Free «E-Payment Systems» Essay
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The owners of Book Bunker require e-payment systems to enable them to process their payments electronically. E-payments entail not only the electronic transactions themselves, but also the infrastructure required for billing and buyer authentication. Bothma & Geldenhuys (2008) note that the availability of suitable e-payment system is a major factor for Book Bunker, as it will enable the owners to realize the full potential of e-commerce as a commercial medium.
The proposed e-payment method must address all the factors of security with ease of use as the most important factor for the customers. Zongqing (2004) notes that customers are concerned about secure transmission of payment details and financial information. Secondly, it is important to address the issue of safety of information stored in the Book Bunker’s database server. Finally, Mary and Joe Johnson must address the issue and find the person, who will have access to the information they provide over the internet, since they cannot see the faces of the people, who are sitting on the other end of the connection (Zongqing, 2004).
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There are many different types of e-payment methods for online consumers. The most common and currently preferred by business owners and customers methods include credit cards, smart cards, debit card, PayPal, electronic checks, and electronic wallets (Bothma, Geldenhuys, 2008). In order to accept these cards, the Book Bunker’s website must have a merchant account, payment processing software, and procedures to protect its customers and itself against fraud.
Apart from securing a merchant account, an e-business must also have in place a process for getting card transactions authorized and enable processing of credit card transactions. Botha (2004) notes that the payment processing software comes with a monthly processing fee. The owners of Book Bunker must download the software into their website in order to enable payments to be processed.
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This e-payment system will enable the customers of Book Bunker to pay for the books online by transmitting over the internet a unique electronic number or other identifier value (Botha, 2004). The advantage of using electronic cash instead of credit card is that it entails lower processing costs for the seller and no special credit card type authorization for the buyer.
A smart card is a small electronic device of approximately the size of a credit card that contains electronic memory. Bothma & Geldenhuys (2008) note that electronic cash can be transferred over a telephone line or over the internet to and from the smart card. One disadvantage of using a smart card is the need for special equipment. The online shoppers of Book Bunker must attach a special card reader to their PCs to read their card; offline merchants must also have a specific card reader to read a smart card. The second disadvantage is the risk of theft, which may deter users from loading a smart card with big amounts of money (Bothma, Geldenhuys, 2008).
An electronic check is the electronic version of a paper check. Book Bunker can use electronic check, which contains the same information, as a paper check, and is based on the same legal framework; it can be used for any transaction, where a traditional paper check is used. Kalakota (1997) says that electronic checks will be suitable for the Book Bunker’s customers, who want to use micropayments. The advantage of using e-checks is that the conventional cryptography of electronic checks makes them easier to process than other items based on the public-key cryptography. Also, since e-check contents can be attached to the Book Bunker’s remittance information, the electronic check will easily integrate with EDI applications, such as accounts receivable (Kalakota, 1997).
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Book Bunker can use credit cards in order to facilitate online transactions for its online customers. Through credit cards, the payment will be made with the number available on the card. In order to ensure that it is only the owners of Book Bunker, who will receive this number, it is transmitted over a secure line (Meier, Stormer, 2009). The advantage of using credit card is that they are available and accepted worldwide. Moreover, the Book Bunker’s owners will not face many hurdles in the implementation of such system and will not need special software, which makes the second advantage of using credit cards. In this context, the customers will only need to enter their credit card number together with the name of the card owner into a special form (Meier, Stormer, 2009). In this context, Montague (2010) says that credit cards will enable Book Bunker to capture a large market share, because this system dominates the majority of the e-commerce solutions.
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Credit cards are also convenient for the buyer. Many banks add a small basic charge for processing payments by credit card and lure in corresponding turnover with additional discounts. Meier and Stormer (2009) say that one of the limitations of credit cards is absence of a security mechanism. This implies that if a hacker steals a credit card number, it will be still sufficient to buy products online. The second disadvantage is that credit cards are not anonymous. Meier and Stormer (2009) claim that when a product is purchased, the owner of the credit card and its number become known to both the seller and the banks involved in the processing of payments. The third disadvantage of credit cards is that they will be expensive for Book Bunker. Credit card institutions and banks require Book Bunker to pay relatively high basic charges, as well as a percentage of sales to them (Meier, Stormer, 2009).
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Book Bunkers can use debit cards to facilitate the online coverage of transactions. They include ACH, direct debit, electronic checks, and bank transfer services. The advantage of using these methods is decreased costs. Books Bunker will incur a fraction of the costs, but they have chargeback limitations (Montague, 2010). ACH has an ability to limit fraud and identity theft, which will give an additional guarantee to the customers (Montague, 2010).
Book Bunkers can use PayPal, which is a credit card-oriented payment system. Meier and Stormer (2009) say that for Book Bunker to use PayPal, it is necessary to register with it. PayPal uses a simple, yet effective, means to protect itself against credit card abuse. The description of this deduction on the credit card statement contains a number (Meier, Stormer, 2009). The first step is to open a PayPal account and incorporate it to your site. The idea of Book Bunker offers both system PayPal and direct credit card payment. The second step is to use reliable and proven shopping cart and payment system service, such as LML Payment Systems and BeanStream. The third step is to offer credentials for payments guarantees (Meier, Stormer, 2009).
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Securing Online Payments
Secure Socket Layer (SSL)
Secure Socket Layer (SSL) is a protocol, which is used by Book Bunker’s sites to encrypt all communication including credit card details during transmission over the internet. Tan (2004) says that the use of SSL by Book Bunker provides the mechanism to securely transmit data from one location to another with transactional integrity. For Book Bunker to use SSL, they should install X.509 certificates from a trusted third party CA on a merchant web server. After the installation of SSL, a customer’s browser is able to enter a secure session with a merchant’s web server and all communication over the channel is encrypted at 128 bits (Tan, 2004). Once the information arrives at the merchant’s website, all the information is decrypted and becomes accessible to the merchant. Tan (2004) articulates that while SSL facilitates integrity and security in transferring information between the buyer and the seller, it does not provide any intrinsic authentication capabilities for the customer or the merchant.
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The disadvantages of using SSL is that no mechanism to provide strong authentication of the cardholder or merchant. Botha (2004) says that SSL does not have any controls over what the merchant does with the customer’s or cardholder’s payment details. There is also lack of policy and legal framework to allow a customer to trust a merchant (Botha, 2004).
Secure Electronic Transaction
Secure Electronic Transaction (SET) was built by Visa and MasterCard in 1996, to add confidence to payment card transactions over the internet. Tan (2004) says that SET will provide Book Bunker’s customers authentication, as well as transactional integrity and confidentiality during online payments. The suitability of SET in this context is on the basis that it not only encrypts a transaction, but also ensures against fake identity by authenticating both the cardholder and the merchant involved in the transaction through the use of digital certificates issued by a CA on behalf of the card issuer (Tan, 2004). According to Zongqing (2004), SET protects buyers, since the buyer’s credit card information is transferred directly to the credit card issuers for verification and billing, rather than to the merchant, who by this mechanism is unable to see the customer’s credit card information.
Transport Layer Security
Transport Layer Security (TLS) provides authentication, confidentiality, and integrity, which protect against message tampering, eavesdropping, and spoofing. The TSL protocol is based on the SSL 3.0 protocol specification.
Securing Websites Database
Book Bunker’s database should be designed and hosted on a secure server. It is important for the owners to look for the hosts offering a secure server to enable the transmission of encrypted data. Since Book Bunker will be required to carry out online credit card transmission and other types of web communication that should be protected against unauthorized access, the web host must provide a secure server (Botha, 2004). According to Bosworth, Kabay and Whyne (2012), access to the Book Bunker’s database must be controlled properly by authenticating the credentials of the requesting principal, and then verifying, which objects the authenticated principal is authorized to access. The security of the database in this case can be assured by enforcing web client authentication to the database, enforcing web client authorization for access to the database records, and changing easily guessed passwords (Bosworth, Kabay, Whyne, 2012). It also important to ensure that passwords are read from encrypted files and are not kept in the program code. Book Bunker’s owners must configure and maintain internal access controls.