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Agenda for the session

• Payment Systems : Electronic, Digital andVirtual Internet Payment System

• Account Setup and Costs

• Virtual Transaction Process InfoHaus• Security Considerations

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E-Commerce Offerings

Products Services Information

• Devices

• Furniture

• Cosmetics

• Ornaments

• Mobile Bill

• AMC

• SaaS

• Banking

Category 1 Category 2

• Music

• Videos

• News, Tips

• Stock Quotes

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2 major categories of On-line ElectronicCommerce systems are for

1. For buying and selling of Information2. For buying and selling of Products andServices

Many options/solutions are available for either of

the above lines of business for the merchants andcustomers

While there are various service Providers, we will

see more specifically one in each category

1. First Virtual2. CyberCash

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E-Commerce Offerings

Products Services Information

• Devices

• Furniture

• Cosmetics

• Ornaments

• Mobile Bill

• AMC

• SaaS

• Banking

Category 1 Category 2

• Music

• Videos

• News, Tips

• Stock Quotes

CyberCash First Virtual

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Buying and Selling Information on Internet

Information

Category 2

• Music

• Videos

• News, Tips

• Stock Quotes

First Virtual

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First Virtual Internet payment SystemThe essential presumptions:

1. Marginal cost for the offerings is “zero”. People taking the“Information” for a “Test Drive” may not want it. There is literallyno loss for the merchant because he can still sell as many genuinecustomers, unlike other products

2. Buyers can “skim through a book” before deciding to purchase.The digitized Information buyers HAVE to download and use it to

get the real feel.3. There is no Sales return4. Buying and selling should be simple with low entry cost in time,

effort and money.5. It should also be virtual

6. Depends on• automated email• forms used on the web• Terminal sessions

7. So, it can be at low cost still supporting large business

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First Virtual Internet payment SystemExclusively for the sale of “ Information” that can be digitized

and offered on the internet like:• News Paper• Novel• e-Book• Marketing Report• Database• Software products• Photographs• Music• Videos• And many more

NOT for Products and Services

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First Virtual Internet payment SystemProcess of opening First Virtual (FV) Account forcustomer

1. Send the Registration Form with:• Name• Email address, frequently accessed• Notification address (CC)

• Phone Number• Postal Address

2. An e-mail will be received from FV with Accountnumber and an application number

3. Applicant will call a Toll Free Number through whichthe credit card number will be entered by the applicantas guided by the IVR

4. FV responds by email and issues a modified A/C IDand debits $2 for the cost of setting up the A/C

Either trough E-mailOr an interactiveTelnet Session

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First Virtual Internet payment SystemProcess of opening First Virtual (FV) Account for the

Merchant1. Send the Registration Form with:• Name• Email address, frequently accessed• Notification address (CC)

• Phone Number• Postal Address

2. An e-mail will be received from FV with Accountnumber and an application number

3. Applicant will send a cheque for $104. FV responds by email and issues a modified A/C ID

and how to register as a Seller or a Merchant.

Either trough E-mail or an interactive Telnet Session

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FIRST VIRTUALCUSTOMER MERCHANT

Send Registration form

Send e-mail + A/C No andID No

Call Toll Free no and givecredit card in IVR

Sends e-Mail withmodified ID No

Debits $2 from Credit cardA/C

Send Registration form

Send check for $10

Instructs to register asmerchant

Sends e-Mail with A/C Noand Application No

Sends e-Mail withmodified A/C No

Either trough E-mailOr an interactiveTelnet Session`

Either trough E-mailOr an interactiveTelnet Session`

Credit card details not passed over the internet

E C MBA

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First Virtual Internet payment SystemTransaction Process

E-Commerce: MBA

Web Server

Web Clients

FV Server showcasing Digitized products,services and information with prices

Customer views offerings of digitized information

Internet

Merchant’s

Server

1 Customer attempts to

downloadinformation

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E-Commerce: MBA

Web Server

Web Clients

FV Server showcasing Digitized

products, services and information


Internet

Merchant’s

Server


downloadinformation

2 FV asks for the ID

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E-Commerce: MBA

Web Server

Web Clients

FV Server showcasing Digitized

products, services and information


Internet

Merchant’s

Server


downloadinformation

2 FV asks for the ID

3 Informationis downloaded

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1. FV Information Merchant offers product descriptionand pricing on line through FV Compatible Server

2. FV Customer attempts to download offered“Information”

3. FV asks for A/C ID

4. “Information” is sent to the buyer directly from theMerchant’s server

5. Merchant’s server sends an Email to the FV withtransaction details like

• Customer A/C ID

• Seller A/C ID• Item• Price

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First Virtual Internet payment SystemTransaction Process (Contd…)

6. FV sends Email to the Customer if he wants to pay for it

7. If, the customer replies ”YES”, then the amount (net oftxn charges)is credited to the merchant’s Bank A/C

8. If no response is received, no action is taken

9. If no response is received within a specific time, furtherattempts are made through reminders while no action istaken

10. Customer has an option to reply “FRAUD” because the

transaction was not initiated by him and so it amountsto fraudulent action by someone else.

The premise of the FV system is that the customersregularly access the Email and so a response MUST be

received within the stipulated time

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11. FV cancels the customer ID so as to avoid furtherattempts

12. FV mandates that frequently used and an exclusivemail address is used by the customer . The transactiondetails are notified to the participant by the give Email

address.13. If the reply from the buyer is “YES”, merchant sends

message to the FV that a sale is pending with thisCustomer ID for the Merchant ID and the item at theprice for the item.

14. The FV sends Email confirmation message and asks ifthe customer authorizes the payment.

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15. At this point of time customer has 3 options:

a) The customer sends “YES” reply indicating that thereceived “Information” is what h wanted and is asexpected. So the payment of price is agreed.

b) The customer sends “NO” reply indicating

• The “Information” is not received • The “Information” received is a corrupt file • The “Information” received is not as expected • is an accidental or a duplicate billing

c) The customer sends “FRAUD” reply indicating a

fraudulent use and FV suspends the A/C. So thecustomer opens a new A/C

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16. Customer is require to check mails regularly as perterms of agreement.

17. If no response is received from the customer, for

repeated attempts, FV cancels A/C and stipulates toopen a new A/C

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First Virtual Internet payment SystemCommitment to Participants

The FV is committed to reduce the risk for themerchants for the potentially risky “Information”business which is further worsened by offering on theInternet.

FV Constantly reviews the customers who frequently orrepeatedly download information and refuse payment.Such customers are warned and terminated as FVCustomers

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How does the merchant promote

the offerings on the Internet?

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First Virtual Internet payment SystemMaintaining online presence of the “Information” is

very expensive through internet using web servers orthrough other Application Servers.

Especially for many small merchants it is unaffordable.

So FV offers a Public Access Information Warehousebranded as InfoHaus.

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First Virtual Internet payment System

InfoHaus

•Offers to promote the participants’ (merchants’) informationthrough the browsers / buyers on the Internet through:

o World Wide Webo ftpo Email distribution

• Costs little to promote• Merchandise like

o Recipeso Proseo Poetryo Drawings

o Photographso Shrink wrapped software

• Exhibits and sells the “Information” through the InfoHaus servicesby downloading the product descriptions and the products to theInfoHaus Server

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InfoHausParticipant Annual Fee Application Fee Transaction Charges

MER CH A NT

Pioneers: Forpeople who want tostart selling"Information" unliketraditional Sellers

$10+ $1.5 per

MB forhosting

$10

$0.29+2% of the Sale Price

(Additional 8% forhosting) +1% fordepositing to the

merchant's Bank Account

Express: Merchants with credit CardMerchant Account

$350+$1.5 per

MB forhosting

$250

$0.29+2% of the Sale Price

(Additional 8% forhosting) +1% fordepositing to the

merchant's Bank Account

CUSTOMER

Any browser or aprosperous buyer onthe internet as aparticipant in FV

$2 Sale Price ONLY

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First Virtual Internet payment System - InfoHaus Setting up InfoHaus Store in the InfoHaus Server

1. Setting up the Store:

Is done through web, ftp or Email, Setting up using telnet is recommended forsimplicity and use

•Login as user ”ih”

• Forward details:

•Business Name

•FV A/C ID

•Email Address for the FV A/C

•Preferred Currency

• Preferred Language

• Brief Introduction of the business

•Description of Infohaus business max 60 characters

•Short textual description yourself and your service

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InfoHaus Setting up InfoHaus Store in the InfoHaus Server

2. Confirm that you are using X11 window server is running (Work station graphicsterminal emulation)

Choose the desired option from:

• N – to register as a new Infohaus merchant

• C – to check in a new item to be sold individually

• M – to set up a new magazine ( subscription on per volume basis)

• B – to set up a new “boxed set” (for a set of items as they become available)

• 0 – to quit

3. Enter product details and wait for the confirmation

4. Send the information product to the Infohaus server, by email or ftp, the later is better

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Security considerations

• All sensitive information are maintainedsecurely by FV entirely offline

• Risk is only when the customers takeadvantage of stealing the information

• Unscrupulous merchant also may fraudusing customer account IDs

• Eavesdroppers may access the

information when transmitted

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FV’s reasoning for security systems • Encryption and digital signatures are cumbersome, complex and

makes the process longer• Can result in false sense of security

• Cryptographic methods require certifications and subject topatents and export controls. So it will add up to the costs andlimits distribution

• Payment information are offline and there is no need to encryptand sign transactions

• Information like name, contact information, telephone numberapplication number and the Account ID are transmitted on theinternet but not the credit card information NEVER transmittedon the internet

• Payment is made only after notification is sent by mail to thecustomer and affirmative response to receive payment.

Improper transaction attempts blocked for future by responseindicating fraud and can not last too long.• Because it needs lot of skills and technology, the thief will rather

target others than the FV!• Prevalence of credit card thefts by stealing card details has wide

scope than to cover the FV

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How do the frauds happen?

Loosing control over email by customer:

– Leaving system with login

– Using password that can be guessed

– Leaving email gateway unprotected

Interception by the thieves:

– Intercepting and responding to email as ifcustomer is unlikely

– Forging email in some one’s name is easier!

– In any case the fraud is discovered early(how?) when receiving statement.

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FV’s justifications

• FV holds approved transactions for 91 days toavoid payment to fraudulent transaction

• The risk is not beyond a certain degree ofaggravation

• Even when information is stolen while intransmission, the merchant can still sell to thegenuine buyers!

Co e ce

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