1. E-Business Eighth Edition
Chapter 11 Payment Systems For E-Business 1 1 1

2. Learning Objectives In this chapter, you will learn about:
The basic functions of online payment systems
The use of payment cards in electronic commerce
The history and future of electronic cash
How electronic wallets work
The use of stored-value cards in electronic commerce
Internet technologies and the banking industry
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3. Online Payment Basics E-commerce B2C payment transactions
Exchange money for goods or services
Important function: handling Internet payments
B2B payment transactions
Electronic funds transfers (EFTs)
B2C payment transactions
Evolving and competing for dominance
Customer convenience, saves companies money
Bill mailed by mail costs $1.00 to $1.50
Internet billing cost: 50 cents
E-Business, Eighth Edition

4. Online Payment Basics (cont’d.)
Four basic means to purchase items in B2C (traditional and electronic)
Cash, checks, credit cards, debit cards
90% of all United States consumer payments
Electronic transfer: small but growing
Most popular: automated payments
Credit cards
Worldwide: 90% of online payments
United States: 97% of online payments
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6. Online Payment Basics (cont’d.)
Scrip
Digital cash minted by a company
Cannot be exchanged for cash
Exchanged for goods or services by company issuing scrip
Like a gift certificate: good at more than one store
Current scrip offerings (eScrip)
Focus: not-for-profit fundraising market
Merchant should offer customers payment options
Safe, convenient, widely accepted
Companies sell payment processing package service
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8. Payment Cards
General term describing all types of plastic cards consumers (businesses) use to make purchases
Categories: credit cards, debit cards, charge cards
Credit card (Visa, MasterCard)
Spending limit based on user’s credit history
Charge purchases against credit line
Options for user billing cycle payments
Pay off entire credit card balance; pay minimum amount
Card issuers charge unpaid balance interest
Accepted worldwide, 30-day dispute period
E-Business, Eighth Edition

9. Payment Cards (cont’d.)
Credit card (cont’d.)
Card not present transactions
Cardholder not present during transaction
Requires extra security
Debit card
Removes sales amount from cardholder’s bank account
Transfers sales amount to seller’s bank account
Issued by cardholder’s bank
Carries major credit card issuer name
E-Business, Eighth Edition

10. Payment Cards (cont’d.)
Charge card (American Express)
No spending limit
Entire balance due at end of billing period
No line of credit or interest charges
Examples: department store, oil company cards
“Payment card”
Refers to credit cards, debit cards, and charge cards
E-Business, Eighth Edition

11. Payment Cards (cont’d.)
Single-use cards
Cards with disposable numbers
Addresses concern of giving online vendors payment card numbers
Not used much anymore
Problem: required consumers to behave differently
E-Business, Eighth Edition

12. Advantages and Disadvantages of Payment Cards
Advantage for merchants
Fraud protection (built-in security)
Charge paid through issuer of payment card
Advantage for U.S. consumers
Liability of fraudulent card use: $50
Card issuer frequently waives $50 charge if card stolen
Good for merchants and consumers
Worldwide acceptance
Currency conversion handled by card issuer
E-Business, Eighth Edition

13. Advantages and Disadvantages of Payment Cards (cont’d.)
Disadvantage for merchants
Per-transaction fees, monthly processing fees
Cost of doing business
Goods and services prices are slightly higher
As opposed to environment free of payments cards
For payment:
Merchant must first set up merchant account
Disadvantage for consumers
Annual fee
E-Business, Eighth Edition

14. Payment Acceptance and Processing
Internet payment card process easier than physical store process
EMV standard
Single standard handling payment card transactions
Visa, MasterCard, MasterCard International
United States online stores, mail order stores
Must ship merchandise within 30 days of charging payment
Violation penalties are significant
Most do not charge payment card accounts until merchandise shipped
E-Business, Eighth Edition

15. Payment Acceptance and Processing (cont’d.)
General steps in payment card transactions
Merchant receives payment card information
Merchant authenticates payment
Merchant ensures funds are available and puts hold on credit line or funds to cover charge
Settlement occurs (few days after purchase); funds travel between banks and are placed into merchant’s account
E-Business, Eighth Edition

16. Payment Acceptance and Processing (cont’d.)
Open and closed loop systems
Closed loop systems
Card issuer pays merchant directly
Does not use intermediary
American Express, Discover Card
Open loop systems (three or more parties)
Third party (intermediary bank) processes transaction
Visa, MasterCard: not issued directly to consumers
Credit card associations: operated by association member banks
Customer issuing banks: member banks
E-Business, Eighth Edition

17. Payment Acceptance and Processing (cont’d.)
Merchant accounts (acquiring bank)
Bank doing business with sellers (Internet, non-Internet) wanting to accept payment cards
Merchant account
Required for online merchant to process payment cards
Acceptance by bank of merchant account
Merchant must provide business information
Risk of business type assessed
Bank collects credit card receipts on merchant’s behalf
Credits value in merchant’s account
E-Business, Eighth Edition

18. Payment Acceptance and Processing (cont’d.)
Merchant accounts (cont’d.)
Chargeback
Cardholder successfully contests charge
Merchant bank must retrieve money from merchant account
Merchant may have to cover chargeback potential
Problem facing online businesses
Level of online transaction fraud
Fewer than 5 percent of credit card transactions completed online; accounts for 60 percent of total credit card dollar amount fraud
E-Business, Eighth Edition

19. Payment Acceptance and Processing (cont’d.)
Processing payment cards online
Payment processing service providers
Companies offering payment card processing
Example: InternetSecure
Supports Visa and MasterCard payments for Canadian and U.S. accounts
Provides risk management and fraud detection
Handles online merchants transactions
Uses existing bank-approved payment card processing infrastructure, secure links, and firewalls
E-Business, Eighth Edition

20. Payment Acceptance and Processing (cont’d.)
Processing payment cards online (cont’d.)
First Data
Provides merchant payment card processing services with ICVERIFY and WebAuthorize programs
ICVERIFY: for small retailers using Microsoft Windows electronic cash registers, point-of-sale terminal systems
WebAuthorize: for large enterprise-class merchant sites
ICVERIFY, WebAuthorize connect directly to:
Network of banks: Automated Clearing House (ACH)
Credit card authorization companies
Connect to ACH through highly secure, private leased telephone lines
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22. Payment Acceptance and Processing (cont’d.)
Processing payment cards online (cont’d.)
Merchant Warehouse’s PayFlow Link system
Online payment system developed by CyberCash
Now operated by VeriSign
InfoSpace’s Authorize.Net
Online, realtime payment card processing service
Merchants link to system by inserting small HTML code block into transaction page
Order encrypted, transferred to Authorize.Net server
Server relays transaction to bank network
Customers not aware of third-party supplier (usually)
E-Business, Eighth Edition

23. Electronic Cash Electronic cash (e-cash, digital cash)
Describes any value storage and exchange system created by private (nongovernmental) entity
Does not use paper documents or coins
Can serve as substitute for government-issued physical currency
Readily exchanged for physical cash on demand
Problem
No standard among all electronic cash issuers
Not universally accepted
E-Business, Eighth Edition

24. Electronic Cash (cont’d.)
Small purchases not profitable for merchants
Bank fees greater than profits
Factors in favor of electronic cash
Potentially significant market for electronic cash
Market for Internet small purchases (below $10)
Most of world’s population does not have credit cards
Electronic cash: solution to paying for online purchases
Idea of electronic cash refuses to die
Despite failures
E-Business, Eighth Edition

25. Micropayments and Small Payments
Internet payments for items
Costing few cents to a dollar
Micropayments barriers
Not implemented very well on the Web yet
Human psychology
People prefer to buy small value items in fixed price chunks
Example: mobile phone has fixed monthly payment plans
E-Business, Eighth Edition

26. Micropayments and Small Payments (cont’d.)
All payments of less than $10
Companies that have developed micropayment systems
Millicent, DigiCash, Yaga, BitPass
All have failed
No company has gained broad acceptance of its system despite industry observers seeing such a need
No company devoted solely to offering micropayment services
E-Business, Eighth Edition

27. Privacy and Security of Electronic Cash
Electronic payment methods concerns
Privacy and security, independence, portability, convenience
Privacy and security: most important to consumers
Transactions vulnerable
Electronic currency: copied, reused, forged
Unique security problems of electronic cash
Possible to spend only once
Not counterfeit; used in two different transactions
Anonymous use
Prevents sellers from collecting information
E-Business, Eighth Edition

28. Privacy and Security of Electronic Cash (cont’d.)
Electronic cash companies
eCharge, InternetCash, Valista
Advantages of electronic cash
Independent
Unrelated to any network or storage device
Ideally pass transparently across international borders; converted automatically to recipient country’s currency
Portable
Freely transferable between any two parties
Credit and debit cards: not portable or transferable
Important characteristic of cash: convenience
E-Business, Eighth Edition

29. Holding Electronic Cash: Online and Offline Cash
Online cash storage
Consumer has no personal possession of electronic cash
Trusted third party (online bank) involved in all transfers, holds consumers’ cash accounts
Online system payment
Merchants contact consumer’s bank
Helps prevent fraud (confirm valid cash)
Resembles process of checking with consumer’s bank to ensure valid credit card and matching name
E-Business, Eighth Edition

30. Holding Electronic Cash: Online and Offline Cash (cont’d.)
Offline cash storage
Virtual equivalent of money kept in wallet
Customer holds it
No third party involved in transaction
Protection against fraud concern
Hardware or software safeguards needed
Double-spending
Spending electronic cash twice
Too late to prevent fraudulent act by time same electronic currency clears bank for second time
Prevent double-spending: use encryption techniques
E-Business, Eighth Edition

31. Advantages and Disadvantages of Electronic Cash
Traditional brick-and-mortar billing methods
Costly
Generate invoices, stuff envelopes, buy and affix postage to envelopes, send invoices to customers
Accounts payable department
Keeps track of incoming payments, posts accounts in database, ensures current customer data
Online stores have the same payment collection inefficiencies
Online customers use credit cards to pay for purchases
E-Business, Eighth Edition

32. Advantages and Disadvantages of Electronic Cash (cont’d.)
Online auction customers use conventional payment methods
Checks, money orders
Electronic cash system
Less popular than other payment methods
Provides unique advantages and disadvantages
Advantages of electronic cash transactions
More efficient (less costly)
Efficiency fosters more business (lower prices)
Occurs on existing infrastructure (Internet)
E-Business, Eighth Edition

33. Advantages and Disadvantages of Electronic Cash (cont’d.)
Advantages of electronic cash transactions (cont’d.)
Internet spans globe
Distance transaction travels does not affect cost
Does not require one party to obtain authorization
Disadvantages of electronic cash transactions
No audit trail
Money laundering
Technique criminals use to convert money illegally obtained into spendable cash
Purchase goods, services with ill-gotten electronic cash
Goods sold for physical cash on open market
E-Business, Eighth Edition

34. Advantages and Disadvantages of Electronic Cash (cont’d.)
Disadvantages of electronic cash transactions (cont’d.)
Susceptible to forgery
Other potentially damaging digital economic factors
Expansion of money supply when banks loan electronic cash on consumer and merchant traditional bank accounts
Electronic cash has not yet become a global success
Will require wide acceptance and solution to problem of multiple electronic cash standards
E-Business, Eighth Edition

35. How Electronic Cash Works
Consumer opens account with electronic cash issuer
Presents proof of identity
Consumer withdraws electronic cash using issuer’s Web site
Digital certificate issued by certification authority
Combination of credit card number and verifiable bank account
E-Business, Eighth Edition

36. How Electronic Cash Works (cont’d.)
After consumer identity is verified:
Electronic cash amount is issued
Amount deducted from consumer’s account
Issuer may charge small processing fee
Consumer stores electronic cash
In electronic wallet
On his or her computer
On stored-value card
Consumer can authorize issuer to make third-party payments
From electronic cash account
E-Business, Eighth Edition

37. Providing Security for Electronic Cash
Significant electronic cash problem
Potential for double-spending
Main deterrent
Threat of detection and prosecution
Keys to creating tamperproof electronic cash that can be traced back to origins
Cryptographic algorithms
Two-part lock
Provides anonymous security
Signals someone is attempting to double-spend cash
E-Business, Eighth Edition

38. Providing Security for Electronic Cash (cont’d.)
When second transaction occurs
Complicated process reveals:
Attempted second use
Identity of original electronic cash holder
Electronic cash used correctly
Maintains user’s anonymity
Double-lock procedure
Protects anonymity of electronic cash users
Simultaneously provides built-in safeguards to prevent double-spending
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40. Providing Security for Electronic Cash (cont’d.)
Double-spending
Neither detected nor prevented with truly anonymous electronic cash
Anonymous electronic cash
Cannot be traced back to person who spent it
Tracing electronic cash
Attach serial number to each electronic cash transaction
Cash positively associated with particular consumer
Does not solve double-spending problem
E-Business, Eighth Edition

41. Providing Security for Electronic Cash (cont’d.)
Single issuing bank can detect when two deposits of same electronic cash are about to occur
Impossible to ascertain fault (consumer or merchant)
Electronic cash contains serial numbers
No longer anonymous
One reason to acquire electronic cash
Raises privacy issues
The use of serial numbers to track consumers’ spending habits
E-Business, Eighth Edition

42. Providing Security for Electronic Cash (cont’d.)
Creating truly anonymous electronic cash
Bank issues electronic cash with embedded serial numbers
Bank digitally signs electronic cash while removing association of cash with particular customer
E-Business, Eighth Edition

43. Electronic Cash Systems
More successful in Europe and Japan
Consumers prefer to use cash (does not work well for online transactions)
Electronic cash fills important need
Not successful in United States
Consumers have payment cards and checking accounts
KDD Communications (KCOM)
Internet subsidiary: Japan’s largest phone company
Offers electronic cash through NetCoin Center
E-Business, Eighth Edition

44. Electronic Cash Systems (cont’d.)
Reasons for failure of United States electronic cash systems
Electronic cash systems implementation
Required to download and install complicated client-side software that ran in conjunction with browser
Number of competing technologies
No standards developed
Array of proprietary electronic cash alternatives
No interoperable software
That runs transparently on variety of hardware configurations and different software systems
E-Business, Eighth Edition

45. Electronic Cash Systems (cont’d.)
CheckFree
Largest online bill processor (in the world)
Payment processing services since 1981 to:
Large corporations, individual Internet users
2007 Fiserv bought CheckFree ($4.4 billion)
Offers online bill processing under CheckFree brand
E-Business, Eighth Edition

46. Electronic Cash Systems (cont’d.)
Clickshare
Electronic cash system for magazines and newspaper publishers
Uses technology called micropayment-only system
An ISP supporting Clickshare automatically registers users
When users click links leading to Clickshare sites
They can make purchases without registering again
Clickshare keeps track of transactions and bills user’s ISP
E-Business, Eighth Edition

47. Electronic Cash Systems (cont’d.)
Clickshare (cont’d.)
Tracks user on the Internet
Significant value to advertisers, marketers
Defeats anonymity
Micropayment capability
By-product of core functionality of tracking identified users
Tracks users with standard HTTP Web protocol
Does not require cookies or software wallets
E-Business, Eighth Edition

48. Electronic Cash Systems (cont’d.)
PayPal
Payment processing services to businesses, individuals
Earns profit from float
Money deposited, not used immediately
Charges transaction fee
Businesses using service to collect payments
Peer-to-peer (P2P) payment system
Free payment clearing service for individuals
Payments from one type of entity to another of the same type
E-Business, Eighth Edition

49. Electronic Cash Systems (cont’d.)
PayPal (cont’d.)
Eliminates writing and mailing checks or payment cards
Send money instantly and securely to anyone with an address
Convenient for auction bidders to pay for purchases
Convenient for auction sellers
Eliminates risks posed by other online payment types
Transactions clear instantly
Redemption
PayPal check
Direct deposit to checking accounts
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51. Electronic Cash Systems (cont’d.)
PayPal (cont’d.)
Merchants and consumers first register for PayPal account
No minimum amount account balance
Add money by authorizing checking accounts transfer, using credit card
Merchants need PayPal accounts to accept PayPal payments
E-Business, Eighth Edition

52. Electronic Cash Systems (cont’d.)
PayPal (cont’d.)
Competition from Billpoint
Joint venture between eBay, Wells Fargo
PayPal maintained first-mover advantage
Remained most widely used eBay payment processing system
eBay purchased PayPal
Other peer-to-peer payment business companies
First Data Corporation offered electronic money orders through BidPay site (closed in 2007)
Citibank’s c2it payments service (closed in 2003)
E-Business, Eighth Edition

53. Electronic Wallets Concerns of consumers when shopping online Solution
Entering detailed shipping and payment information for each online purchase
Filling out forms
Solution
Electronic commerce sites allows customer to store name, address, credit card information on the site
Problem
Consumers must enter information at each site
E-Business, Eighth Edition

54. Electronic Wallets (cont’d.)
Electronic wallet (e-wallet)
Holds credit card numbers, electronic cash, owner identification, owner contact information
Provides information at electronic commerce site checkout counter
Benefit: consumer enters information once
More efficient shopping
Server-side electronic wallet
Stores customer’s information on remote server of merchant or wallet publisher
No download time or installation on user’s computer
E-Business, Eighth Edition

55. Electronic Wallets (cont’d.)
Server-side electronic wallet (cont’d.)
Main weakness
Security breach can reveal thousands of users’ personal information (credit card numbers)
Servers must employ strong security measures to minimize possibility of unauthorized disclosure
Client-side electronic wallet
Stores information on consumer’s computer
Disadvantages
Must download wallet software onto every computer
Not portable
E-Business, Eighth Edition

56. Electronic Wallets (cont’d.)
Client-side electronic wallet (cont’d.)
Advantage
Sensitive information stored on user’s computer
Sensitive information safer on client machine
Attackers must launch many attacks on user computers (more difficult to identify)
Prevents easily identifiable wallet vendor’s servers from attack
E-Business, Eighth Edition

57. Electronic Wallets (cont’d.)
Characteristics of useful wallets
Wallet accessibility
Populate data fields in any merchant’s forms for any site consumer visits
Electronic wallet manufacturer and merchants from many sites must coordinate efforts
Wallet recognizes consumer information going into each field of given merchant’s forms
E-Business, Eighth Edition

58. Electronic Wallets (cont’d.)
Store shipping and billing information
Consumer’s first and last names, street address, city, state, country, postal code
Hold credit card names, numbers
Offers consumer choice of credit cards at online checkout
Hold electronic cash from various providers
E-Business, Eighth Edition

59. Electronic Wallets (cont’d.)
Electronic wallet used by business companies
Example: MasterCard
Most abandoned efforts
Current major browsers include feature to remember names, addresses, other commonly requested information
Browsers provides one-click Web form field completion
Two e-wallet arena survivors
Microsoft Windows Live ID
Yahoo! Wallet
E-Business, Eighth Edition

60. Microsoft Windows Live ID
Formerly called Passport, Microsoft .NET Passport
Single sign-in service
Includes server-side electronic wallet
Operated by Microsoft
All personal data entered into Windows Live ID wallet
Encrypted and password protected
E-Business, Eighth Edition

61. Microsoft Windows Live ID (cont’d.)
Four integrated services
Single sign-in service (SSI)
Allows user to sign in at participating Web site using username and password
Wallet service
Provides electronic wallet functions (secure storage, form completion of credit card, address information)
Kids service
Helps parents protect, control children’s online privacy
Public profiles
Allows consumers to create public page of information about themselves
E-Business, Eighth Edition

62. Yahoo! Wallet Server-side electronic wallet offered by Yahoo!
Completes order forms automatically
Identifying information, credit card payment information
Stores information
Several major credit, charge cards, Visa and MasterCard debit cards
Accepted by:
Thousands of Yahoo! Store merchants, Yahoo! Travel
Yahoo! Services
Premium storage, Web hosting fees
E-Business, Eighth Edition

63. Yahoo! Wallet (cont’d.) Yahoo! Advantage Privacy concern
Number of services and shops accommodate own wallet
Large number of merchants accept wallet
Privacy concern
Company issuing wallet has access to great deal of information about individual using wallet
E-Business, Eighth Edition

64. Stored-Value Cards Microchip smart card or magnetic strip plastic card
Records currency balance
Microchip versus magnetic strip
Microchip stores more information
Tiny microchip computer processor
Performs calculations and storage operations on card
Different microchip card reader needed
Examples: prepaid phone, copy, subway, bus cards
“Stored-value card” and “smart card” used interchangeably
E-Business, Eighth Edition

65. Magnetic Strip Cards Holds rechargeable value
Passive magnetic strip cards cannot:
Send or receive information
Increment or decrement cash value stored
Processing done on device into which card inserted
Magnetic strip cards and smart cards store electronic cash
Smart card better suited for Internet payment transactions
Has processing capability
E-Business, Eighth Edition

66. Smart Cards Stored-value card
Plastic card with embedded microchip
Credit, debit, charge cards store limited information on magnetic strip
Store information
About 100 times more than magnetic strip plastic card
Hold private user data
Financial facts, encryption keys, account information, credit card numbers, health insurance information, medical records
E-Business, Eighth Edition

67. Smart Cards (cont’d.) Safer than conventional credit cards
Information encrypted on smart card
Popular in Europe, parts of Asia
Public telephone calls, cable television programs
Hong Kong
Retail counters, restaurant cash registers have smart card readers
Octopus is the public transportation smart card: can be reloaded at transportation locations, 7-Eleven stores
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69. Smart Cards (cont’d.) Beginning to appear in United States
San Francisco TransLink integrated ticketing system for public transportation
Smart Visa card (2000)
Target Visa smart card (2002)
Smart Card Alliance
Advances smart card benefits
Promotes widespread acceptance of multiple-application smart card technology
Promotes compatibility among smart cards, card reader devices, applications
E-Business, Eighth Edition

70. Internet Technologies and the Banking Industry
Paper checks
Largest dollar volume of payments
Processed through world’s banking system
Other major payment forms
Involve banks one way or another
Banking industry Internet technologies
Providing new tools
Creating new threats
E-Business, Eighth Edition

71. Check Processing Physical check processing (banks, clearinghouses)
Person wrote check; retailer deposited check in bank account
Retailer’s bank sent paper check to clearinghouse
Clearinghouse managed fund transfer (consumer’s bank to retailer’s account)
Paper check transported to consumer’s bank
Send cancelled check to consumer
Many banks stopped sending cancelled checks to consumer
Provide PDF images of processed checks
E-Business, Eighth Edition

72. Check Processing (cont’d.)
Disadvantage of paper checks
Cost of transporting tons of paper checks
Float
Delay between the time person writes check and the time check clears person’s bank
Bank’s customer obtains free use of funds for few days
Bank loses use of funds for same time period
Can become significantly longer than a few days
E-Business, Eighth Edition

73. Check Processing (cont’d.)
Technologies helping banks reduce float
2004 U.S. law: Check Clearing for the 21st Century Act (Check 21)
Banks eliminate movement of physical checks entirely
Check 21-compliant world
Retailer scans customer's check
Scanned image transmitted instantly
Through clearing system
Posts almost immediately to both accounts
Eliminates transaction float
E-Business, Eighth Edition

74. Phishing Attacks Phishing expedition Basic structure
Technique for committing fraud against online businesses customers
Launched against all online business types
Particular concern to financial institutions
Customers expect high degree of personal information security
Basic structure
Attacker sends message
Large number of recipients
Account at targeted Web site
E-Business, Eighth Edition

75. Phishing Attacks (cont’d.)
Basic structure (cont’d.)
message tells recipient account is compromised
Recipient must log on to account to correct problem
message includes link
Appears to be Web site login page
Actually disguised perpetrator’s Web site
Recipient enters login name, password
Perpetrator captures
Uses to access recipient’s account
Access personal information, make purchases, withdraw funds
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77. Phishing Attacks (cont’d.)
Spear phishing
Phishing expedition that is carefully designed to target particular person or organization
Requires considerable research
Increases chance of being opened
Example: 2008 government stimulus checks
Phishing s appeared within one week of passage
E-Business, Eighth Edition

78. Phishing Attacks (cont’d.)
link disguises and tricks
Example of Web server that ignores all characters preceding
Example of disguised link:
Example of invisible phony site displayed due to JavaScript code:
E-Business, Eighth Edition

79. Phishing Attacks (cont’d.)
link disguises and tricks (cont’d.)
Pop-up windows
Look exactly like browser address bar
Including Web site graphics of financial institutions
Looks more convincing
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81. Organized Crime, Identity Theft, and Phishing Attacks
Organized crime (racketeering)
Unlawful activities conducted by highly organized, disciplined association for profit
Differentiated from less organized terrorist groups
Internet providing new criminal activity opportunities
Generates spam, phishing, identity theft
Identity theft
Criminal act where perpetrator gathers victim’s personal information
Uses information to obtain credit
Perpetrator runs up account charges and disappears
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83. Organized Crime, Identity Theft, and Phishing Attacks (cont’d.)
Large criminal organizations
Efficient perpetrators of identity theft
Exploit large amounts of personal information quickly and efficiently
Sell or trade information that is not of immediate use
Other worldwide organized crime entities
Zombie farm
Large number of computers implanted with zombie programs
Pharming attack
Hacker sells right to use zombie farm to organized crime association
E-Business, Eighth Edition

84. Organized Crime, Identity Theft, and Phishing Attacks (cont’d.)
Two elements in phishing
Collectors: collect information
Cashers: use information
Require different skills
Crime organizations facilitate transactions between collectors and cashers
Increases phishing activity efficiency, volume
Each year
More than a million people fall victim
Financial losses exceed $500 million
E-Business, Eighth Edition

85. Phishing Attack Countermeasures
Change protocol
Improve recipients’ ability to identify message source
Reduce phishing attack threat
Educate Web site users
Contract with consulting firms specializing in anti-phishing work
Monitor online chat rooms used by criminals
E-Business, Eighth Edition

86. Summary Online stores payment forms
Credit, debit, charge cards (payment cards)
Ubiquitous, convenient, easy to use
Electronic cash advantages and potential uses
Making micropayments, stored online or offline
Convenience of electronic wallets
Stored-value cards
Smart cards, magnetic strip cards
Banks process most monetary transactions
Use Internet technologies to process checks
Concerns: phishing expeditions, identity theft
E-Business, Eighth Edition