Paying on the web

In todays business world, one of the major concerns is the security of financial and informational transactions. This security is and one of the obvious and vital steps to the usage of the Internet for business interactions. Electronic payment is the financial exchange of value that takes place online between buyers and sellers. It is an alternative to cash or credit payments. Payment for the products and services purchased over the Internet is an obvious and vital step in the elecrtonic commerce transaction process. Purchases over the Internet are increasing dramatically every year. But the process is not very simple because most transactions are nearly anonymous and take place over a complex computerized networt comprised of many buyers and sellers. Many security issues worry people. Making matters worse are the many alternatives and/or financial institutions and middlement that may be part of the process. Because of this predicament a variety of electronic payment systems are used today. Electronic funds transfer is the major from used by banking and retailing industries today to transfer funds electronically instead of using cash or paper documents, such as checks. EFT uses a variety of information technologies to capture and process money and credit transfers between banks and businesses, and their customers. A simple example that most people are aware of are the automated teller machines located everywhere or the, point of sale terminals located in almost all retail stores. These make it possible for consumers to get cahs or purchase products or services without having to use cash simply by using a credit or debit card. In the world of Internet commerce, one of the major concerns in todays marketplace is the security of Internet transactions. Credit cars information is vulnerable to interception by networt sniffers: softwer that can recognize and record the credit cart number format, allowing someone other than the ower to use the card for purchases. Some of the methods used to make these transactions safer are: Encryption, or enciphering scrambles data or converts it prior to unauthorized recipients. This keeps important data from being intercepted, read, or modified illicitly. Exemples include the following: add the number 3 to the digital representation of each character in the text; reverse the bit representation of the last foru bits of each byte that represent a character. Authentication verifies the ID of the sender and helps to guarantee that the message has not been altered. It keepa users from misrepresenting thei identity and committing fraud. Firewall a computer, or network processor, and software that protects the networ from intruders not authorized for entry; allows from a secure connection between networks, and keeps unauthorized users from gaining access to a network. Non-repudiation documentation that prevents anyone from denying that they send or received a certain message. Privacy ability to shield communications from unauthorized viewing. Many factors affect elecronic payments in todays business world, such as: Constantly decreasing technology costs, Reduced operational and processing costs, Ever-increasing online commerce.

Traditional methods of processing payments on-line, such as credit cards, are not working that well; the problems are: Lack of convenience, Lack of security Lack of coverage: individual to individual transactions, Lach of eligibility: not all potential buyers have credit cards, and Lack of support from microtransactions. For example, assume you are charging each user 5 cents from downloading a file from your site. How much will it cost you to process each transaction and receive your money? Is it really worth it? The different electronic payment mechanisms include the following: Digital cahs digital cash combines computerized convenience wiht security and privacy. It is an improvement over paper cash. Digital cash must have the following properties: Digital cash must have a monetary value; cash, bank authorized credit, or a bank certified cashier check must back it. Digital cash must be interoperable, or exchangeable as payment for other digital cash, paper cash, goods or services, lines of credit, and items of value, such as deposits in banking accounts. Digital cash must be storable and retrievable. The cash could be stored on a remote computers memory, in smart cards, or on other easily transpored special purpose devices. Digital cash should be difficult to copy or tamper with while it is being exchanged. It should be possible to prevent or detect duplication and double spending of digital cash. Electronic token Electronic token is a digital analog of payments backed by a bank or financial institutions. There are two types of tokens: Real Time: (or Pre-paid tokens) - These are exchanged between buyer and seller, their users prepay for tokens that serve as currency. Transactions are settled with the exchange of these tokens. Examples of these are DigiCash, Debit Cards, Electronic purse etc. Post Paid Tokens are used with fund transfer instructions between the buyer and seller. Examples Electronic cheques, Credit card data etc. Some tokens are specifically designed to handle micro payments, or pay-ments for small snippets of information (such as five cents for a file). Some systems target specific niche transactions; others seek more general transac-tions. The key is to identify the parties involved, the average amounts, and the purchase interaction. Tokens must be backed by cash, credit, electronic bill payments (prearranged and spontaneous), cashiers checks, letters of credit, or wire transfers. Each option incurs trade-offs among transaction speed, risk, and cost. Most transaction settlement meth-ods use credit cards, while

others use other tokens for value, effectively cre-ating currencies of dubious liquidity and with interesting tax, risk, and float implications. Electronic tokens vary in the protection of transaction privacy and confidentiality. Encryption can help with authentication, non reputability, and confidentiality of information. Tokens might suddenly be-come worthless because of bank failure leaving customers with currency that nobody will accept. If the system stores value in a smart card, consumers may be exposed to risk as they hold static assets. Further, electronic tokens might be subject to discounting or arbitrage. If the transaction has a long lag time between product delivery and payment to merchants, there is a risk to mer-chants that buyers will not pay, or to buyers that the vendor will not deliver. Electronic checks electronic checks are modeled on paper checks, except that they are initiated electronically, use digital signatures for signing and endorsing, and require the use of digital certificates to authenticate the payer, the payers bank, and bank account. The benefits of electronic checks include the following: Electronic checks work in the same way as traditional checks, thus simplifying custome education Electronic checks are well suited for clearing micropayments or smal payments. Electronic checks can serve corporate markets. Firms can use electronic checks to complete payments over the networ in a more cost-effective manner than other present alternatives.

The buying and selling of goods and services over the Internet will become more and more commonplace as people get used to the idea of using their computer for purchases. As the encryption of transactions becomes more secure and consumers trust the process more, purchases and the transfer of funds over the Internet will become more routine.