1 Web Developer Foundations: Using XHTML Chapter 12 E-Commerce Overview Modified by Linda Kenney November, 2006

© 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 Reduced Costs – why?

© 2007 Pearson Education 6 Increased Customer Satisfaction – why?

© 2007 Pearson Education 7 More Effective Data Management – why?

© 2007 Pearson Education 8 Potentially Higher Sales -why?

© 2007 Pearson Education 9 E-Commerce Advantages for Consumers Convenience – why? Easier Comparison Shopping Wider Selection of Goods

© 2007 Pearson Education 10 E-Commerce Risks for Businesses Need for a robust, reliable web site Fraudulent transactions Customer reluctance to purchase online Increased competition

© 2007 Pearson Education 11 E-Commerce Risks for Consumers Possible Security Issues Possible Privacy Issues Purchasing from photos & descriptions Possible difficulty with returns

© 2007 Pearson Education 12 E-Commerce Business Models B2C – Business-to-Consumer –Some are online only –Some are both online and Brick and Mortar B2B – Business-to-Business C2C – Consumer-to-Consumer B2G – Business-to-Government

© 2007 Pearson Education 13 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 15 E-Commerce Statistics - updated E-commerce revenue in 2006 – over $2 billion e.html?page= http:// e.html?page=

© 2007 Pearson Education 16 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 17 “Black Friday” stats news/article.php/ http:// news/article.php/ e.html?page= http:// e.html?page=

© 2007 Pearson Education 18 E-Commerce Issues Intellectual Property Security Fraud Taxation International Commerce

© 2007 Pearson Education 19 Intellectual Property Domain names and cybersquatting

© 2007 Pearson Education 20 Security

© 2007 Pearson Education 21 Fraud

© 2007 Pearson Education 22 Taxation

© 2007 Pearson Education 23 International Commerce

© 2007 Pearson Education 24 Order & Payment Processing Describe online ordering.

© 2007 Pearson Education 25 Try:

© 2007 Pearson Education 26 Order & Payment Processing E-Commerce Payment Models: –Cash –Check –Credit –Smart Card –Micropayments

© 2007 Pearson Education 27 Cash/Check

Credit Card Order Processing Flow

© 2007 Pearson Education 29 Secure Electronic Transactions (SET) Standard protocol that enables secure credit card transactions on the Internet. SET uses encryption and digital certificates.

© 2007 Pearson Education 30 Smart Card Similar to a credit card, but with an integrated circuit. Mainly used in Europe, Australia, and Japan

© 2007 Pearson Education 31 Micropayments Small amounts of currency are exchanged over the Internet. “When digital and physical merchants deploy Peppercoin, consumers can use their debit and credit cards for purchases of any size. For example, a consumer can pay for a parking meter, purchase a digital news article for $0.50, or buy a pack of gum from the corner store for $0.75. “

© 2007 Pearson Education 32 E-Commerce Storefront Solutions Instant Online Storefront Off-The-Shelf Shopping Cart Software Custom Built Solution Semi-Custom Built Solutions on a Budget

© 2007 Pearson Education 33 Instant Online Storefront Yahoo! Earthstores FreeMerchant

© 2007 Pearson Education 34 Off-The-Shelf Shopping Cart Software Miva Merchant, Mercantec

© 2007 Pearson Education 35 Custom Built Solution –IBM's WebSphere –Microsoft's Visual Studio.NET –Macromedia Dreamweaver –Etc.

© 2007 Pearson Education 36 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 37 STOP HERE

© 2007 Pearson Education 38 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 39 Encryption is needed because information in a packet can be intercepted as it travels across media.

© 2007 Pearson Education 40 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 41 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 42 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 43 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 44 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 45 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

© 2007 Pearson Education 46 SSL in Action

© 2007 Pearson Education 47 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 48 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 49 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 50 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 51 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 52 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.