eBusiness – Payments & Security Pascale Vande Velde

UNIVERSITE LIBRE DE BRUXELLES eBusiness – Payments & SecurityPascale Vande Velde Solvay Business School SEMINAIRE DE TECHNOLOGIES DE L’INFORMATION ET DE LA COMMUNICATION GEST 116

Content of eBusiness course Introduction – Part I Introduction – Part II Payments & Security Supply chain management

Introduction to epayments Network security principles and concepts B2C ePayments solutions B2B ePayments solutions

Generic Payment Process 1. Payment request or instruction transmitted by the customer to an intermediary 1’. Payment request or instruction transmitted by the customer directly to the bank Customer 2. Customer’s payment request or instruction transmitted by the intermediary to the vendor’s bank Intermediary Vendor’s bank After verification of the customer solvability, the transaction is sent to a clearing entity Clearing Intra-banks Settlement when clearing achieved Inter-banks International

The payments market by instrument in Belgium However, there is a significant shift from paper based towards electronic transfers and use of debit and credit cards has significantly intensified Cost of payment * The data are very small relative to other relevant data in the table. Source : ECB Blue Book – June 2001

Internet is by far the cheapest way to process a payment Payment Unit Costs in Europe: € per transaction: • Paper-based transfer: 1.24 (still 30% of all payments in volumes) • Direct Debit modification: 0.74 to 4.96 (opening, changes, cancellation, …) • Phone: 0.50 • ATM: 0.27 • Online (PC): 0.23 • Internet: 0.10

Electronic Electronic Electronic Debit Cards Checks Debit Cards 3 4 10 14 Credit Cards Checks 22 12 31 22 Debit Cards 17 51 Checks 16 Cash 26 20 19 30 Credit Cards Cash Cash Credit Cards 100% ~$4.5 Trillion 100% ~$6.8 Trillion 100% ~$8.8 Trillion Significant differences between US and Europe Checks are intensively used in the US while transfers and direct debits are hardly used US Consumer Payments in 1998 (% Share of Transactions) US Consumer Payments in 2005 (% Share of Transactions) US Consumer Payments in 2010 (% Share of Transactions) Source: Nilson Reports; Accenture analysis

Consumers able to view & pay at least 60% of all their recurring bills at one site Electronic billing is a promising solution in the USA US Retail Bills Presented & Paid Online (million) 1,962 But the situation is different in Europe: actually, in Belgium, 80% of people use direct debit* to pay their bills. Consequently, billing presentation is not so important. e-Billing/invoice used in the US is an obsolete system compared to the system in application in Europe 1,142 446 84 6.7 0.9 1999 2000 2001 2002 2003 2004 EBPP Households (million) 0.1 0.6 2.1 6.0 13.1 20.7 Recurring Household Bills Payable Online (%) 5 8 28 52 61 66 Percentage of all Bills (%) 0.01 0.04 0.6 3.0 7.6 13.1 Source: IDC; Jupiter Communications; Data Monitor; Forrester Research; Tower Group; Gartner Group; Accenture analysis *Domiciliation

Billing Process EBPP includes bill presentment and payment Electronic Bill Presentment and Payment Overview 1. Customer uses Internet to access websites where bills reside 2. Billers send electronic bills to appropriate site(s) Internet Website Billers 3. Customer authorizes payment through website 5. Remittance and payment information is sent to biller for posting 4. Payment is sent electronically (ACH*, RPS, etc.) from customer bank to biller bank Customer’s Bank Biller’s Bank *Automated Clearing Housed: Clearing method including netting, and typical to the U.S.

EBPP Multi-channel presentation and delivery Third party CSP Billers Customers FTP/XML/ EDIFACT eBanking Large billers FTP/XML/ EDIFACT Consumer FTP/XML/ EDIFACT Other Portal Trusted Third Party (TTP) EBPP Consolidator Consumer FTP/XML/ EDIFACT Medium enterprises GUI for view and pay + eMail with bills + notification SME GUI for view and pay . + integration into standard accounting packages + bill analysis features Online invoice templates Small Enterprises & independents FTP/XML/EDIFACT + integration into ERP systems + notification to responsible A/P Corporate • Presentment options: • White labeled: direct billing through • ASP or presentment via a third party CSP • TTP branded: on the TTP’s Portal • Payment options: • For the B2C and SME • eBanking • Credit cards • E-mail based payments (paypall, x.com) • For corporates • Regular payment systems • International • Netting of payments • Client subscription DB with: • delivery preferences: • Physical delivery • WAP & PDA • eBanking • TTP Portal • Other Portal • eMail@TTP.be • Other eMail • Notification preferences: • SMS • eMail • Portal Alert Printing & physical delivery • Potential Value Added • Services by TTP: • Factoring • Intra-corporate and inter-corporate Netting • Cash Management (incl. FX) • Trade Finance • Trust services

Six security principles Digital security data must address several critical needs Need Description Identification Our customers are identified Authentication Transaction participants are known Authorization Transaction participants are authorized Integrity Data is not changed in an unauthorized way Non-Repudiation An individual cannot deny that a transaction was made Confidentiality Transactions and communications are kept private

Authentication Authentication flow • Two components necessary : authentication server and authentication client • The authentication client will prompt the user to enter his identifier and shared secret and will pass the information to the authentication server Authentication response • The authentication server will then confirm that the identifier is valid, and that the shared secret matches the identifier. • The authentication server will then pass a yes/no response back to the autentication client. The user will then be granted or denied access to the application

Authentication Client Authentication Application Web Server Server Server Firewall Public Key Storage Entity One (Business) Internet Private Key End User PC Entity Two (User) Decrypt with user’s public digital signature key Authentication Client Authentication Application Web Server Server Server Firewall Public Key Storage Entity One (Business) Internet Private Key End User PC Entity Two (User) Encrypt with user’s private digital signature key Encryption Encryption architecture • Cryptography services are provided with a Public Key Infrastructure (PKI) • In public key encryption, all entities will be issued public keys • The private key is generated via an algorithm based on the public key and all public keys are stored in a central storage location • The distribution of public keys and maintenance of central storage for the public keys establishes the public key infrastructure for ecommerce transactions • When the end user wants to send a message, he generates a private key based on its public key • He encrypts the message using his private digital signature key • When the business application server receives the transaction, it looks up the end user’s public key from the central storage location and decrypts the message with the key • The business application server can decrypt the message because he has the corresponding public key Message encryption process

Digital signatures Digitally signing a message • A digital signature is an encrypted message hash • A message hash is a mathematical formula that is run against a message to create a unique number. This mathematical formula is well known to all participants in a transaction • When the message hash is encrypted with the user’s private key, it becomes a digital signature Sending a digitally signed message • A certificate is a digital document that binds a public key to an entity. In their simplest form, certificates contain an entity’s name and public key • When signing a message with a digital signature, an entity will also send its certificate containing its identity and public key • Certificates are issued and maintained by a Certificate Authority (CA). This CA is a secure, trusted entity who will issue certificates to authorized entities only and who will verify that a certificate is valid

Digital signatures/2 Digital Certificate Industry Standard: name, public key, expiration date, CA name, CA signature, CA signature algorithm identifier, certificate version, and serial number Digital Certificate • Sender applies to Certificate Authority (CA) as trusted third party* • CA verifies sender’s identity, issues certificate (with public key data) and publishes certificate in repository • Sender creates and signs message and attaches certificate • Recipient trusts CA, certificate and contents, including public key** • Recipient extracts public key to verify sender signature • Recipient verifies identity and integrity Trusted third party Certificate Repository Certificate Authority (CA) Certificates and Revocation Lists (CRLs) Certificates and Revocation Lists (CRLs) Sender Recipient Security Services * In practice the entity that identified the users is called a Registration Authority ** If recipient does not trust CA, they can find a certificate attesting to identity of ICA, and possible construct a chain of certificates terminating at trusted root CA (Source: Digital Signature Trust; Accenture analysis)

Validating digital signatures Validating a digitally signed message • The business will receive the message and the end user’s certificate. However, the business has no way of knowing that the certificate is valid; i.e. that it contains the correct name and public key information • Therefore the business will send the end user’s certificate to the CA Validating a certificate • The CA maintains a directory of authorized entities and their public keys. When the CA receives the end user’s certificate, it will confirm or deny the validity of the certificate and send it back to the business

Digital signature – Recent legislation • European directive (December 13, 1999) on digital signatures • Belgian law (October 20, 2000 and July 9, 2001) • A signature can consist of a set of electronic data which can be associated to a well defined person and which certifies the integrity of the content • Legally binding of a digitally signed document • The law targets mainly the digital signatures based on assymmetric cryptography and combined with a digital certificate (PKI) • Legislation defines role and responsibilities of the Certification Authority • Approval • Control • CA role consists of certifying the link between a person and its public key • CA liability : a CA which delivers a qualified certificate is liable for any damages caused to anyone who has trusted the certificate • In practice, purpose is to limit carelessness (not timely revocation of a certificate…)

Providing non repudiation Providing non repudiation • The business now knows that the certificate contains the correct public key for the end user. The business will then decrypt the message hash using that public key. The business will then rerun the message hash using the known mathematical formula. If the decrypted message hash matches the message hash which the business just created, then it has been verified that the message was sent by the end user, and that the message was not altered during transmission. Therefore non repudiation for the message is provided

Transport/Encrypted connection • The TCP/IP (Transmission Control protocol/Internet Protocol) governs the transport and routing of data over the internet • The SSL protocol allows an SSL-enabled server to authenticate itself to an SSL-enabled client, allows the client to authenticate itself to the server, and allows both machines to establish an encrypted connection • SSL protocol addresses security issue of the communication while symmetric and assymmetric encryption addresses security issues related to data transferred HTTP Application layer Network layer Secure sockets layer (SSL) TCP/IP layer

Data encryption - Isabel illustration Registration Authority (RA) Client’s bank Client Identification of the client Isabel Platform (acting as root Certification Authority) Isabel’s network = Belgian banks network Certification Authority (CA) delivers digital certificate Contains client data and stores public key Payment software + empty microship Public Key (key publicly known) The digital certificate is stored in a directory + + There is a logical (mathematical relation) between the private and the public key The private key is generated and recorded on the chip When the PC is started. To use the chipcard, a pincode must be entered Public Directory (Yellow pages) Software Interface Private Key (key known only to user)

Data encryption - Isabel illustration/2 Isabel Platform Isabel’s network = Belgian banks network Checks his Accounts And Initiates payments via + User Software Interface Four characteristics to determine the security level of an electronic file: Authentication: confirming the identity of parties involved in the transaction Integrity: confirmation that the content of a message has not been altered Non-repudiation: the signer can not deny the signing of the message Encryption: allow the sender to encrypt the messages he wants to send in order to keep its content secret These characteristics can only be conferred to an electronic file through Certification User’s Banks

What do the Belgians buy online and where ? • Most frequent goods bought online are books, CDs, softwares, hardware, events tickets, transport tickets • More than one third of purchases are made on a foreign internet site. This has an impact on the payments methods used Source : Belgian internet mapping – October 2000

Which tools do the Belgians use to pay their online purchases ? • One order out of two is paid by credit card. Use of edebit cards is limited at this stage • Remittance (eg virements) account for a significant share of payments, in particular for domestic purchases Source : Belgian internet mapping – October 2000

Retail Solutions: eDebit Card Banxafe is the security label developed by Banksys to guarantee total reliability of bankcard payments over the Internet. This concept has already set a new standard for on-line payment security. 2°)Choose your Banxafe payment sytem: Bancontact, Mister Cash, Visa, Mastercard 3°)Insert your Bancontact/ Mister Cash card In the terminal 1°)Install your Banxafe terminal 4°)Type your secret code twice and confirm the amount of your purchases Your payment is done! PKI and digital signature Security is achieved by a public key authentication applet. This applet is accessed by a banking PIN and generates a digital signature which is checked by a public key infrastructure certificate. The client uses a private key to sign his payments. Banksys has the corresponding public key and can authentify the identity of the sender

Banxafe Digitally signing a message • An authentication applet will generate a message hash when the user inputs his PIN code • The payment itself and the message hash are encrypted with a private key. The user certificate is sent with the encrypted transaction • Certificates are issued and maintained by Banksys (Certificate Authority (CA)). Sending a digitally signed message

Banxafe Validating a digitally signed message • Banksys will receive the message and the end user’s certificate. Validating a certificate • Banksys is the CA and maintains a directory of authorized entities and their public keys. Based on the end user’s certificate, it will confirm or deny the validity of the certificate • Banksys will decrypt the transaction with the corresponding public key

Key facts and figures per business line Founded in 1989 as a merger of Bancontact and Mister Cash Consortium owned by 58 banks (Belgian or with subsidiary in Belgium) Provider of integrated card-system to banking industry, traders, self-employed persons and card holders: Networking: managing Banknet, private IP network, with 25 mio transactions monthly Equipment: design, installation and maintenance of terminals Bancontact/Mister Cash, Proton(76.000) Customer services and support for Visa cards, due to take-over of activities (except sales) of Bank Card Company in 1999 Banknet accounts for International presence: STEP, managing ATM-ETP activities in different European countries Proton as the international standard of rechargeable wallets (34,5 mio cards in 24 countries) Terminal and card applications (C-Zam/Smash, solution for e-commerce) Banxafe as ultra secure payment solution for Credit card payment over Internet 6 accountable units since 1999: Customer services and support Networking Field service Operations Terminals and card applications Card transactions Banksys overview Evolution of Ratios • Net sales: € 211 mio • Operating Income: 24 mio • Net profit (after tax): € 13 mio • Employees: 1008 Source : Annual report Banksys and Dun & Bradstreet

Internet Banking security Most common security configuration • Use of SSL for transport security • Use of digital signatures (via Digipass or a C-ZAM/PC terminal) The Digipass looks like a “calculator”, but is a little electronic machine which generates a digital signature. This signature will allow the user to present himself to PC Banking, will “sign” the operations, … The Digipass is connected to the PC The C-ZAM/PC terminal is a little machine provided with a keyboard, and connected to the PC. To login or sign operations in PC Banking, the user must introduce his bankcard in the terminal, and then type his usual secret code. Encryption of transaction

Use of mPayments FACT: Customers will start using mobile devices to make payments PKI and digital signature Security is achieved by a public key authentication applet embedded in the SIM card. This applet is accessed by a PIN and generates a digital signature which is checked by a public key infrastructure certificate. The client uses a private key to sign his payments. The telco or a company like Banksys could have the corresponding public key and could authentify the identity of the sender New actors emerge in the payments market TelCo Payment Provider Bank

eCash/Deutsche Bank illustration Virtual wallet Virtual pre-paid account is credited with credit card or electronic transfer and used for e-commerce/C2C payments. Enormous success of Paypal in the US based on e-mail payment procedure (12 million users. Volume : 200.000 payments/day. Value : 10 MUSD/day) • Customer can choose from the following payment options: • Upload money from bank’s system onto personal system and e-mail eCash to vendor • Use a mobile device to transfer eCash to the vendor Customer deposits money into an eCash-enabled account. The electronic money is stored into the bank’s system until the customer uploads the money on his personal system or makes a purchase by mobile device Vendor needs to have an account with a bank supporting the eCash payment system. This bank will then convert eCash into a regular deposit on vendor’s bank account after it has verified the payer’s eCash account with the DB 24.

$ $ $ Payment functionality for a B2B site • eCommerce applications are often pre-enabled to use a vendor’s payment services application • The payments services application has links with many payments networks • Transfer of payments orders from the B2B site via the web or interface Seller’s bank SWIFT Off the shelf ecommerce applications Payments services vendor site Isabel Clearing House INTERNET MERCHANT Custom ecommerce application • Services • Transaction reporting • Virtual terminal • Merchant configuration • Manual capture and settlement INTERFACE Mastercard/Eurocard Buyer’s bank Banksys

Pre-Sale Post-Sale Sale Post-Sale Context Post-Sale Pre-Sale Sale Content Post-Sale The B2B eCommerce Value Chain The classic sale value chain • The value chain desegregates a firm into its strategically relevant activities • The eCommerce technologies and possibilities for interaction have an impact on the classic sale value chain by enriching it with two new factors of differentiation: content and context. • Content • Information presented with text, graphics, sound and video, i.e. a product description in an on-line catalogue • Context: • The context adapts and presents the content (useful for the one-to-one marketing), i.e. a catalogue where the content is customised with respect to a specific customer The eCommerce value chain as an instance of the sale value chain

eCommerce value chain • These processes illustrate the typical interactions between buyers and sellers in trading relationships • The processes of the actors interact mutually through the services provided by intermediaries • eCommerce intermediaries: actors enabling various eCommerce related activities Buyers:  - Investigate offerings  - Publish need  - Evaluate and select offers  - Place order  - Cancel order  - Receive goods or services  - Accept/non-accept goods  - Receive invoice  - Dispute (protest invoice,…)  - Submit payment - Request support • Sellers: • - Prepare market presence  - Publish offerings  - Bid in expressed demand •  - Respond to standard inquiries •  - Process orders •  - Confirm order •  - Acknowledge cancellation •  - Distribute goods •  - Issue invoice •  - Receive payment •  - Provide support

$ $ $ Specific issues in eCommerce value chain The transposition of a B2B sales cycle into a fully ‘electronic’ value chain context raises specific issues to be addressed Authorizations Identification and non-repudiation Integrity Context Post-Sale Content Pre-Sale Sale Post-Sale Sellers Standardized message exchanges Archiving of transactions Buyers Mandatory Optional Transaction and payment closure Electronic contract enforcement Guarantees and financing

The Roles of eCommerce Intermediaries In an eCommerce market place, a number of (new) intermediaries are assuming several responsibilities: • Certification Authority: an entrusted service by one or more entities to create and assign certificates, and to mange the revocation of certificates • Registration Authority: reliable services, which have the responsibility of registration and approval of users of certificates on behalf of the Certification Authority • Transaction authorisation Authority: when a transaction is sent, the transaction authorisation authority checks if the amount being ordered is under the limit authorised, and takes the engagement to the receiving party • Transaction tracing Authority: offers a proof-of-evidence of a particular transaction at an instance in time. Querying services can be provided to the buyer and seller. This can be extended with the association services of linking related transactions • Transaction archiving Authority: archives and manages digital documents and other data for longs period of time • Notarial Authority: notaries can provide their certification or digital signature to trading or other official documents • Transaction translation Authority: facilitates the integration of systems by translating the output data of the sending system into a suitable format of the receiving system • Network Services provider: ensures the network management and provides additional services directly related to the infrastructure • Navigation Services provider: ensures the ease of navigation on the main areas of the platform • Trusted security software provider: designs and implements trusted security solutions based on the platform’s standards

Buyers Intermediaries Certification Authority Registration Authority Transaction Archiving Authority Trusted security software provider Navigation Services provider Transaction Translation Authority Transaction Authorisation Authority Transaction Tracing Authority Notarial Authority Network Services provider Sellers The Intermediaries of eCommerce • All these service providers intermediaries are forming the middle layer in the model

‘Trust’ Zone for Seller $ $ $ ‘Trust’ Zone for Buyer International considerations When virtual communities are created with overlapping trust zones, standards and governance are needed to support the B2B sales cycles Third party (e.g. Seller service provider) Seller When actors with no previous business relationship are involved in an ‘electronic’ value chain at ‘e-speed’, trading communities are built from scratch and use the power of a virtual network (representing by the 4-corner model) For this 4-corner model to operate efficiently, there is a need for a community or industry wide convention to agree on standards relating to contracts, financing, delivery,… Buyer Third party (e.g. Buyer service provider)

$ $ $ Therefore, to enable trusted exchanges throughout the full electronic value chain involving many actors, the following Trust Transaction Services need to be set up(1/2) Seller Seller Bank Trust enablement through the Trust Transaction Services Registration Identification Trusted Third Party Trusted Third Party Value-added Services Roles and Rules Transactions Transactional Support Administration Buyer Buyer Bank

Therefore, to enable trusted exchanges throughout the full electronic value chain involving many actors, the following Trust Transaction Services need to be set up(2/2) Trust enablement through the Trust Transaction Services • Enrollment • Registration • Certification • SLA/OLA • Revocation Registration • Authentication • Warranty (Insurance of identify) Identification Value-Added Services Roles and Rules Transactions • Reputation services (e.g. creditworthiness) • Financing • Warranty/insurance of settlement, quality, timely delivery,etc • Notary Services • Organization and roles • Authorization and Privileges • Policies • Selection and execution of transactions • Fulfilment of order process • Settlement of payment • Standards and protocols • Integrity and non-repudiation • Privacy and confidentiality • Integrity • Compliance auditing Transactional Support • Trusted archiving and logging • Dispute resolution • Montoring, measurement and management Administration

Traditional economic actors and new entrants are starting to provide fragmented and piece-wise Trust Transactions Services (1/2) • Financial institutions: • Registration and identification (strong security level) • Transactions – Settlement of payment • Value-Added Services – Reputation services (off-line) • Value-Added Services – Financing (off-line) • Privacy and confidentiality • Marketplaces: • Registration and identification (low security level) • Roles and Rules • Transactions – Bid/Order/Buy/Sell • Transactions – Settlement of payment • Transactional support – Standards and protocols • Secured Infrastructure Providers: • Registration and identification • Value-Added Services – Warranty/insurance • Value-Added Services – Notary services • Transactional support – Integrity and non-repudiation • Administration • Standardization bodies: • Transactional support – Standards and protocols • Transactional support – Compliance auditing • Roles and Rules - Policies

Traditional economic actors and new entrants are starting to provide fragmented and piece-wise Trust Transactions Services (2/2) • Financial institutions: • Registration and identification • Corporate customers of Belgian banks with Isabel • ABN-AMRO, Deutsche Bank and Allianz (via HypoVereinsbank) started using Identrus-based certificates to secure new applications • Transactions • Barclays B2B.com UK first purchase-to-payment portal to cover entire B2B trading chain • Dresdner Bank Europe’s first transactional financial portal to offer corporates online banking, risk management and transaction services • Secured Infrastructure Providers: • S.W.I.F.T. with TrustAct is a secured Internet-based messaging service with non-repudiation and identification based on Identrus certificates • Isabel provides proprietary certificates and a secured messaging service to all corporate customers of the Belgian banks (more than 45,000 companies) • Government sponsored bodies such as the Spanish Mint provide all citizens with a digital certificate and signature • Standardization bodies: • S.W.I.F.T. with Bolero have released 65 XML document definitions as used in international trade (e.g. commercial, documentary credit, customs) to be transported through the secured S.W.I.F.T. /TrustAct infrastructure • Identrus has defined a industry standard for digital certificates, a payment initiation application and a contractual framework that regulates their usage • E.U. passed a directive on 19 January 2000 making digital signatures equivalent to paper based signatures • Marketplaces: • ‘Industry-centered’ (industry consortia or independent) or ‘company-centered’ • Focus on seamless procurement and supply chain integration

Identrus Root Certificate Authority (CA) Root CA OCSP Resp. & Repository Risk Mgmt Module Transaction Coordinator OCSP Responder & Repository OCSP Responder & Repository Relying Participant Issuing Participant Risk Management Module Risk Management Module Certificate Authority Certificate Authority Transaction Coordinator Transaction Coordinator Relying Customer Subscribing Customer Business to Business Interactions Client App Client App Seller (Relying Party) Purchasing Manager (Certificate Holder) Identrus System-wide roles & responsibilities Contracts & Procedures Online Certification Service Provider: check banks’ certificates + yellow page

Identrus • Identrus was created in April ’99. It acts as Root Certification Authority (CA) amongst the different public key infrastructures (PKI) of the banks set-up across the world, ensuring their inter-operability. • Identrus uses the “four-corner” model among the Buyer, the Seller, and their respective banks to allow these banks to provide trusted eCommerce services • Payments, Warranty of identity and of settlement, Letters of credit, Commercial paper, Credits, Creditworthiness, Secure Mail and intermediation, … • Identrus and Swift have recently announced an alliance whereby Swift will operate a trusted and value added network for B2B exchanges based on the Identrus model and trust tree • A number of the original Identrus founding banks are working on the Eleanor project, jointly defining new global standards for B2B ePayments and market place facilities • Commerzbank • Deutsche Bank • Dresdner Bank • HSBC Group • Hypo Vereinsbank • Industrial Bank of Japan (IBJ) • NatWest Group - RB of Scotland • Sanwa Bank • Scotiabank • Société Générale • Wells Fargo • Its 30 to 40 shareholder banks include • ABN Amro • ANZ Banking Group • Bank of America • Barclays Bank • BNP Paribas • BSCH • CIBC • Chase Manahattan Bank • Citigroup • Crédit Agricole de France

TrustAct - SWIFT How the service works Two businesses having subscribed to the e-trust service from their respective financial institutions. Using TrustAct, businesses can validate their trading partners' certificates and have complete assurance of the identity of the other trading party • The buyer browses the seller's catalogue. • The seller wants identity assurance and requests the buyer to forward a signed commercial document to TrustAct together with a certificate from the buyer's financial institution. • TrustAct performs a basic validation of the certificate and requests the respective financial institutions to validate the identity of their business. TrustAct also checks with Identrus to ensure that both institutions are scheme members. • TrustAct relays the assured order to the seller who now has an order that can be relied upon. • The seller returns a signed receipt to the buyer, via TrustAct, who now has an assured receipt that can be relied upon. • TrustAct records and maintains time-stamped records of all messages received by the TrustAct server. • SWIFT andIdentrus™ LLC have entered into an alliance to offer a joint solution to facilitate business-to-business (B2B) trusted communication (based on Identrus' identity trust services and SWIFT's messaging capability.

Swift (Society for Worldwide Interbank Financial Telecommunication), located in Brussels, is a cooperative society owned by 239 member banks and financial institutions (founded in 1974) Offices in 25 locations worldwide Employees : 1,800 (of which 1,000 in Belgium) Geographic spread : Europe accounts for 2/3rd of revenues US #1 UK #2 Germany #3 France #4 Belgium #5 Business include Financial messaging Payments Securities Treasury Trade finance E services TrustAct (Identrus) SWIFT overview Swift statistics YTD 08 2001

eBusiness – Payments & Security Pascale Vande Velde