 catalog system

(c) David Strom and Stephanie Denny, 1998
237
Database Server
Recommendations
 Use
existing client/server db if possible
 SQL Server: best with MS tools
 Oracle: if you know pSQL already
 Informix: all other situations
(c) David Strom and Stephanie Denny, 1998
238
Database/web Tools
 Develop
your own forms
 Query your database
 Develop your own catalog
(c) David Strom and Stephanie Denny, 1998
239
Why is a Catalog Important?
 Your
customers view of your store
 Current with your own inventory and offerings
 Don’t want to sell what you don’t have
 See catalog resources page
(c) David Strom and Stephanie Denny, 1998
240
Another choice: outsourced
catalog!
 ShopSite/Open
Market
 IBM Home Page Creator mypage-products.ihost.com
(N. America only)
 Mindspring with Mercantec
(c) David Strom and Stephanie Denny, 1998
241
ShopSite demo
 www.reliablehost.com/cgi-bin/bo/start.cgi
 username:
test8
 password: test
(c) David Strom and Stephanie Denny, 1998
242
Tool Recommendations
 Cold
Fusion, www.allaire.com
 Sapphire/Web, www.bluestone.com
(c) David Strom and Stephanie Denny, 1998
243
Which Web Server?
 Hundreds
to choose from
 Must support SSL and/or SHTTP
 Platform isn’t important, really
(c) David Strom and Stephanie Denny, 1998
244
Get Your Certificates in Order
 Bring
up form inside web server
 Send to CA on letterhead with credit card (!)
 Receive cert from CA
 Install on your web server
(c) David Strom and Stephanie Denny, 1998
245
What can a Shopping cart do?
 Simplify
ordering process
 Track multiple purchases for a single visitor
 Display items purchased
 Calculate total prices, tax, shipping charges
 Track item attributes (colors, styles, sizes)
(c) David Strom and Stephanie Denny, 1998
246
Different Shopping cart Methods
 Account-based
 Cookie-based;
 Encoded
see www.cookiecentral.com
URLs
(c) David Strom and Stephanie Denny, 1998
247
Shopping cart Programs
 S-Mart:
www.rcinet.com/~brobison/scripts
 Minishop: www.egrafx.com/minishop
 mvend: www.iac.net/~mikeh/mvend.html
 PerlShop: www.arpanet.com/perlshop
(c) David Strom and Stephanie Denny, 1998
248
Commercial Programs
Internet Shopping Cart Server:
www.webisland.com/cart
 Rent-A-Cart: www.rent-a-cart.com
 CyberCart: www.lobo.net/~rtweb
 AutoCart: www.autocart.com/Autocart
 WebCart: www.staff.net/webcart.html
 SoftCart: www.mercantec.com
 WWWOrder:

www.virtualcenter.com/scripts2/WWWOrder.html
(c) David Strom and Stephanie Denny, 1998
249
Shopping cart Example
www.asizip.com (SoftCart)
Shopping basket
 Cookies to track purchases
 Simple navigation

(c) David Strom and Stephanie Denny, 1998
250
Payment Choices
 Use
gateway (CyberCash, ICVerify) or service
provider?
 Do you need support for multiple currencies?
 Do you have to host your store elsewhere?
 Do you understand the fee structure?
(c) David Strom and Stephanie Denny, 1998
251
Again, Merchant Providers Differ
 Compare
services
Which cards do they authorize?
 Do they provide electronic check services?
 Do they provide check guarantee services?

 Compare
prices
Start-up fees
 Monthly discount fees
 Other service fees (per transaction)
 Statement generation fees

(c) David Strom and Stephanie Denny, 1998
252
WorldPay and PSI

Multicurrency payments


>100 for product prices
16 different ones for settlement
Have to host your web at PSI
 Includes SoftCart and iCat software as well
 US$1000 + US$1400/yr

(c) David Strom and Stephanie Denny, 1998
253
WorldPay Demo

www.worldpay.com/demo/store.html
(c) David Strom and Stephanie Denny, 1998
254
Prices of Typical Products
P ro d u ct
Type
In ex
A cco u n tin g
S o ftC art
S h o p p in g C art
M allM an ag er
C atalo g
2000
W eb C atalo g
C atalo g
1600
S aq q ara
S earch to o l
VPO S
P ay m en t serv er
W eb M ate
D ev elo p m en t to o l
(c) David Strom and Stephanie Denny, 1998
P rice
255
U S $6000
900
700
2500
750
Inex Demo
 Financial
backend strength
 Store front and some aspects of suite
 www.inex.com
(c) David Strom and Stephanie Denny, 1998
256
Don’t forget about sales tax and
VAT!
 Make
use of software from Taxware.com
 Some of the catalogs and suites have databases
to deal with this
 But you have to create them from scratch
(c) David Strom and Stephanie Denny, 1998
257
Dealing with search engines
 Some
use <META>, some use <TITLE>
 Keep descriptions at top of your home page
short and sweet
 Review information on
SearchEngineWatch.com
 Web Review article:
webreview.com/97/10/17/webmaster
(c) David Strom and Stephanie Denny, 1998
258
Don’t Forget About Security
 Make
sure you protect your web site!
 See “Ten ways” article from Winn Schwartau
 See “Eight Steps to Minimize Fraud” article
 Limit access, isolate servers, lock down scripts,
so forth
 See
www.nwfusion.com/netresources/0202hack1.html
and www.scambusters.org/Scambuster23.html
(c) David Strom and Stephanie Denny, 1998
259
Putting Together Your Own
Solution
 SQL
Server database
 CyberCash payment system
 WebCatalog 3.0 (supports CCash)
 IIS web server
 Total price: <US$10,000
(c) David Strom and Stephanie Denny, 1998
260
Conclusions
 eCommerce
crosses many different skill sets
 Software is still too dicey in many areas
 Standards aren’t much use right now
 Suites don’t offer much in the way of
integration
 DIY may be the best solution
(c) David Strom and Stephanie Denny, 1998
261
Acronyms
 B2B
Business to business
 CSP Commerce Service Provider
 DIY Do It Yourself
 EBP Electronic Bill Presentment
 URLs Universal Resource Locator
 SSL Secure Sockets Layer
 OFX Open Financial Exchange
 SHTTP Secure web protocol HTTP
(c) David Strom and Stephanie Denny, 1998
262
More Acronyms











ACH
CA
ISP
MAC
MICR
MO/TO
NACHA
PIN
PKC
POS
RSA
Automated Clearing House
Certificate Authority
Independent Service Provider
Message Authenticity Check
Magnetic Ink Character Recognition
Mail Order/Telephone Order
National Automated Clearing House Association
Personal Identification Number
Public Key Cryptography
Point of Sale
Rivest, Shamir and Adleman
(c) David Strom and Stephanie Denny, 1998
263
Thanks!
 Review,
Q&A
 David
Strom
 +1 516 944 3407
 [email protected]
(c) David Strom and Stephanie Denny, 1998
264
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Internet Commerce: Understanding Payments, Security and