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Digital Payment: Fraud Detection and Online Methods

This chapter discusses the digital payment requirements, fraud detection techniques, and various online payment methods and types. It also explores the future of payment systems.

markjensen
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Digital Payment: Fraud Detection and Online Methods

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  1. Chapter 13 Paying Via The Net

  2. Agenda • Digital Payment Requirements • Fraud Detection • Online Payment Methods • Online Payment Types • The Future Payment

  3. Digital Payment Requirements • Acceptability • Anonymity: privacy & untraceability • Convertibility • Efficiency • Flexibility • Integration • Availability

  4. Digital Payment Requirements • Reliability • Scalability • Security • Integrity • Authentication • Usability

  5. Agenda • Digital Payment Requirements • Fraud Detection • Online Payment Methods • Online Payment Types • The Future Payment

  6. Fraud Detection • Methods • Products

  7. Methods • Checksum for credit card no. • Verify the credit card no. and expiration date with card issuer • Check postal address with online services • Confirmation with e-mail address • Digital certificates for non-repudiation • Predefined purchase limits each time and per week

  8. Methods • Confirmation web page for terms and conditions • Data base with credit card no., e-mail address, and phone no. • Document the complete online transactions • Trustworthy logistics partner • Unique key for online shipping digital merchandise

  9. Methods • Business rules for checking suspicious orders and credit card no.

  10. Products • Fraud Shield by ClearCommerce • Visa

  11. Agenda • Digital Payment Requirements • Fraud Detection • Online Payment Methods • Online Payment Types • The Future Payment

  12. Online Payment Methods • Pre-paid • Electronic cash systems • Smart cards • Instant-paid • Debit cards • Post-paid • Credit cards • Invoices • Internet cheques • Cash on delivery

  13. Electronic cash systems • Saving digital money to the hard disk or floppy disk • Pros & cons • Anonymity • Security with encryption and digital signature • Splitting value • Internet usage only • Easy to lose • No anonymity with physical delivery • No open standard

  14. Electronic cash systems • Products • DigiCash • NetCash • CyberCoins • IBM micro payment • MilliCent

  15. Smart Card • Embedded chips with encrypted digital money • Pros and cons • Use password to ensure the security • Cyber and real usage • Low transaction cost • No open standard

  16. Smart Card • Types • Health Care • Phone • Debit • Products • Mondex • VisaCash

  17. Instant-paid • Debit cards • Pros and cons • Access to bank’s database • Less fraud & error • High security • Complicated • Need hardware & software • Signature through fax • High communication costs

  18. Instant-paid • Product • Direct Debit

  19. Credit Cards • Four players: customer, merchant, issuer and acquirer • Pros & cons • International • Low security • High transaction cost • Fraud

  20. Credit Cards Security standards • Secure Socket Layer (SSL) • By Netscape • Encrypt traffic between the web browser and web server • Secure Electronic Transaction (SET) • By Visa and MasterCard • Public key encryption using digital certificates for both buyer and seller

  21. Credit Cards Security standards • SET features • High security • Low visibility • Standards • Non-repudiation • Chip-secured Secure Electronic Transaction C-SET • Use chip card for any network devices • Reduce cost and complexity for merchant

  22. Invoices • Business-to-business • Usage reasons • High volume transaction • No need to reorganize the old process • Low transaction fee

  23. Internet Cheques • Electronic cheques • Pros and cons • Require payer’s digital signature • Special software & network • Less manual steps • Systems • echeck by US Department of the Treasury

  24. Cash on Delivery (COD) • Pros and cons • Require logistics party • More expensive • Extra cost paid by customer

  25. Agenda • Digital Payment Requirements • Fraud Detection • Online Payment Methods • Online Payment Types • The Future Payment

  26. Online Payment Types • Micro payments • Less than $5 • Electronic cash transaction • Consumer payments • Between &5 and $500 • Credit card transactions • Business payments • Over $500 • Direct debit or invoice transaction

  27. Agenda • Digital Payment Requirements • Fraud Detection • Online Payment Methods • Online Payment Types • The Future Payment

  28. The Future Payment • Projects • Secure Electronic Marketplace for Europe (SEMPER) • The Open Trading Protocol (OTP) • Open Buying on the Internet • Global Trust Enterprise • Goal • Internet payment infrastructure to achieve the digital payment requirements

  29. Points to Remember • Digital Payment Requirements • Fraud Detection • Online Payment Methods • Online Payment Types • The Future Payment

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