Internet Commerce: Understanding Payments, Security and

Transcript Internet Commerce: Understanding Payments, Security and

Internet Commerce: Understanding Payments, Security and Storefronts presented by: Stephanie Denny, [email protected], www.denny.dc3.com

David Strom, [email protected], www.strom.com

Day 1: Internet Commerce presented by: Stephanie Denny, [email protected]

Why This Tutorial



A successful web storefront must accommodate the common forms of electronic payment in use today



Customer payment choices = increased sales



Not all payment systems look or act the same



The right payment options protect you as well as your customer

What This Course is Not About

4 

Mathematics of Public Key Cryptography



In-depth discussion of Visa ® and MasterCard ® operating regulations for e-commerce



Legal advice for e-commerce issues related to operating a web storefront



Writing your own storefront systems from scratch



In-depth on security issues

Course Topics-- Day 1 (Denny)



The essential ingredient to web storefronts: providing for payment of goods and services



What is a secure transaction, and why all the fuss about it?



Overview and demonstration of payment systems that are working on the Internet today



The future of payments on the Internet

Course Topics-- Day 2 (Strom)



What Becomes eCommerce Success



Choosing the Right eCommerce Path



Installing and Operating Your Own Storefront

6 (c) Stephanie Denny and David Strom, 1998

Course Approach

7 

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

Some $5.00 Words I Will Not Use in Today’s Presentation $5.00 Word



Nascent



Ubiquitous



Efficacious



Paradigm 5-cent Synonym



New



Everywhere



Effective



Standard

Denny’s Background



I’ve been involved with payment systems for a long time



26 years in credit cards / banking (both the acquiring and issuing sides of the credit card business)

 

Managed the development of an on-line banking service for a major US Bank Credit Card Mostly non-technical, with major experience in Marketing and Communications

Strom’s 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

10 (c) Stephanie Denny and David Strom, 1998

Our Beliefs



Our perspective is from the Consumer’s viewpoint, as well as from the Merchant’s



We believe that e-commerce is the next evolutionary step in payment systems



There will be other iterations of eCommerce payment forms yet to come

Our Perspective on the Internet

12 

Historically, it will have as profound an effect on humanity as did the invention of the printing press



It is a mass communication medium, but different because it is two-way and feedback is instantaneous



Commercially, it is another channel for sales and distribution

Some Disclaimers



I am not a mathematician, engineer or cryptography expert



However:

 

I was in the credit card business before Visa and MasterCard were around I’ve been around the Internet since the early days of the World Wide Web

Benefits of the Internet



Free exchange of information; expansion of personal knowledge



Instant distribution of information, worldwide



At the same time, we all share the responsibility for accurate publishing

Marketing on the Internet



Direct, one-to-one marketing opportunity



Allows you to learn useful information to build a relationship with your customer



Relatively inexpensive medium compared to advertising, direct mail or telemarketing



Results are measurable

Marketing on the Internet



Some say that eCommerce has slowed down, and some say it’s taking off



How do we convince the general public that they will really like eCommerce?

16 (c) Stephanie Denny and David Strom, 1998

Marketing on the Internet



The Internet has the capacity to be a major distribution channel



Business-to-business use will grow faster due to efficiencies realized online



However...

Marketing on the Internet



The Wide use of eCommerce by Consumers Will Depend on Several Things:



Easy forms of payment

 

Trust in the system Perceived benefits outweigh the risk (What’s in it for me?)

Marketing on the Internet

19 

This is a fundamental change in the concept of money



Like the introduction of the credit card and the ATM, it will take some time (but the adoption curve will be faster)



However, if you tried to buy on the Internet during the past Holiday season, you know it’s growing

Today’s Topics

20 

I. The Essential Ingredient to Web Storefronts: Accepting Payments for Goods and Services



II. What is a Secure Transaction, and Why all the Fuss About it?



III. Payment Systems Today



Overview of those that work today on the Internet



Live demonstration of how they work



IV. The Future of eCommerce Payments

The Essential Ingredient to Web Storefronts: Accepting Payments



Payment basics



Which options are the right ones for you?



Objectives in providing payment choices



Virtual money is the currency of the future



Q & A

Payment Basics

Consumer Access Point Issuer Acquirer BANK • deposit & withdrawal • transaction status inquiry • authentication • problem resolution Consumer • purchase & refund • transaction status inquiry • authentication • problem resolution

Merchant Access Point Merchant

What Makes a Good Payment System?



Universal (worldwide) acceptance



Universal value



Reliability



Ease of use for your customer



Capacity for quick settlement (collection of payment for you)

What are the Requirements?



Payment options must appeal to the masses



They must allow easy payment for the customer, at an acceptable level of risk for you and your bank



They must accommodate order changes, cancellations and returns

Objectives in Offering Payment Choices



Your customer’s objective is to make a purchase



Your objective is to facilitate the sale with a convenient and “safe” method that ensures collection of the payment



“Safe” means safe for you, your customer and your bank

Objectives in Offering Payment Choices



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

26 (c) Stephanie Denny and David Strom, 1998

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

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

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

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

Questions and Answers

31 (c) Stephanie Denny and David Strom, 1998

II. What is a secure transaction, and why all the fuss about it?



You want to identify your customer as an authorized account holder



Your customer wants to identify you as a legitimate merchant



You both want to make sure that valid payment is received for the purchase

Enter Secure Electronic Commerce



SEC allows for secure processing of customer and payment information



Based on cryptographic technology

   

Privacy of message contents Authentication of parties involved Integrity of data transmitted Non-repudiation of transactions

Privacy



Privacy means that the message contents cannot be seen by anyone but the intended parties



Accomplished through the use of encryption

34 (c) Stephanie Denny and David Strom, 1998

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

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

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

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It will be much harder for customers to claim they never placed the order

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)

38 (c) Stephanie Denny and David Strom, 1998

Certificate Authorities (CAs)

39 

Trusted third parties, similar to notaries



Can be external or internal (managed within your own company) — we will discuss external



Choice of a CA may depend on your merchant server software



If you want to choose an unsupported CA, you will be on your own to determine interoperability with your software

Steps in Certificate Creation

40 

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

Examples of Certificate Authorities



VeriSign

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http://www.Verisign.com



GTE CyberTrust Solutions, Inc.

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http://www.cybertrust.gte.com



Thawte Consulting



http://www.thawte.com

Certificate Creation



Demo of key generation and certificate request

42 (c) Stephanie Denny and David Strom, 1998

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

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)

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)

Secure Sockets Layer Protocol (SSL) Merchant’s Certificate (Digital ID) can be viewed by any secure browser

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https:// in the URL = a secure connection

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SSL allows customers to verify who the merchant is

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The merchant’s digital ID does not certify the integrity of the merchant

46 (c) Stephanie Denny and David Strom, 1998

Secure Sockets Layer Protocol (SSL) Customer Order with Payment Information Encrypted order sent Customer order decrypted at merchant server

47 

SSL encrypts the customer order, which includes the payment information



This data is sent from the customer to the merchant via a secure “pipe”

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

Encryption Strength



It is illegal to export products containing encryption that is stronger than 40 bits



It is not illegal to use encryption stronger than 40 bits internationally

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Financial institutions do not consider 40-bit encryption adequate for Internet transactions

Encryption Strength



Newer browser and server software are capable of 128-bit encryption



128-bit encryption is exponentially stronger than 40-bit encryption

50 (c) Stephanie Denny and David Strom, 1998

Encryption Strength



We’ve all heard about the case where 40-bit encryption was broken in eight days



Estimated cost of effort was $10,000

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Encryption Strength



According to Netscape, it would cost $5,600,000,000,000,000,000,000,000,000,000 US (approximately) to crack a single session in eight days with 128-bit encryption

52 (c) Stephanie Denny and David Strom, 1998

Some New Credit Card Operating Regs You Should Know About



For both Visa and MasterCard:

 

Effective April 1, 1998 electronic commerce transactions using unsecured protocol are subject to higher interchange rates for the acquirer, which translates into higher discount rates for the merchant Secure protocols are defined in the regs as “channel encrypted” (SSL) or SET

How Things Will Be in the Future



Non-repudiation of transactions through digital certificates for both merchant and customer



The SET Protocol (SET) is 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

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

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Uses public and private key pairs that have a mathematical relationship

Public and Private Key Pairs



A public key is disclosed and widely distributed with no adverse affects



Used to encrypt or decrypt information

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Works only in conjunction with its paired private key

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

Public and Private Key Pairs

58 

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

A Digital Certificate (or Digital ID) is a Notarized Public Key



The Certificate Authority is the Notary



You can create a key pair through server, browser or wallet software



You send the public key to the Certificate Authority

A Digital Certificate (or Digital ID) is a Notarized Public Key



Your public key is digitally signed and returned as the certificate



Your private key remains embedded in your software

60 (c) Stephanie Denny and David Strom, 1998

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 a SET transaction

How is SET Different from SSL?



Digital certificates for SET will be payment specific

  

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)

62 (c) Stephanie Denny and David Strom, 1998

With SET: How is SET Different from SSL?

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

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

MasterCard ® Example of a SET Transaction http://www.mastercard.com/set/screen1.html

65 (c) Stephanie Denny and David Strom, 1998

MasterCard ® Example of a SET Transaction http://www.mastercard.com/set/screen2.html

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MasterCard ® Example of a SET Transaction http://www.mastercard.com/set/screen3.html

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MasterCard ® Example of a SET Transaction http://www.mastercard.com/set/screen4.html

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MasterCard ® Example of a SET Transaction http://www.mastercard.com/set/screen5.html

69 (c) Stephanie Denny and David Strom, 1998

SSL vs. SET

70    

SSL Server authentication



Merchant certificate as legitimate business Possible for client authentication



Not tied to payment method Privacy



Encrypted message to merchant includes account number Integrity



Message authenticity check (MAC)

   

SET Server authentication



Merchant certificate tied to accept payment brands Customer authentication



Digital certificate tied to certain payment method Privacy



Encrypted message does not pass account number to merchant Integrity



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...

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

Questions & Answers

73 (c) Stephanie Denny and David Strom, 1998

III. Payment Systems on the Internet Today



Overview of those that work today on the Internet



Live demonstration and discussion of how they work



Q & A

Payment Systems on the Internet Today

75 

Separate payment systems from payment gateways and payment devices:

  

A payment system provides the processing and settlement of transactions A payment gateway provides software or services that support eCommerce transactions between the merchant and acquirer A payment device initiates the transaction (such as a credit card or debit card)

Hierarchy



Payment System (clearing house)



Clearing house between acquirers and issuers



Acquirer (third-party processor)



Authorizes, processes and settles for merchant bank



Merchant Bank



Accepts merchant deposit



Merchant



Accepts authorized cardholder transaction

76 (c) Stephanie Denny and David Strom, 1998

Examples of Payment Systems (Clearing Houses)



Federal Reserve System for clearing checks



Visa and MasterCard transaction networks



American Express



Novus (Discover)

77 (c) Stephanie Denny and David Strom, 1998

Examples of Acquirers (Processors)

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First Data Corp.



Paymentech



National Data Corp.



Bank of America Merchant Services



Many processors (acquirers) process multiple brands as part of their service

Internet Payment Devices



Credit cards, debit cards



Off-line accounts



Electronic cash



Electronic checks

79 (c) Stephanie Denny and David Strom, 1998

Credit cards, debit cards



Visa



MasterCard



Discover, American Express, JCB

80 (c) Stephanie Denny and David Strom, 1998

How Credit Cards Work

81 

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

“Off-line” Accounts



Electronic wallets

  

CyberCash ® Wallet Microsoft ® Wallet Verifone ® vWALLET SM



First Virtual ®



All these may provide access to credit, debit, e-cash or electronic check accounts

“Off-line” Account Services

83 

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

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

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

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

Some Problems with Wallets



Not transferable to other wallets



Not available for use at all web storefronts



For eCash products, money must be moved into wallet from another account prior to use:

  

There may be a hold of up to seven days before the funds can be used If your hard disk crashes, you lose the money in that account (remember to back up wallet files) Storage of cash in your wallet = use of float on those funds for your wallet provider

Visa ® Wallet Example of Electronic http://www.visa.com/cgi-bin/vee/nt/sec/no_shock/virt_wallet_L.html?2+0

88 (c) Stephanie Denny and David Strom, 1998

Visa ® Example of Wallet Registration (Digital ID) http://www.visa.com/cgi-bin/vee/nt/sec/no_shock/registering_L.html

89 (c) Stephanie Denny and David Strom, 1998

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”)

CyberCash Secure Internet Credit Card Payment http://a.dn.cybercash.com/cybercash/info/sixsteps.html

91 (c) Stephanie Denny and David Strom, 1998

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)

CyberCash Merchant Services



Interactive Billing and Payment

  

Enables presentment, payment and posting of bills on the Internet (single or recurring transactions) Works with PayNow (e-check), credit card or CyberCoin ® services Can be used for business-to-business as well as consumer payments

CyberCash CashRegister® Software



Makes all their payment services work



Integrates with a variety of operating systems and merchant storefront software



Can be used with or without consumer wallets



Non-wallet transactions are SSL-encrypted, and do not require consumer action in advance

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

Credit Card Payment Demo



Credit card transaction with CyberCash — No Wallet



CyberCash Wallet transaction

96 (c) Stephanie Denny and David Strom, 1998

Credit Card Settlement with CyberCash Transactions



Card data is captured for transmission in one of three ways:



Online Capture — simultaneous with authorization

 

Post-Authorization Capture Batch Capture



Method of capture is determined by your merchant bank and their acquirer

Online Capture



Happens simultaneously with authorization of transaction



Fastest method of capture for online merchants who can guarantee same-day shipment of goods

98 (c) Stephanie Denny and David Strom, 1998

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

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 CyberCash to the bank for funds transfer and merchant account reconciliation

100 (c) Stephanie Denny and David Strom, 1998

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

101 (c) Stephanie Denny and David Strom, 1998

First Virtual



Another example of a “closed system” — only available to merchants and cardholders who have signed up in advance



Similar to the electronic wallet idea

102 (c) Stephanie Denny and David Strom, 1998

First Virtual Services



First Virtual services revolve around an integrated network called the Interactive Messaging Platform SM , or IMP (secure e-mail):

  

VirtualRECEIPT SM , — electronic receipts for physical and virtual credit and debit card activity VirtualALERT SM — interactive alert messages advising customers of shipments or billing VirtualMAIL SM — customized direct mail tailored to individual profiles (slicing and dicing with customer’s permission)

103 (c) Stephanie Denny and David Strom, 1998

First Virtual Services



Today we will focus only on First Virtual’s payment service, which uses the VirtualPIN SM



VirtualPIN is an alias for a MasterCard or Visa credit card (or debit card)

 

Account number is not transmitted on the Web, but store credit card information off-line (PIN is a cross reference number) Also requires a personal Internet e-mail address

104 (c) Stephanie Denny and David Strom, 1998

FV Merchant Account Options



Pioneer Account

  

Minimal start-up cost allows for anyone to start a business and sell on the Internet Does not require that you already have a merchant credit card account Drawback: There is a holding period of 90 days for each transaction before merchant receives payment (to cover risk of chargebacks)

105 (c) Stephanie Denny and David Strom, 1998

FV Merchant Account Options



Express Account

    

For merchants who already accept credit cards Requires solid financial history and excellent credit record Existing merchant account must have low chargeback rate Payout period is four days after transaction is processed Application Fee: $350 non-refundable

106 (c) Stephanie Denny and David Strom, 1998

How Does a First Virtual Payment Work?

   

First Virtual Acts as clearing service for Visa and MasterCard payments (debit or credit) Requires account set-up with First Virtual in advance, for customer identification and account verification All transactions are confirmed by e-mail before a credit card is charged FV sends electronic deposit to merchant’s bank account through the US ACH

107 (c) Stephanie Denny and David Strom, 1998

First Virtual Demo

108 (c) Stephanie Denny and David Strom, 1998

Electronic Checks



Examples:

 

CyberCash PayNow SM Service



Currently only available as a service to merchants with recurring payments



There is a heavy demand for use with a variety of consumer purchases; will soon be available with wallet software Check Free ®



Similar service being tested, not yet in use

109 (c) Stephanie Denny and David Strom, 1998

Electronic Checks: How They Work

   

Service provider or gateway captures Federal Reserve Routing and Account Number information from bottom of physical check (MICR line) When authorized by customer, payment is automatically deducted from checking account Requires advance set-up with service provider Automated clearing only — not a check guarantee service

110 (c) Stephanie Denny and David Strom, 1998

Token-based systems



Stored value accounts (virtual money) for micro payments, generally under $10



Real world example: currency, coin



Internet example: e-cash, where money in a checking or credit card account in exchanged for scrip



Business case has not been proven

111 (c) Stephanie Denny and David Strom, 1998

Electronic Cash (e-cash)



CyberCoin ®

 

Service of CyberCash, part of Wallet Currently available with Microsoft Wallet



Digicash ®



ecash SM service Licensed in US by Mark Twain Bank



Mondex ®

 

Licensed by MasterCard International, Inc.

Smart card-based system

112 (c) Stephanie Denny and David Strom, 1998

Mark Twain Bank is Worth Looking At: http://www.marktwain.com/digifaq.html#Help

113

Look at their customer support disclaimer —they get an “A” for honesty!

Digicash ecash Payment Demo

114 (c) Stephanie Denny and David Strom, 1998

Other Merchant Providers to Consider



Online Financial Services (OFS)



http://ofs.web-charge.com/signup1.html



Internet Secure



http://www.internetsecure.com/



Redi Check / Redi Charge



http://www.redi-check.com



Merchant Account Services



Provo, Utah 1-801-765-1111

115 (c) Stephanie Denny and David Strom, 1998

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

116 (c) Stephanie Denny and David Strom, 1998

Four Choices for Setting Up a Merchant Account



Join an eMall and process through them



Contract with an independent service provider (ISP)



Buy a software suite that includes merchant account set-up



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

117 (c) Stephanie Denny and David Strom, 1998

Range of Credit Card Fees Your Bank eMall or ISP Provider Discount Rate: 1.5% - 5.0%

118

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

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 Telephone Protection Act



Can Internet Protection Act be far behind?



Privacy Principles



Yet to be mandated, but inevitable; and generally a good idea

119 (c) Stephanie Denny and David Strom, 1998

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

120 (c) Stephanie Denny and David Strom, 1998

Privacy Issues for the Consumer



Anonymity



Confidentiality



Disclosure

  

Name and address info Disclosure of transaction to a third party Merchant’s identity

121 (c) Stephanie Denny and David Strom, 1998

“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

122 (c) Stephanie Denny and David Strom, 1998

IV. The Future of Payments on the Internet



Transaction security



New forms of payment systems



Access devices



Virtual currency

123 (c) Stephanie Denny and David Strom, 1998

Transaction Security



Many more iterations of SET and similar protocols



Digital IDs held off-line in smart cards



New payment systems (beyond Visa, MasterCard)

124 (c) Stephanie Denny and David Strom, 1998

Access devices



Will we really need plastic cards?



Who says a chip has to be on a card?



Mobil Oil’s clever idea for POS device



Eliminates need for credit card



Biometrics as identification



Fingerprint scanning

 

Iris scanning Voice recognition

125 (c) Stephanie Denny and David Strom, 1998

Virtual Currency



The move to a single, blended account for consumer-oriented transactions



Multi-functional chip (smart) cards



Universal, worldwide currency?

126 (c) Stephanie Denny and David Strom, 1998

Summary



If all this information seems overwhelming...



New environments are always scary



Awareness and curiosity are the keys to taking advantage of new opportunities



You don’t have to know everything about it — you just need to know where to get the answers.

127

“Everyone is ignorant, only on different subjects.” -- Will Rogers

Questions & Answers

128 (c) Stephanie Denny and David Strom, 1998

Useful References



SET (Secure Electronic Transaction protocol)

   

http://www.dc.net/gtill/set1.htm



Gregory J. Till, US Treasury Dept. attorney



Document details the implications of SET for merchants http://www.visa.com/ http://www.mastercard.com/ http://www.setco.org/

129 (c) Stephanie Denny and David Strom, 1998

Useful References — Cryptography



Cryptography/cryptosystems

  

http://www.rsa.com/ http://www.counterpane.com/ http://www.pipeline.com/



Richard Field, Esq. (US attorney specializing in payment systems and electronic commerce)

130 (c) Stephanie Denny and David Strom, 1998

Useful References — Merchant Payment Options



http://www.cybercash.com/



http://www.firstdatacorp.com/



http://www.firstvirtual.com/

131 (c) Stephanie Denny and David Strom, 1998

Useful References



History of money

  

http://www.frbsf.org/ http://www.firstdatacorp.com/ http://www.mastercard.com/

132 (c) Stephanie Denny and David Strom, 1998

Relevant acronyms

          

ACH CA ISP MAC MICR MO/TO NACHA PIN PKC POS RSA

133

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

Copy of This Presentation

  www.strom.com/pubwork/vegas98t275.ppt

And URLs are at www.strom.com/pubwork/vegas98.html

134 (c) Stephanie Denny and David Strom, 1998

135

Internet Commerce: Understanding Payments, Security and Storefronts presented by: Stephanie Denny, [email protected] www.denny.dc3.com

David Strom, [email protected] www.strom.com

136

Day 2: Internet Storefronts presented by: David Strom, [email protected] www.strom.com +1 516 944 3407

Today’s Topics



V: What Becomes Success



VI: Choosing the Right eCommerce Path



VII: Installing and Operating Your Own Storefront

137 (c) Stephanie Denny and David Strom, 1998

Topic V: 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

138 (c) Stephanie Denny and David Strom, 1998

Overview of eCommerce Market



Predictions



Success factors



Five principles

139 (c) Stephanie Denny and David Strom, 1998

140

Source IDC Forrester Jupiter Dataquest eCommerce Revenue Predictions are Wide-Ranging 1996 (B$US) $2.2

1.4

6.4

2000 est. (B$ US) 94 117 15.6

And Not Very Believable



IDC says the web will become a mass market in the US by 12/98!



With 100 million users!



Let’s not confuse web users with eCommerce BUYERS!

141 (c) Stephanie Denny and David Strom, 1998

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

142 (c) Stephanie Denny and David Strom, 1998

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!

143 (c) Stephanie Denny and David Strom, 1998

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 144 (c) Stephanie Denny and David Strom, 1998

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

145 (c) Stephanie Denny and David Strom, 1998

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

146 (c) Stephanie Denny and David Strom, 1998

Let’s Learn From the “Real World”



Compare what works for physical stores



Try to extend to the web

147 (c) Stephanie Denny and David Strom, 1998

Critical Success Factors for Physical Storefronts



Location



Branding



Good service



Good product selection



Proper pricing and margins



Traffic

148 (c) Stephanie Denny and David Strom, 1998

First Problem:



None of these translate on the ‘net!

149 (c) Stephanie Denny and David Strom, 1998

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

150 (c) Stephanie Denny and David Strom, 1998

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!

151 (c) Stephanie Denny and David Strom, 1998

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

152 (c) Stephanie Denny and David Strom, 1998

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!

153 (c) Stephanie Denny and David Strom, 1998

Traditional Advertising Doesn’t Apply Anymore



Can’t measure anything



Every site has its own banner sizes



The Web is not TV

154 (c) Stephanie Denny and David Strom, 1998

One Working Definition of Success:



SURVIVAL!



If a site is still running after 12 months, and getting more traffic, it is a success.

155 (c) Stephanie Denny and David Strom, 1998

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

156 (c) Stephanie Denny and David Strom, 1998

Good eCommerce Examples



Easy to find merchandize



Good service



Individual customization is key



Simple navigation



Business-to-business focus

157 (c) Stephanie Denny and David Strom, 1998

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!

158 (c) Stephanie Denny and David Strom, 1998

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

159 (c) Stephanie Denny and David Strom, 1998

AMP

connect.ampincorporated.com

160 (c) Stephanie Denny and David Strom, 1998

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

161 (c) Stephanie Denny and David Strom, 1998

Save in Translation Costs



AMP catalog in several languages



Translation cost was US$100,000



Versus US$1.5MM to produce separate translations of print editions

162 (c) Stephanie Denny and David Strom, 1998

Silicon Investor

www.techstocks.com



Difficult to find anything



Incomplete database of companies



Companies are arranged poorly

163 (c) Stephanie Denny and David Strom, 1998

First Principle of eCommerce:



It is easy to find what you are selling!

164 (c) Stephanie Denny and David Strom, 1998

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

165 (c) Stephanie Denny and David Strom, 1998

Amazon

166 (c) Stephanie Denny and David Strom, 1998

Update your directories!

 

This one is almost a year old

www.asiapage.com/alist.html#jewellery 167 (c) Stephanie Denny and David Strom, 1998

Non-secure servers

 

Many SG sites collect credit cards on them

www.asiapage.com/goodwood 168 (c) Stephanie Denny and David Strom, 1998

Second Principle of eCommerce:



Deliver solid service!

169 (c) Stephanie Denny and David Strom, 1998

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$1MM/day in sales!

170 (c) Stephanie Denny and David Strom, 1998

Dell

171 (c) Stephanie Denny and David Strom, 1998

Canadiantire.com



eFlyer uses email notification along with web forms



Customize exactly what coupons and deals are sent to you

172 (c) Stephanie Denny and David Strom, 1998

Third Principle of eCommerce:



Individual customization is key

173 (c) Stephanie Denny and David Strom, 1998

BMW Motors



Example of what not to do



Use gratuitous graphics



Cheesy low-res videos



Toys, not tools

174 (c) Stephanie Denny and David Strom, 1998

BMW

175 (c) Stephanie Denny and David Strom, 1998

Compare with Subaru



Find specific information about each car



Can price options to your particular needs

176 (c) Stephanie Denny and David Strom, 1998

How NOT to Design a Payment Screen

 www.netmar.com/new/norderform.shtml

177 (c) Stephanie Denny and David Strom, 1998

How NOT to take advantage of bandwidth

 www.clickdiz.com



Two different pages, one for SG ONE, one for all others



But SG ONE page has just heavy graphics - why?

178 (c) Stephanie Denny and David Strom, 1998

A better example: fishing licenses



Simple, quick, and does the job with a minimum of clutter

 www.permit.com

179 (c) Stephanie Denny and David Strom, 1998

Fourth Principle of eCommerce:



Make navigation simple!



Use small graphics, site maps, indexes



Avoid clutter, frames

180 (c) Stephanie Denny and David Strom, 1998

Int’l Commerce Exchange System



Matches overstocked sellers with buyers



B2B exclusively



Uses faxes to notify potential customers

181 (c) Stephanie Denny and David Strom, 1998

ICES

www.icesinc.com

182 (c) Stephanie Denny and David Strom, 1998

Fifth Principle of eCommerce:



Business-to-business focus

183 (c) Stephanie Denny and David Strom, 1998

Topic VI: Choosing the Right eCommerce Path

184 (c) Stephanie Denny and David Strom, 1998

Four Approaches:



Join an eMall



Outsource to an ISP



Buy suite of software



DIY

185 (c) Stephanie Denny and David Strom, 1998

Joining an eMall



Only if you don’t have any in-house programming staff



Don’t want or can’t trust consultants to do it for you



Want someone else to handle payment processing



Don’t care whether your store is tied into your own financial system

186 (c) Stephanie Denny and David Strom, 1998

The Mall of eMalls



malls.com, of course!

187 (c) Stephanie Denny and David Strom, 1998

Different Kinds of eMalls



Collection of independent links elsewhere



Landlord/hosting provider



Become a sales representative for an eMall and Make Money Fast!

188 (c) Stephanie Denny and David Strom, 1998

Evaluating eMalls



Do they offer storefront design?



Have in-house programmers?



Hosting of your own web?



How many payment systems do they support?



What kinds of accounting reports do they offer?



Who are the other tenants and do you like them?

189 (c) Stephanie Denny and David Strom, 1998

The Truth about Internet Malls



Read your contract



Check your site for errors



Evaluate your content



Measure your results



Promote your site



(from

www.netrageous.com/reports/thetruth.html

)

190 (c) Stephanie Denny and David Strom, 1998

Reasons Not to Join an eMall:



You know and like perl



Don’t have to take payment via the web



Want complete control over your site

191 (c) Stephanie Denny and David Strom, 1998

The Results So Far Haven’t Been Encouraging



Many store owners haven’t sold anything from the mall!



Over 90% dissatisfied with mall operator



Basic HTML errors and unresponsive staff to fix problems

192 (c) Stephanie Denny and David Strom, 1998

The Catch-22 of eCommerce:



To be successful, a software vendor has to promote his products via the Internet.



But this means eating one’s own dog food!

193 (c) Stephanie Denny and David Strom, 1998

Leading USA eMalls Vendor, location ViaWeb www.viaweb.com

Internet Mall www.internetmall.com

Blue Money www.bluemoney.com

Number of stores $100/month, all done with a browser $150 + $15/mo, % of each transaction Outsourced payments and catalogs

194 (c) Stephanie Denny and David Strom, 1998

Find an ISP



More ISPs are offering eCommerce solutions



Have to use their software standards and payment schemes



Could be pricey



Just catching on in USA

195 (c) Stephanie Denny and David Strom, 1998

Some 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

) 196 (c) Stephanie Denny and David Strom, 1998

Provider IBM Earthlink Netcom Mindspring

197

Price Comparison for ISP hosting Setup fee (US$) Monthly fee (US$) 260 624 55 194 Plan name, payment options Bronze, credit cards Premium Plus 450 175 300 324 Commerce Site, credit cards Commercial Advantage, credit cards, Cybercash

Price Comparison assumptions



10 Mb disk storage



Single email account



InterNIC $100 fee included for domain name

198 (c) Stephanie Denny and David Strom, 1998

New Approaches: GeoShop, Tripod



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



Tripod will offer something similar this summer

199 (c) Stephanie Denny and David Strom, 1998

One Way to Support Lots of Payment Systems



Wired-2-Shop

 www.wired-2 shop.com/TestDrive/Admin/PaymentList.asp

200 (c) Stephanie Denny and David Strom, 1998

The Suite Approach



Leading contenders



What is part of the suite and what isn’t



Prices and platforms

201 (c) Stephanie Denny and David Strom, 1998

Vendor, Product

Popular eCommerce Suites

Version Price Platform ICat Elec Comm Suite IBM Net.Commerce

Microsoft Commerce 3.0

3.0

2.0

$9000 $5000 $5000 NT, 95 NT, AIX NT 202 (c) Stephanie Denny and David Strom, 1998

Vendor, Product

Popular eCommerce Suites (con’t)

Version Price Platform OM Transact Open Market Intershop Online Intershop WebSite Pro O'Reilly 2.3

3.0

2.0

$250,000 Unix $5000 $800 NT Unix NT, 95 203 (c) Stephanie Denny and David Strom, 1998

Four Typical Elements



Catalog



Storefront designer



Ordering/inventory system



Shopping cart/check out system

204 (c) Stephanie Denny and David Strom, 1998

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

205 (c) Stephanie Denny and David Strom, 1998

Payment Systems Included in Each Suite



Microsoft: Verifone, Buy Now



IBM: Verifone, SET, eTill



iCat: None (but many third parties)



OpenMarket: Verifone



WebSite Pro: InternetSecure, CyberCash



Intershop: CyberCash, ICVerify, others

206 (c) Stephanie Denny and David Strom, 1998

Sample Stores Included in Each Suite



Microsoft: 4 stores



IBM: eMall, simple and advanced sample stores



iCat: 1 hardware store



OpenMarket: none



WebSite Pro: 1 bookstore



Intershop:3 stores

207 (c) Stephanie Denny and David Strom, 1998

Databases Supported in Each Suite



Microsoft: SQL Server



IBM: DB2



iCat: 4D, Sybase SQL Anywhere



WebSite: Access



Intershop: Sybase SQL 11

208 (c) Stephanie Denny and David Strom, 1998

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

209 (c) Stephanie Denny and David Strom, 1998

Store Wizards Included in Each Suite



WebSite Pro (but doesn’t do much)



Intershop (various wizards)



net.Commerce v3



MS Commerce

   

create appearance navigation registration, check out flows payment methods

210 (c) Stephanie Denny and David Strom, 1998

Tips Don’t install anything before making sure you have everything!

211 (c) Stephanie Denny and David Strom, 1998

WebSite Professional website.ora.com



Version 2, shipping since 9/97



US$799!



NT (or 95)



Supports Cybercash OR Internet Secure (Visa, MC)



One sample store (bookstore)

212 (c) Stephanie Denny and David Strom, 1998

Sample storefront

 http://merchant.inline.net/admin

213 (c) Stephanie Denny and David Strom, 1998

WebSite Configuration Sheet

214 (c) Stephanie Denny and David Strom, 1998

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

215 (c) Stephanie Denny and David Strom, 1998

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



See Infoworld review

216 (c) Stephanie Denny and David Strom, 1998

Intershop



demo at presentation.intershop.com (admin/admin for store)



Includes Sybase SQL 11



US$5000, includes 3 mos. support

217 (c) Stephanie Denny and David Strom, 1998

Seven Different Managers



Catalog



Products



Store



Purchases



Inventory



Customers



Admin

218 (c) Stephanie Denny and David Strom, 1998

Characteristics



Everything managed via browser, which can get tedious



But you already have a database behind it

219 (c) Stephanie Denny and David Strom, 1998

Payment Options galore

220 (c) Stephanie Denny and David Strom, 1998

Recommendations



Most flexible payment options of any suite



Better at processing orders than site creation



Not good for large catalogs

221 (c) Stephanie Denny and David Strom, 1998

Microsoft Commerce (nee Merchant)



Still evolving



More of a development platform than a suite



Closely tied to IIS, SQL Server et al.

222 (c) Stephanie Denny and David Strom, 1998

The many Microsoft servers

223 (c) Stephanie Denny and David Strom, 1998

Shopping with MS Commerce

224 (c) Stephanie Denny and David Strom, 1998

MS Commerce

225 (c) Stephanie Denny and David Strom, 1998

Microsoft Upsells

226 (c) Stephanie Denny and David Strom, 1998

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

227 (c) Stephanie Denny and David Strom, 1998

Commerce Server Specifics



NT, fast Pentium with 128 M RAM essential



US$5000



www.microsoft.com/commerce

228 (c) Stephanie Denny and David Strom, 1998

iCat Electronic Commerce Suite

229 (c) Stephanie Denny and David Strom, 1998

iCat Process



Use four-step process



Make changes to staging db



Use designer and built-in catalog



Then post changes to production db

230 (c) Stephanie Denny and David Strom, 1998

Create Your Database



Can use bundled Sybase SQL Anywhere



Enter upsells, promotions, and discounts

231 (c) Stephanie Denny and David Strom, 1998

Design Your Templates



Look and feel of storefront



Design views of catalog

232 (c) Stephanie Denny and David Strom, 1998

Setup Your Hard Disk



Locate your files



Setup your web server

233 (c) Stephanie Denny and David Strom, 1998

Set Misc. Options



Matching sales tax rates to zip codes



Use registration and indexing tools

234 (c) Stephanie Denny and David Strom, 1998

iCat Demo Catalogs

 www.icat.com/catalogs/democats.htm



Demonstrate variety of options



Several different stores to view

235 (c) Stephanie Denny and David Strom, 1998

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

236 (c) Stephanie Denny and David Strom, 1998

iCat Specifics



NT, fast Pentium with 128 M of RAM



US$9000 for professional version



www.icat.com

237 (c) Stephanie Denny and David Strom, 1998

IBM Net.Commerce

238 (c) Stephanie Denny and David Strom, 1998

Included



IBM’s Go Web Server



DB2 database



Shopping trolley system



Credit card verifier, eTill software

239 (c) Stephanie Denny and David Strom, 1998

Several ways to setup your store



Use nine-step wizard with populated catalog



Use wizard with empty catalog



Start from scratch



Import existing databases

240 (c) Stephanie Denny and David Strom, 1998

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

241 (c) Stephanie Denny and David Strom, 1998

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

242 (c) Stephanie Denny and David Strom, 1998

New in version 3.1



“Intelligent Catalog”



Java-based wizards to setup and manage store



Recognizes shopping preferences and upsells



New SET payment server but not worth using



Integration with Domino Merchant



See Infoworld review

243 (c) Stephanie Denny and David Strom, 1998

OpenMarket



High end solution



Worldnet offers hosting of OM servers



Still needs customization!

244 (c) Stephanie Denny and David Strom, 1998

Recommendations



If you can afford it ....



Really the price covers lots of consulting time



High transactions and throughput needs

245 (c) Stephanie Denny and David Strom, 1998

OpenMarket Specifics



Various Unix



US$250,000 and up!



www.openmarket.com

246 (c) Stephanie Denny and David Strom, 1998

Do it Yourself Path



Traditional merchant banking approach



More risk, especially when your payment system is on the ‘net

247 (c) Stephanie Denny and David Strom, 1998

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

248 (c) Stephanie Denny and David Strom, 1998

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

249 (c) Stephanie Denny and David Strom, 1998

One DIY solution



IIS



PerlShop shopping cart



OuterNet Commerce ISP hosting site



First American Payment Systems



Verisign certificates



Fees: $800 setup, $500/yr, $50/month



What isn’t working: perl scripts to make credit card payments!

250 (c) Stephanie Denny and David Strom, 1998

But First: Consider the Customer

251 (c) Stephanie Denny and David Strom, 1998

How Customers Buy Stuff



Sometimes have partial orders



Sometimes cancel orders



Sometimes inventory systems lie



Sometimes shipments are returned

252 (c) Stephanie Denny and David Strom, 1998

Purchasing Stages



One product has a 14-stage process!



Need to gather so many items:

   

Shipping info Item inventory, pricing Order pricing “Last chance” (upsells, cancel out)



All this means: get thee to a database!

253 (c) Stephanie Denny and David Strom, 1998

What is Needed



A way to track orders



Provide shipping status



Provide payment status

254 (c) Stephanie Denny and David Strom, 1998

Our Recommendation: email!



Capture that email address



Use it for status reports



Outcalls and future upsells



Reminders



But how do you validate the address these days?

255 (c) Stephanie Denny and David Strom, 1998

Payment System Considerations

   

Do customers need accounts and profiles?



yes: reduces the amount a visitor has to type



no: less of a privacy concern Should shopping be persistent across the session?



yes: use accounts or cookies Should all communications be via SSL?



yes: then you’ll need the appropriate browsers and servers Do I want to have multiple stores on a single server?

256 (c) Stephanie Denny and David Strom, 1998

Merchant Back-end Integration



Financial interactions



Clerical interactions

257 (c) Stephanie Denny and David Strom, 1998

Credit Card Issues



Separate authorization from settlement

  

authorize when order received, but ship within 24 hrs of settlement, and beware of stale backorder data



Consumers can chargeback

 

either need a physical signature or evidence of verified shipping address



Opening a merchant account (see

www.shopsite.com/help/payment.merchant.html) 258 (c) Stephanie Denny and David Strom, 1998

Electronic Bill Presentment



Saves on paper but requires lots of coordinated systems



Can show bills with nice fonts, interactive applications



Is separate process from the actual payment system

259 (c) Stephanie Denny and David Strom, 1998

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

260 (c) Stephanie Denny and David Strom, 1998

Microsoft’s MSFDC



A means to standardize on presentment



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.

261 (c) Stephanie Denny and David Strom, 1998

Other EBP efforts



Open Financial Exchange (www.ofx.net)



www.Integrion.Net



CheckFree’s E-Bill (getbills.checkfree.com)

262 (c) Stephanie Denny and David Strom, 1998

eBill



Most popular and in widest practice



Schwab and Intuit/Quicken are supporters



Most threatened by MSFDC

263 (c) Stephanie Denny and David Strom, 1998

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

264 (c) Stephanie Denny and David Strom, 1998

Integrion



Banking-intensive plus IBM



No other software supporter, BUT…



Combining forces with CheckFree



Trying to establish their “Gold Standard” vs. OFX

265 (c) Stephanie Denny and David Strom, 1998

What about SET?



IBM, Verifone having second thoughts



Specs still at 1.0 (barely)



Just handles the buyer authentication piece



Trial with Citibank/SG

 www.visa.com for more info 266 (c) Stephanie Denny and David Strom, 1998

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!

267 (c) Stephanie Denny and David Strom, 1998

Topic VII: Installing and Operating Your Own Storefront



What you need to know



What you need to buy

268 (c) Stephanie Denny and David Strom, 1998

You Need to be a Superhero:



Part web designer



Internet technologist



SQL database admin



Payment system maven

269 (c) Stephanie Denny and David Strom, 1998

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

270 (c) Stephanie Denny and David Strom, 1998

Dealing with search engines



Some use , some use  Keep descriptions at top of your home page short and sweet  Web Review article: webreview.com/97/10/17/webmaster 271 (c) Stephanie Denny and David Strom, 1998 <a id="p272" href="#"></a> The Most Under-rated Skill:  PATIENCE! 272 (c) Stephanie Denny and David Strom, 1998 <a id="p273" href="#"></a> 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! 273 (c) Stephanie Denny and David Strom, 1998 <a id="p274" href="#"></a> Which Database Server?  Pick before anything else  Core of your store revolves around the database:    inventory system accounting system catalog system 274 (c) Stephanie Denny and David Strom, 1998 <a id="p275" href="#"></a> 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 275 (c) Stephanie Denny and David Strom, 1998 <a id="p276" href="#"></a> Database/web Tools  Develop your own forms  Query your database  Develop your own catalog 276 (c) Stephanie Denny and David Strom, 1998 <a id="p277" href="#"></a> 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 277 (c) Stephanie Denny and David Strom, 1998 <a id="p278" href="#"></a> Catalog Software  Cadis.com, US$1500  Centor.com, US$50,000  Dataware.com, US$1800  Elekom.com, US$25,000  Isadra.com, US$10,000 278 (c) Stephanie Denny and David Strom, 1998 <a id="p279" href="#"></a> 279 Other catalogs Product Icat (www.icat.com) Intershop (www.intershop.com) CatSmart WebCatalog (www.pacific coast.com) Cat@log (www.thevisionfactory.com) Impulse (www.inetrep.com) Price range US$3-10,000 3-8,000 10,000 2500 3-4000 <$1000 (c) Stephanie Denny and David Strom, 1998 <a id="p280" href="#"></a> Another choice: outsourced catalog!  ShopSite  IBM Home Page Creator mypage-products.ihost.com (N. America only)  Mindspring with Mercantec 280 (c) Stephanie Denny and David Strom, 1998 <a id="p281" href="#"></a> ShopSite demo  www.reliablehost.com/cgi-bin/bo/start.cgi  username: test8  password: test 281 (c) Stephanie Denny and David Strom, 1998 <a id="p282" href="#"></a> Tool Recommendations  Cold Fusion, www.allaire.com  Sapphire/Web, www.bluestone.com 282 (c) Stephanie Denny and David Strom, 1998 <a id="p283" href="#"></a> Which Web Server?  Hundreds to choose from  Must support SSL and/or SHTTP  Platform isn’t important, really 283 (c) Stephanie Denny and David Strom, 1998 <a id="p284" href="#"></a> Get Your Certificates in Order  Bring up form inside web server  Send to Verisign on letterhead with credit card (!)  Receive cert from Verisign  Install on your web server 284 (c) Stephanie Denny and David Strom, 1998 <a id="p285" href="#"></a> 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) 285 (c) Stephanie Denny and David Strom, 1998 <a id="p286" href="#"></a> Different Shopping cart Methods   Account-based Cookie-based; see www.cookiecentral.com  Encoded URLs 286 (c) Stephanie Denny and David Strom, 1998 <a id="p287" href="#"></a> 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 287 (c) Stephanie Denny and David Strom, 1998 <a id="p288" href="#"></a> 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.htm l 288 (c) Stephanie Denny and David Strom, 1998 <a id="p289" href="#"></a> Shopping cart Example www.asizip.com (SoftCart)    Shopping basket Cookies to track purchases Simple navigation 289 (c) Stephanie Denny and David Strom, 1998 <a id="p290" href="#"></a> Payment Systems for SSL   ICVerify, www.icverify.com Worldpay/PSI www.psi.net/worldpay 290 (c) Stephanie Denny and David Strom, 1998 <a id="p291" href="#"></a> 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! 291 (c) Stephanie Denny and David Strom, 1998 <a id="p292" href="#"></a> Supported Merchant Servers for ICVerify      MS Merchant, Commerce Oracle Payment Mercantec SoftCart Internet Factory Merchant InterShop Online 292 (c) Stephanie Denny and David Strom, 1998 <a id="p293" href="#"></a> ICVerify Demo Download  www.icverify.com/library/ downloads/icvdemo20. html 293 (c) Stephanie Denny and David Strom, 1998 <a id="p294" href="#"></a> 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 294 (c) Stephanie Denny and David Strom, 1998 <a id="p295" href="#"></a> WorldPay Demo  www.worldpay.com/demo/store.html 295 (c) Stephanie Denny and David Strom, 1998 <a id="p296" href="#"></a> Prices of Typical Products Product Inex SoftCart MallManager WebCatalog Saqqara VPOS WebMate 296 Type Accounting Shopping Cart Catalog Catalog Search tool Payment server Development tool (c) Stephanie Denny and David Strom, 1998 Price US$6000 900 2000 1600 700 2500 750 <a id="p297" href="#"></a> Inex Demo  Financial backend strength  Store front and some aspects of suite  www.inex-corp.com 297 (c) Stephanie Denny and David Strom, 1998 <a id="p298" href="#"></a> Don’t Forget About Security  Make sure you protect your web site!  See “Ten ways” article from Winn Schwartau  Limit access, isolate servers, lock down scripts, so forth  See www.nwfusion.com/netresources/0202hack1.htm l 298 (c) Stephanie Denny and David Strom, 1998 <a id="p299" href="#"></a> What About Web Server Load Balancing?  Resonate, HydraWeb, Cisco  IBM Interactive Network Dispatcher, www.ics.raleigh.ibm.com/netdispatch  Packeteer PacketShaper, www.packeteer.com  Others at www.techweb.com/se/directlink.cgi?NWC199708 01S0026 299 (c) Stephanie Denny and David Strom, 1998 <a id="p300" href="#"></a> Putting Together Your Own Solution  Mercantec shopping cart  SQL Server database  ICVerify payment system  WebCatalog  IIS web server  Total price: <US$10,000 300 (c) Stephanie Denny and David Strom, 1998 <a id="p301" href="#"></a> Don’t Forget the Process and People  Put together policies and procedures book that describe what you did  Gather forms for your business partners to sign up for ISPs if needed  Document how to make changes to your product catalog via the web  Approach your trading partners with solutions, not problems! 301 (c) Stephanie Denny and David Strom, 1998 <a id="p302" href="#"></a> 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 302 (c) Stephanie Denny and David Strom, 1998 <a id="p303" href="#"></a> Some eCommerce Resources      Web Review article on NT, Mac Suites: webreview.com/98/01/23/feature/ Windows Sources reviews of 3 eCommerce suites: web1.zdnet.com/wsources/content/0697/ntadmin.html My Infoworld reviews www.strom.com/pubwork/iworld.html www.webcompare.com, all the web servers you could ask for PC Magazine review of various products www5.zdnet.com/products/content/pcmg/1620/pcmg0 024.html 303 (c) Stephanie Denny and David Strom, 1998 <a id="p304" href="#"></a> For future reference  Copy of this presentation (Powerpoint): www.strom.com/pubwork/vegas98t275.ppt  And list of all the relevant links mentioned: www.strom.com/pubwork/vegas98.html 304 (c) Stephanie Denny and David Strom, 1998 <a id="p305" href="#"></a> Acronyms  B2B Business to business   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 305 (c) Stephanie Denny and David Strom, 1998 <a id="p306" href="#"></a> <h1>Conclusion</h1>  Review  Q&A  David Strom   +1 516 944 3407 david@strom.com 306 (c) Stephanie Denny and David Strom, 1998 </div> </section> </div> </div> </div> </main> <footer> <div class="container mt-3"> <div class="row justify-content-between"> <div class="col"> <a href="/"> <img src="/theme/studyslide/static/logo-slideum.png" /> </a> </div> </div> <div class="row mt-3"> <ul class="col-sm-6 list-unstyled"> <li> <h6 class="mb-3">Company</h6> <li> Nicosia Constantinou Palaiologou 16, Palouriotissa, 1040 <li> +357 64-733-402 <li> info@slideum.com </ul> <ul class="col-6 col-sm-3 list-unstyled"> <li> <h6 class="mb-3">Links</h6> <li> <a href="/about">About</a> <li> <a href="/contacts">Contact</a> <li> <a href="/faq">Help / FAQ</a> </ul> <ul class="col-6 col-sm-3 list-unstyled"> <li> <h6 class="mb-3">Legal</h6> <li> <a href="/terms">Terms of Service</a> <li> <a href="/privacy">Privacy policy</a> <li> <a href="/page.html?code=public.usefull.cookie">Cookie policy</a> <li> <a href="/page.html?code=public.usefull.disclaimer">Disclaimer</a> </ul> </div> <hr> slideum.com © 2024, Inc. 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