E-Commerce: Security And Privacy

As the evolution of the internet and purchasing online becomes popular, so do the security factors that contribute to the ways of eliminating fraud, theft, and acquiring personal information. E-commerce has created many new ways for customers to make payments including e-cash, e-cheques, and e-wallets. In the 21st century, many organizations worked hard at securing communications and payments made through e-commerce transactions. In doing so, customers would be able to feel a sense of trust, confidence and assurance that their information is safe. Many technological developments are being tested and today even implemented through that very system, of e-payments. Already being used today are smart-cards and e-wallets, which in fact work well at creating a safeguard for customers information. Customers now have the convenience of quick and more efficient ways of making transactions and saving data effortlessly with the click of a button. Authentication programs such as VeriSign Secure Site Program, allows one to learn more about web sites users visited before they submit any confidential information, in addition to permitting one to submit sensitive information like one's own credit card number. Such programs are being used on sites such as Ryerson's website, where students can make payments through the system where credit card information is used. Public key infrastructure and digital certificates help companies battle the wave of illegal activity and enhance the business models. Today many businesses are using firewalls as a way to add security to a network. Virtual Private Network allows users to gain secure access to its organizations network. Companies that have used these technologies are paving the way for future security methods. Encryption and decryption are always used whenever secure sites are accessed so that users that enter information can not be accessed by unauthorized people. 56 bit used before and the 128-bit encryption is becoming the standard at the moment.

Many companies who conduct business electronically have the responsibility of making sure that when payments are made over the Internet, accuracy and security become extremely critical. The main concern with electronic payment is the level of security during each step of the transaction. For if there is the slightest possibility the payment system is not secure, trust and confidence in the system by online customers will begin to deteriorate. There are currently 4 major categories of electronic payments systems: (1) electronic cash, (2) online credit card payment, (3) electronic checks and (4) small payments. Each one of these payments has their advantages and limitations.

E-cash is a more convenient and flexible way of handling payments than traditional money. It can be used by both, consumers and businesses. Banks that issue E-cash could find it much cheaper than handling checks and the paper records that accompany traditional money. Consumers who do business on the Internet will find some forms of electronic money offer much greater privacy than using ordinary credit cards. Disadvantages associated with e-cash are that uncontrolled growth of E-cash systems could undermine bank and government-controlled money systems. E-cash may be less secure than bank money, since money stored on a PC could be lost forever if the system crashes. E-cash could foster a have and have-not society: Those with PCs would have ready access to the stuff, while those without, many of them low-income consumers, would not. The worse part of it all is that if hackers or other criminals were to break into e-cash systems, they could instantaneously extract the electronic wealth of thousands or even millions of innocent consumers.

Although online credit card payments require a high usage fee and they have a limit on how much one can spend, it is popular because of its acceptability in many foreign countries and also because it is a relatively safe method of payment. The risks associated with online credit card transactions is that neither party can be certain of the other's identity; and second, the goods ordered may take some time to be delivered. On delivery, the buyer may discover that the merchandise does not match his expectations. There is also a problem of fraud and a lack of security, which can lead to the compromise of credit card numbers stored in online databases.

In the physical retail world, if credit card fraud occurs, the credit card companies cover the cost. But on Internet transactions, it's the E-tailer that must cover these costs. There are two main ways to prevent credit card fraud. One is address verification, where the retailer compares the address of the credit card owner to that of the person who is attempting to use the card. If the addresses don't match up, the sale is rejected. The second way looks for fraudulent patterns based on the history of credit card purchases.

Year after year the internet is becoming a popular shopping spot, with an estimated $65 billion in sales for 2004. Merchants expect growth in cyber crime to keep pace with increase in Web sales. However, the growing availability of fraud-detection tools and services should help. For instance, merchants can use so-called geolocational tools that scan IP addresses to identify orders that are being placed from outside the country.

Similarly, new card-verification methods that are available from all of the major credit card companies allow merchants to ensure that the person entering the card number actually has the card in his possession. And fraud-detection services, which cost between 5 cents and $1 per transaction, let merchants automatically flag suspicious transactions.

"While e-commerce appears to be alive and kicking, the growth rate in the levels of fraud appear to be growing at the same rate as well," Healy said. "What we are seeing is about 3% to 4% of a retailer's bottom line being consumed by fraud."

Since the direct costs of electronic checks are high, it can only be used in the virtual world. Electronic checks do not protect the users' privacy therefore this method is not suitable for consumers. This payment method is usually used by governments and private corporations who don't find user privacy a concern. Also, since the money being transferred is usually a large sum, online credit card payments or e-cash are both unable to make such large transfers. So, therefore electronic checks are more suitable for governments and corporations.

Small payments are offered to those who are not frequent users and are willing to pay a reasonable price to browse through information. Therefore pay-per-click and per-fee-links will definitely become an online trend for transactions. Small payment structures are not brought forth by international financial organizations

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