1 Web Developer Foundations: Using XHTML Chapter 12 Key Concepts

© 2007 Pearson Education 2 Learning Outcomes In this chapter, you will learn how to: –Describe E-Commerce –Identify benefits and risks of E-Commerce –Describe E-Commerce business models –Describe E-Commerce Security and Encryption –Describe EDI (Electronic Data Interchange) –Describe trends and projections for E-Commerce –Describe issues related to E-Commerce –Describe order and payment processing –Describe E-Commerce solution options

© 2007 Pearson Education 3 What is E-Commerce? The integration of communications, data management, and security technologies to allow individuals and organizations to exchange information related to the sale of goods and services. Major functions of E-Commerce include: –the buying of goods, –the selling of goods, and –performance of financial transactions on the Internet.

© 2007 Pearson Education 4 E-Commerce Advantages for Businesses Reduced Costs Increased Customer Satisfaction More Effective Data Management Potentially Higher Sales

© 2007 Pearson Education 5 E-Commerce Advantages for Consumers Convenience Easier Comparison Shopping Wider Selection of Goods

© 2007 Pearson Education 6 E-Commerce Risks for Businesses Need for a robust, reliable web site Fraudulent transactions Customer reluctance to purchase online Increased competition

© 2007 Pearson Education 7 E-Commerce Risks for Consumers Possible Security Issues Possible Privacy Issues Purchasing from photos & descriptions Possible difficulty with returns

© 2007 Pearson Education 8 E-Commerce Business Models B2C – Business-to-Consumer B2B – Business-to-Business C2C – Consumer-to-Consumer B2G – Business-to-Government

© 2007 Pearson Education 9 Electronic Data Interchange (EDI) EDI is the transfer of data between different companies using networks. This facilitates the exchange of standard business documents including purchase orders and invoices. EDI is not new; it has been in existence since the 1960s. Organizations that exchange EDI transmissions are called trading partners. Newer technologies such as XML and Web Services are replacing traditional EDI by allowing trading partners virtually unlimited opportunities to customize their information exchange over the Internet.

E-Commerce Statistics Source:Forrester Research as reported on

© 2007 Pearson Education 11 Typical Internet User A recent study by Harris Interactive discussed on Clickz.com ( ) found that the typical Internet user in the U.S. now mirrors the U.S. population. Male 49% Female 51% Household Income $40,816 Adults %

© 2007 Pearson Education 12 E-Commerce Issues Intellectual Property Security Fraud Taxation International Commerce

© 2007 Pearson Education 13 E-Commerce Security Encryption –Used to ensure privacy within an organization and on the Internet. –The conversion of data into an unreadable form, called a ciphertext. This ciphertext cannot be easily understood by unauthorized individuals. Decryption –The process of converting the ciphertext back into its original form, called plaintext or cleartext, so it can be understood. The encryption/decryption process requires an algorithm and a key.

© 2007 Pearson Education 14 E-Commerce Security Encryption Types Secure E-Commerce transactions make use of the encryption technologies below: Symmetric-key Encryption Asymmetric-key Encryption Hash Encryption These technologies are used as part of SSL (Secure Sockets Layer) – the technology that helps to make commerce on the Internet secure.

© 2007 Pearson Education 15 E-Commerce Security Types of Encryption(1) Symmetric-Key Encryption Also called single-key encryption. Both the encryption and decryption use the same key. Since the key must be kept secret from others, both the sender and receiver must know the key before communicating using encryption. An advantage of symmetric-key encryption is speed.

© 2007 Pearson Education 16 E-Commerce Security Types of Encryption(2) Asymmetric-Key Encryption Also called public-key encryption. There is no shared secret. Instead, two keys are created at the same time. This key pair contains a public key and a private key. Public-key encryption is much slower than symmetric-key encryption.

© 2007 Pearson Education 17 E-Commerce Security Types of Encryption(3) Hash Encryption A hash algorithm transforms a string of characters into a usually shorter fixed- length value or key that represents the original string, called a digest. Hash encryption is one-way encryption. Hash encryption is used for information that will not be read or decrypted. The function of hash encryption is to verify the integrity of information.

© 2007 Pearson Education 18 Secure Sockets Layer (SSL) SSL is a protocol that allows data to be privately exchanged over public networks. SSL was developed by Netscape and is used to encrypt data sent between a client (usually a web browser) and a web server. SSL utilizes both symmetric and asymmetric keys. SSL uses the “ https ” protocol instead of the “ http ” protocol Most browsers display a “ lock ” icon when SSL is being used.

© 2007 Pearson Education 19 Secure Sockets Layer (SSL) SSL provides secure communication between a client and server by using: –Server and (optionally) client digital certificates for authentication –Symmetric-key cryptography using a "session key" for bulk encryption –Public-key cryptography for transfer of the session key –Message Digests (hash encryption) to verify the integrity of the transmission

SSL in Action

© 2007 Pearson Education 21 SSL & Digital Certificate SSL enables two computers to securely communicate by using a digital certificate for authentication. A digital certificate is a form of an asymmetric key that also contains information about the certificate, the holder of the certificate, and the issuer of the certificate.

© 2007 Pearson Education 22 Digital Certificate The contents of a digital certificate include: –The public key –Effective date of the certificate –Expiration date of the certificate –Details about the Certificate Authority -- the issuer of the certificate –Details about the certificate holder –A digest of the certificate content

© 2007 Pearson Education 23 Certificate Authority A Certificate Authority is a trusted third-party organization or company that issued digital certificates. Well-known Certificate Authorities: –Verisign –Thawte

© 2007 Pearson Education 24 Obtaining a Digital Certificate Request a certificate from a Certificate Authority and pay the application fee. The Certificate Authority: –verifies your identity, –issues your Certificate, –and supplies you with a public/private key pair. Store the certificate in your software - such as a web server, web browser, or e- mail application. The Certificate Authority makes your certificate publicly known.

© 2007 Pearson Education 25 SSL & Digital Certificates When you visit an e-commerce site that uses SSL, a number of steps are involved in the authentication process. –The web browser and web server go through initial handshaking steps using the server certificate and keys. –Once trust is established, the web browser encrypts the single secret key (symmetric key) that will be used for the rest of the communication. –From this point on, all data is encrypted using the secret key.

© 2007 Pearson Education 26 Checkpoint Describe three advantages of e- commerce for an entrepreneur just starting a business. 2.Describe three risks that businesses face when engaging in e-commerce. 3.Define SSL. Describe how an online shopper can tell that an e- commerce site is using SSL.

© 2007 Pearson Education 27 Order & Payment Processing E-Commerce Payment Models: –Cash –Check –Credit –Smart Card –Micropayments

Credit Card Order Processing Flow

© 2007 Pearson Education 29 E-Commerce Storefront Solutions Instant Online Storefront –Yahoo!, Bigstep, Earthstores, FreeMerchant Off-The-Shelf Shopping Cart Software –Miva Merchant, Mercantec Custom Built Solution –IBM's WebSphere Commerce Suite, Microsoft's Commerce Server –Visual Studio.NET, Macromedia Dreamweaver MX, IBM’s WebSphere Commerce Studio Semi-Custom Built Solutions on a Budget E-Commerce add-ons for FrontPage and Dreamweaver Paypal order processing Free shopping cart scripts

© 2007 Pearson Education 30 Checkpoint List three payment models commonly used on the Web. Which one is the most popular, why? 2.Have you purchased online? If so, think of the last item that you purchased. 1.Why did you purchase it online instead of at a store? 2.Did you check to see if the transaction was secure? Why or why not? 3.How will your shopping habits be different in the future? 3.Describe three types of e-commerce solutions available. Which provides the easiest entry to e-commerce? Explain.

© 2007 Pearson Education 31 Summary This chapter introduced you to basic e-ommerce concepts and implementations. Consider taking an E-Commerce course to continue your study of this dynamic and growing area of web development.