tisc99keynote

The State of eCommerce

David Strom

david@strom.com

(516) 944-3407

TISC Boston 11/12/1999

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Consider the shopper

• Can’t find your store• Can’t find the right product• Can’t determine prices and shipping ahead

of time• Can’t pay easily• Can’t get decent service and support

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Consider the developer

• Poor quality of tools to build storefronts• Need to integrate several products for any

solution• Have to deal with credit card snooping

perceptions• And still have to satisfy customers!

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It is a wonder anyone can buy anything on the web!

• BMW with page not found error• Gap missing any search function• Netmar payment screen confusing• Singapore jewelry directory outdated

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Rent, buy, or build your store

• Rent: outsource to a CSP• Buy suite of software• Build it yourself

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The cold hard reality of suites

• Suites are nothing more than collection of products

• Lack integration among various elements• Difficult to setup, customize, and use• Require you to live “inside” their structure• Limited payment options• Sounds like early MS Office

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Trends

• Suites will get better, but no one will really care

• Rental options will continue to get cheaper and more functional

• Web/database integration still difficult problem that suites are ignoring

• Backoffice integration still difficult problem but getting better

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Technology status report

• SSL vs. SET• eWallets• eCommerce hosting providers• Payment providers

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SSL vs. SETSSL

• Server authentication– Merchant certificate as

legitimate business• Possible for client

authentication– Not tied to payment method

• Privacy– Encrypted message to

merchant includes account number

• Integrity– Message authenticity check

SET• Server authentication

– Merchant certificate tied to accept payment brands

• Customer authentication– Digital certificate tied to

certain payment method• Privacy

– Encrypted message does not pass account number to merchant

• Integrity– Hash/message envelope

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SET issues• Implementation of SET has some big drawbacks:

– Lack of interoperability among systems– Management of public key infrastructure– Distribution of digital certificates requires action on the

part of the consumer– Will banks want to become cert authorities?

• And who will pay for all this?• Meanwhile, eCommerce goes on

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The future of SET

• Non-repudiation of transactions through digital certificates for both merchant and customer

• SET may be the industry standard for payments, but yet to be implemented

• It will be far more difficult for a customer to claim no knowledge of a transaction

• Demonstrations continue

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Some problems with eWallets• Not transferable to other wallets • Tied to a single PC• Not available for use at many web storefronts• Just solve a small part of the overall payment

process• And they just don’t work!

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Trends

• eWallets will eventually go away• SET becomes a server-side issue• SSL still dominates eCommerce

transactions for many years

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Interoperability is the key

• Wallets will become widely used when the following events occur:– Mass distribution of wallets to consumers is

easily made– Will be accepted by all merchants, regardless of

wallet brand or payment brand– Don’t require PKI knowledge or computing

expertise

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Turnkey eCommerce hosting providers

• GeoShop/Yahoo• ViaWeb/Yahoo• iCat• Shopsite/Open Market• iTool• Shopzone• Encanto

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What they have in common

• Relatively easy to setup simple storefronts• Relatively difficult to setup anything else!• Payments, order processing still mostly a

manual effort• Limited catalog and page controls• But good to learn about eCommerce!

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Case study: Encanto

• Started out selling hardware appliance• Now sells eCommerce hosting services and

gives away the box• Will they make it on monthly fees?• Best explanation of payment process around

but took it off their web site!

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The state of payment systems

• Today the vast majority of web payments are with SSL forms and credit cards

• Many new directions for payments, but still far from general acceptance

• Banks at odds with software developers

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Remember the old payment providers?

• Digicash• Cybercash (first generation)• First Virtual• Mondex• GlobeID

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Why didn’t they work?

• Too complex to implement• Too much cumbersome infrastructure• Not too many stores took their kind of

money• Too many other technical challenges • Solved the wrong problem first (credit card

snooping)

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Today’s sessions

• Choosing the right payment provider • New alternatives to PKI for authentication• Securing and integrating web and database

servers • Web switching and caching • Preventing cyberfraud • PKI application implications

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Our moderators

• Christy Hudgins-Bonafield• Victor Danevich• Greg Yerxa • Greg Shipley• Jon Udell

Session 1: Choosing the right eCommerce

payment provider

Christy Hudgins-Bonafield

Brian Boesch, Cybercash

David Strom, David Strom Inc.

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Why use any payment system?

• Automate existing business practice (POs, procurement, supply chain, etc.)

• Non-human transactions, businss-to-business

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Three choices

• Outsource everything (Evergreen, BofA, Amazon zShops)

• Use Cybercash online system• Use PC POS (Tellan, PC Authorize)

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Issues

• Real time or batch authorization• Real time or batch capture/posting of

transactions• Fraud detection• Whether or not physical goods are involved• Scalability, reliability• Where and how customer account data is

stored

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Diversity issues

• Shopping carts used to keep track of sessions vs. committed order processing

• Rich reporting tools, backup, management, history/log

• Open interfaces to extract information and use across different legacy payment models

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Three different levels of security

• Transaction level• Session level• Membership and directory level

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What is the goal?

• To safeguard user identity and payment information

• Across all transactions, sessions, and wherever membership information is stored

• And to ensure that accurate transactions occur!

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Transaction level security

• Identity must be coupled with transactions• Transactions must be persistent and

grouped for optimal payment authorization and processing

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Session level security

• Identity must be constantly verified during eCommerce session and especially when transactions committed for payment authorization.

• Cookies, tokens, SSL

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Membership level security

• Persistent way to store identity and payment methods.

• Must be secure – or face legal consequences!

• Critical for business-to-business automation• Must leverage existing business PO

authorization systems

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All of these are tied to your shopping cart

• Usually, cart processes payments and sends to banking network

• Demonstration from Perfectotech.com• strom.com/pubwork/ecommerce/testcart.htm

Session 2: Authentication alternatives for

secure eCommerceDavid Strom

(516) 944-3407

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The old method: SSL/credit cards

• How to deal with returning customers?• How to deal with breaks in shopping

session?• How to deal with peak loads?• Are they really secure? (Perception vs.

reality)

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Current authentication methods

• Cookies• Database logins• Certs and PKI infrastructure

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Do you really want to do this?

• Setup CA server • Generate a secure root CA• Train Reg Authorities to manage certs• Develop customer cert policies

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New ways to authenticate shoppers

• 1Clickcharge.com • qPass.com • Cybercash’s InstaBuy.com• ISP bill-backs (iPin, Trivnet) • eCharge.com• Personalized shopping portals (Shopnow,

iGive, eBates)• ECML

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Characteristics

• Mainly for digital content delivery• Per day pass (WSJ)• Charge 8- 12% per transaction • Universal membership• Aggregate lots of small transactions into

one monthly bill• Don’t leave site while completing purchase• Build on “community” and “standards”

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ShopNow, eBates

• Each user registers and sets up own mini mall with links to stores

• Basic rebate program but large collection of stores

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iGive

• Percentage of sales goes towards charities• Clickthroughs also are measured and

accumulate $• Members have earned $300k for charities

so far

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iPin, Trivnet

• Digital content only• Aggregates purchases and bills your ISP

directly• Only works if your ISP and merchant are

signed up • Does this sound familiar?

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Advantages

• Ease of use -- maybe• No credit card transmission over the

Internet

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Disadvantages

• Need to reach critical mass of users almost at launch

• Still rely on username/password combination which can be cumbersome

• Small companies without a lot of depth• Standards still in play

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Why use these any of these services?

• Save money• Build loyalty, return visits• Make eCommerce easier? Not sure.

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Panel

• Brian Smiga, 1ClickCharge• Jamie Fullerton, Inflo• Ted Goldstein, Brodia/ECML.org