MIS 300 - Fundamentals of E-Commerce

E-Payments &
072 Saudi Arabian e-Infrastructure

Mr. Mustafa Faisal Ahmed

mfahmed@kfupm.edu.sa
Chapter Outline

‰ E-Payments Chapter 11 (selected coverage)

• Online payments basic
• The use of payment cards in electronic commerce
• Electronic Cash
‰ Saudi Arabian E-Commerce Scenario
• Saudi e-Payment Solutions
• SWOT Analysis of Saudi Arabian E-Commerce Market
• Saudi Arabian Internet Users (e-statistics)
• Important Organizations to know
E-Payments
Online Payment Basics
… Credit cards, and debit (ATM) cards
account for more than 90 percent of all
consumer payments in the United States.
… Saudi Arabia is not really that different.
There has been a large rise in the use of
ATM and credit cards in the last 10 years
in Saudi Arabia.
Payment Cards
… Describe all types of plastic cards used to make
purchases

… Credit card (Visa, Mastercard)

† Has spending limit based on a user’s credit history

… Debit card (ATM card)
† Removes an amount from a cardholder’s bank account
† Transfers it to the seller’s bank account
… Charge card (American Express
† Carries no spending limit
† Amount charged is due at the end of the billing period
Advantages and Disadvantages of
Payment Cards
… Advantage
† Worldwide acceptance

† Built-in security for merchants

… Disadvantage
† Payment card service companies charge
merchants per-transaction fees and
monthly processing fees
Payment Acceptance and Processing

… Steps followed once a merchant

receives a consumer’s payment card
information
† Merchant authenticates payment card
† Merchant checks with payment card issuer
„ To ensure that credit or funds are available
„ Puts a hold on the credit line or the funds
needed to cover the charge

† Settlement occurs
Merchant Accounts

… To process payment cards for Internet

transactions an online merchant must
set up a merchant account
… New merchant must supply
† Business plan
† Details about existing bank accounts
† Business and personal credit history
Processing a Payment Card
Transaction
Electronic Cash

… Term that describes any value storage

and exchange system created by a
private entity that
† Does not use paper documents or coins
† Can serve as a substitute for government-
issued physical currency
… Attractive in two arenas
† Sale of goods and services of less than $10
† Sale of higher-priced goods and services to
those without credit cards
Advantages and Disadvantages of
Electronic Cash
… Advantages of electronic cash
† Transactions are more efficient
† Transfer on the Internet costs less than
processing credit card transactions
… Disadvantages of electronic cash
† Use provides no audit trail
† E-Cash has not been successful up to now
† Problem of money laundering arises
† Susceptible to forgery
Electronic Cash

… Electronic cash is a commercial flop

PayPal

… PayPal
† Provides payment processing services to
businesses and to individuals
† Peer-to-peer (P2P) payment system
„ Free payment clearing service for individuals
„ NOW AVAILABLE IN SAUDI ARABIA
Phishing – A very serious threat to E-
Commerce

… Basic structure
† Attacker sends e-mail messages to a large
number of recipients
† Message states that an account has been
compromised and the matter should be
corrected
† Message includes a link

† User enters a login name and password, which

the perpetrator captures
† Once inside a victim’s account, the perpetrator
can access personal information
Phishing Attack Countermeasures

… Most important step that companies can

take today
† Educate Web site users
… Many companies contract consulting
firms that specialize in anti-phishing work
… Anti-phishing technique
† Monitor online chat rooms used by criminals
Saudi Arabian E-Commerce
Scenario
Saudi Arabian E-Payment Solutions
Saudi Arabian E-Payment Solutions

… Saudi American Bank (SAMBA) –

SambaConnect is the name of the product.
† Samba E-Wallet
† Samba E-Banking
† Visa, Mastercard
† Saudi ATM card

… Al Rajhi Bank

… National Commercial Bank (NCB)

SWOT Analysis of Saudi Arabian E-Commerce
Market
Strengths
„Center for Islamic World
„The largest Arab economy
„Free market with minimum taxes
„High per capita income
„High youth population
„The largest IT market in the region
Opportunities
„E-commerce enables access to regional and
global marketplaces
„Internet is an important engine for economic
growth
„Internet helps reduce cost of doing business
(e.g., B2B procurement cost)
„With trade barriers coming down, environment
for E-Business is becoming more conducive
„eGovernment systems enable convenient and
responsive services for citizens
Weaknesses
„Lack of local IT professionals
„Lack of sufficient and affordable facilities for
education and training of locals
„Very high cost of Internet access
„Telecom operator monopoly
„Non-existent legal environment for E-
Commerce transactions
„Lack of basic infrastructure for secured
transactions
Threats
Regional E-Business initiatives from UAE,
Dubai, and Egypt
Admission to WTO will lower the legal barriers
thus local firms will be exposed to higher
international competition
Cultural backlash towards the internet
Saudi Arabian Internet Access (cont)

… First Level: ISPs

These are commercial companies that provide internet access to
the general public, government and private sector through dialup
and leased lines. ISPs are connected to the National Backbone and
to the International link at ISU. They provide their subscribers with
access to these networks. In addition ISPs provide subscription
accounting, customer support and other value added information
services.

… Second Level: National Backbone

The Saudi Telecomm Company (STC) is developing a high speed
network connecting most parts of the Kingdom together. Currently,
the main regions of the Kingdom are covered by this backbone with
expansion planned for the remaining regions. ISU and all ISPs are
connected to the National Backbone which carries Internet traffic
inside the Kingdom and to the International Link.

… Third Level: International Link

This is the link which connects the National Backbone to the
International Internet. The International link is operated by ISU and
all international traffic to the Kingdom pass through this link.
Saudi Arabian Internet Users
Saudi Arabian Internet Users

… Internet users in Saudi Arabia are estimated to

be around 4.7 Million by the end of 2006, the
largest number among Arab countries, as
shown in the figure on the next slide.
… In terms of internet penetration rates,
however, KSA (19.6%) ranks fourth in the Arab
World (after UAE, Kuwait and Bahrain).
… KSA Internet penetration rate is higher than
Arab countries average (7%), developing
countries average (10%) and global average
(16%), but is well below the developed
countries average internet penetration rate of
around 60%.
Saudi Arabian Internet Connectivity

All IP traffic from the Eastern Province and Riyadh exits

and enters KSA from Riyadh - the Western region’s IP
traffic from Jeddah.
Saudi Arabian Domain Name (.sa)

What is the Saudi Network Information Center?

SaudiNIC is the entity that is responsible for the administration of the domain name space
for the country code (ccTLD) of Saudi Arabia (.SA). This includes the operation of the DNS
root servers for .SA domains as well as the registration and maintenance of all third-level
.SA domain names.

Based on the Council of Ministers' decree No. 229 dated 13/8/1427h the task of
operating and administering the Saudi Network Information Center (SaudiNIC) was
moved from King Abdulaziz City for Science and Technology (KACST) to the
Communications and Information Technology Commission (CITC). The SaudiNIC was
established in 1995 by KACST.

Mission Statement
The mission of SaudiNIC is to provide an equitable, just and competent technical and
administrative management of domain name registrations and IP address allocations for
Internet community in Saudi Arabia.
 CERT-SA’s Mission
… To increase the information security awareness level in the
Kingdom of Saudi Arabia
… To coordinate national effort towards promoting IT Security
best practices and creating trust among cyber community
… To help managing information security attacks and incidents in
the Kingdom of Saudi Arabia
… To be the reference point in information security for the Cyber
Community in the Kingdom of Saudi Arabia
… To build Saudi talent and human capacity in the field of
information security in the Kingdom of Saudi Arabia
… To provide a trusted environment for e-transactions
… to foster trust, cooperation and collaboration among our
constituents and the general cyber community in the Kingdom
Saudi e-Statistics
Saudi e-Statistics
Important ‘Saudi Arabian’ Links

… Saudi Network Information Center (SaudiNIC):

www.nic.net.sa
… CERT-SA: www.cert.gov.sa
… Internet Services Unit www.isu.net.sa
… Communications and Information Technology
Commission: www.citc.gov.sa
… Saudi E-Government: www.yesser.gov.sa
… Saudi Internet Portal: www.internet.gov.sa