Electronic Commerce - A Penny for your thoughts

Mark Cathcart, penny4.prz
© 1997 IBM United Kingdom Limited
November 19th, 1997
GUIDE SHARE Europe - UK Region
Annual Conference
© 1997 IBM United Kingdom Limted
Mark Cathcart, IT Consultant, Software Strategy,
S/390 Division, Europe, Middle East & Africa
mark_cathcart@uk.ibm.com
http://www.s390.ibm.com/sections/corner
e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?
© 1997 Copyright IBM United Kingdom Limited penny4.PRZ
Mark S. Cathcart Page 1

Asymmetric CryptographyAsymmetric CryptographyAsymmetric CryptographyAsymmetric CryptographyAsymmetric CryptographyAsymmetric CryptographyAsymmetric CryptographyAsymmetric Cryptography
decryptcipher
text
plain
text
plain
text
encrypt
public
key
private
key
Asymmetric encryption:Asymmetric encryption:
RSA: Rivest, Shamir, AdlemanRSA: Rivest, Shamir, Adleman
two keys: one private, one publictwo keys: one private, one public
key length: 512 to 2048 bitskey length: 512 to 2048 bits
100x slower than DES100x slower than DES

Understanding Public and Private KeysUnderstanding Public and Private KeysUnderstanding Public and Private KeysUnderstanding Public and Private KeysUnderstanding Public and Private KeysUnderstanding Public and Private KeysUnderstanding Public and Private KeysUnderstanding Public and Private Keys
TOP SECRET
DO NOT
DISTRIBUTE
Open House
All Visitors Welcome
Private Keys:Private Keys:
Generated by user's browserGenerated by user's browser
Extremely long string of charactersExtremely long string of characters
Known only to user and must be kept secretKnown only to user and must be kept secret
Data encrypted with private key can only beData encrypted with private key can only be
decrypted with public keydecrypted with public key
Cannot be derived from public keyCannot be derived from public key
Public Keys:Public Keys:
Generated along with private keyGenerated along with private key
Extremely long string of charactersExtremely long string of characters
Made available to public or can be listed in directoriesMade available to public or can be listed in directories
Data encrypted with public key can only beData encrypted with public key can only be
decrypted with private keydecrypted with private key

AgendaAgendaAgendaAgendaAgendaAgendaAgendaAgenda
InternetInternet
Future, Today, TrendsFuture, Today, Trends
ImplicationsImplications
Legal, Social, Consumer LifestyleLegal, Social, Consumer Lifestyle
e-Commercee-Commerce
Why, What, WhoWhy, What, Who
Market, Examples, ProcessMarket, Examples, Process
How to get e-Commerce enabledHow to get e-Commerce enabled

The Internet of the futureThe Internet of the futureThe Internet of the futureThe Internet of the futureThe Internet of the futureThe Internet of the futureThe Internet of the futureThe Internet of the future
Will be a mass medium, like television or moviesWill be a mass medium, like television or movies
In fact, it may be indistinguishable from televisionIn fact, it may be indistinguishable from television
Delivered via cable or satelliteDelivered via cable or satellite
Viewed on a big screen with high fidelity soundViewed on a big screen with high fidelity sound
Mostly professionally-produced content for commercialMostly professionally-produced content for commercial
purposespurposes
Unlike television, people can produce their own contentUnlike television, people can produce their own content
and make it easily available to a global audienceand make it easily available to a global audience

Transactional privacy is assured via encryption andTransactional privacy is assured via encryption and
digital signatures, even across international boundariesdigital signatures, even across international boundaries
Micropayment systems allow content providers to sellMicropayment systems allow content providers to sell
information for a very small fee per transaction, butinformation for a very small fee per transaction, but
with a very large number of transactionswith a very large number of transactions

Business transactions are routinely accomplished overBusiness transactions are routinely accomplished over
the Netthe Net
Both business-to-business and consumerBoth business-to-business and consumer
Multiple payment methods:Multiple payment methods:
Credit CardCredit Card
Direct DebitDirect Debit
Digital CashDigital Cash
Purchase OrderPurchase Order

The Internet todayThe Internet todayThe Internet todayThe Internet todayThe Internet todayThe Internet todayThe Internet todayThe Internet today
Changed from a network of computers to a network ofChanged from a network of computers to a network of
humanshumans
Changed from academic curiosity toChanged from academic curiosity to
a daily part of the lives of millionsa daily part of the lives of millions
but not all of those millions actually use it, though!but not all of those millions actually use it, though!
Coming soon, Internet2Coming soon, Internet2

Internet TrendsInternet TrendsInternet TrendsInternet TrendsInternet TrendsInternet TrendsInternet TrendsInternet Trends
Domain Names up 43%Domain Names up 43%
Largest Jump everLargest Jump ever
Number of "Number of "Host ComputersHost Computers" up 21%" up 21%
Increase of 3.39 millionIncrease of 3.39 million
In last 6-months!In last 6-months!

Internet Trends (2)Internet Trends (2)Internet Trends (2)Internet Trends (2)Internet Trends (2)Internet Trends (2)Internet Trends (2)Internet Trends (2)
Where is it all going ?Where is it all going ?
1 .Com1 .Com - Commercial- Commercial
2 .edu2 .edu - Education- Education
3 .net3 .net - Networks- Networks
4 .jp4 .jp - Japan- Japan
5 .uk5 .uk - UK!- UK!
Jan - July 1997Jan - July 1997
Network Wizards Inc. SurveyNetwork Wizards Inc. Survey
http://www.nw.comhttp://www.nw.com

What is it being used for ?What is it being used for ?What is it being used for ?What is it being used for ?What is it being used for ?What is it being used for ?What is it being used for ?What is it being used for ?
88%88% - Surfing for Information- Surfing for Information
83%83% - Sending e-mail- Sending e-mail
80%80% - Informal research- Informal research
70%70% - Browsing company home pages- Browsing company home pages
50% up from last year50% up from last year
90% of those looking for product information90% of those looking for product information
1997 Survey by Market Facts for Advertising Age1997 Survey by Market Facts for Advertising Age

International BoundariesInternational BoundariesInternational BoundariesInternational BoundariesInternational BoundariesInternational BoundariesInternational BoundariesInternational Boundaries
They don't exist on the InternetThey don't exist on the Internet
Data on a machine in one country is accessible fromData on a machine in one country is accessible from
any other countryany other country
The user may not even know where the information isThe user may not even know where the information is
storedstored
Enforcing local standards is impossibleEnforcing local standards is impossible
CryptographyCryptography
"Unacceptable" content"Unacceptable" content

Legal ImplicationsLegal ImplicationsLegal ImplicationsLegal ImplicationsLegal ImplicationsLegal ImplicationsLegal ImplicationsLegal Implications
Supply of goodsSupply of goods
BillingBilling
Country Legal regulation (law)Country Legal regulation (law)
TaxTax
Data protectionData protection

Copyright and PaymentsCopyright and PaymentsCopyright and PaymentsCopyright and PaymentsCopyright and PaymentsCopyright and PaymentsCopyright and PaymentsCopyright and Payments
Approaches to the copyright problemApproaches to the copyright problem
Digital WatermarkingDigital Watermarking
CryptolopesCryptolopes
Approaches to the payment problemApproaches to the payment problem
Subscription-based servicesSubscription-based services
Digital CashDigital Cash
Micropayment systemsMicropayment systems

Social / Community ImplicationsSocial / Community ImplicationsSocial / Community ImplicationsSocial / Community ImplicationsSocial / Community ImplicationsSocial / Community ImplicationsSocial / Community ImplicationsSocial / Community Implications
Information haves/have notsInformation haves/have nots
Education and Access to informationEducation and Access to information
On the Web, no one can see you surf!On the Web, no one can see you surf!

Consumer LifestyleConsumer LifestyleConsumer LifestyleConsumer LifestyleConsumer LifestyleConsumer LifestyleConsumer LifestyleConsumer Lifestyle
Time Poverty drives demand for:Time Poverty drives demand for:
7/24 access7/24 access
high levels of customer service and conveniencehigh levels of customer service and convenience
Growing number of single parent and dual incomeGrowing number of single parent and dual income
householdshouseholds
Increasing consumer technology literacyIncreasing consumer technology literacy
Access to technology widespreadAccess to technology widespread
Shopping habits changing dramaticallyShopping habits changing dramatically
11/1997 Shell UK Survey11/1997 Shell UK Survey

Why e-Commerce ?Why e-Commerce ?Why e-Commerce ?Why e-Commerce ?Why e-Commerce ?Why e-Commerce ?Why e-Commerce ?Why e-Commerce ?
Power migrating to buyersPower migrating to buyers
Information assetsInformation assets
Increase revenueIncrease revenue
Time to marketTime to market
DifferentiationDifferentiation
Reduce CostsReduce Costs

What is e-Commerce ?What is e-Commerce ?What is e-Commerce ?What is e-Commerce ?What is e-Commerce ?What is e-Commerce ?What is e-Commerce ?What is e-Commerce ?
InquiryInquiry
OrderOrder
AuthorisationAuthorisation
PaymentPayment
FulfillmentFulfillment
Any or all of the aboveAny or all of the above

Who can use e-Commerce ?Who can use e-Commerce ?Who can use e-Commerce ?Who can use e-Commerce ?Who can use e-Commerce ?Who can use e-Commerce ?Who can use e-Commerce ?Who can use e-Commerce ?
Business to businessBusiness to business
$1.3 Billion in 1996$1.3 Billion in 1996
$176 Billion in 2001$176 Billion in 2001
IDC SurveyIDC Survey
Internal orderingInternal ordering
IntranetIntranet - 28% ROI- 28% ROI
Publish onlyPublish only - 22% ROI- 22% ROI
CollaborationCollaboration - 40% ROI- 40% ROI
Real-time TxReal-time Tx - 68% ROI- 68% ROI
Meta Group StudyMeta Group Study
Consumer to businessConsumer to business

Is there a market for e-Commerce ?Is there a market for e-Commerce ?Is there a market for e-Commerce ?Is there a market for e-Commerce ?Is there a market for e-Commerce ?Is there a market for e-Commerce ?Is there a market for e-Commerce ?Is there a market for e-Commerce ?
UKUK
Exceed £2.7Billion by Year 2000 (IDC)Exceed £2.7Billion by Year 2000 (IDC)
Culture AlignmentCulture Alignment
11/1997 Shell UK Survey11/1997 Shell UK Survey
Spurred by growth of InternetSpurred by growth of Internet
5,000 commerce sites online5,000 commerce sites online
Year on Year growthYear on Year growth
""Whole planet online by 2003/2004Whole planet online by 2003/2004""

Are there examples of e-Commerce ?Are there examples of e-Commerce ?Are there examples of e-Commerce ?Are there examples of e-Commerce ?Are there examples of e-Commerce ?Are there examples of e-Commerce ?Are there examples of e-Commerce ?Are there examples of e-Commerce ?
Book sellersBook sellers
amazon.comamazon.com - Largest?- Largest?
Bookserve.comBookserve.com - Supplier to amazom- Supplier to amazom
- Subsiduary of Ingram Entertainment- Subsiduary of Ingram Entertainment
http://www.bookshop.co.ukhttp://www.bookshop.co.uk
TicketsTickets
Airlines, Theatres, Opera HouseAirlines, Theatres, Opera House
Shops on the netShops on the net
http://www.shopsonthenet.co.ukhttp://www.shopsonthenet.co.uk

TicketsTickets

What's the e-Commerce process ?What's the e-Commerce process ?What's the e-Commerce process ?What's the e-Commerce process ?What's the e-Commerce process ?What's the e-Commerce process ?What's the e-Commerce process ?What's the e-Commerce process ?
Typical Credit Card ProcessTypical Credit Card Process
Clearing
Goods
Payment
BANK
Acquirer BankIssuer Bank
Consumer Merchant

How to get e-Commerce enabled ?How to get e-Commerce enabled ?How to get e-Commerce enabled ?How to get e-Commerce enabled ?How to get e-Commerce enabled ?How to get e-Commerce enabled ?How to get e-Commerce enabled ?How to get e-Commerce enabled ?
1. Create a web site1. Create a web site - Product Info & Service- Product Info & Service
2. Access to service2. Access to service - Self Service ie. Loyalty programs- Self Service ie. Loyalty programs
3. Business Transactions3. Business Transactions
Integrate with existing applications and dataIntegrate with existing applications and data
Avoid Islands of dataAvoid Islands of data

Electronic Commerce with OS/390Electronic Commerce with OS/390Electronic Commerce with OS/390Electronic Commerce with OS/390Electronic Commerce with OS/390Electronic Commerce with OS/390Electronic Commerce with OS/390Electronic Commerce with OS/390
Web browser
Wallet
Net.Commerce
e-Till
Merchant
Payment gateway
Acquirer
CommercePOINT WalletCommercePOINT Wallet
Helper application for the Web browserHelper application for the Web browser
Net.CommerceNet.Commerce
Electronic mall and store frontElectronic mall and store front
CommercePOINT eTillCommercePOINT eTill
Processes SET protocol elementsProcesses SET protocol elements
CommercePOINT Payment GatewayCommercePOINT Payment Gateway
Translates SET authorization requestsTranslates SET authorization requests
IBM Registry for SETIBM Registry for SET
Certificate managementCertificate management

CommercePOINT WalletCommercePOINT WalletCommercePOINT WalletCommercePOINT WalletCommercePOINT WalletCommercePOINT WalletCommercePOINT WalletCommercePOINT Wallet
Helper application forHelper application for
Web browsersWeb browsers
Launched by wakeup messageLaunched by wakeup message
sent by the Net.Commercesent by the Net.Commerce
server (a page returned overserver (a page returned over
HTTP that has a specific MIMEHTTP that has a specific MIME
type)type)
Allows a choice to be made fromAllows a choice to be made from
multiple payment instrumentsmultiple payment instruments
On buy, SET protocol flows areOn buy, SET protocol flows are
initiated between consumer andinitiated between consumer and
merchantmerchant

Net.CommerceNet.CommerceNet.CommerceNet.CommerceNet.CommerceNet.CommerceNet.CommerceNet.Commerce
Merchant
Goods
Payment
Net.Commerce
eTill
BANK
Acquirer Bank
Consumer
Electronic mall and store front forElectronic mall and store front for
business-to-consumer or business-to-businessbusiness-to-consumer or business-to-business
Dynamic HTML to customise catalog web pages -Dynamic HTML to customise catalog web pages -
for special offers, target customer groups...for special offers, target customer groups...
Multipayment protocol function and SETMultipayment protocol function and SET
Browser-based clients for Site management, StoreBrowser-based clients for Site management, Store
management and Content managementmanagement and Content management
Exploits DB2 for pricing and product informationExploits DB2 for pricing and product information
Option to reuse existing catalog web sitesOption to reuse existing catalog web sites
Integrates with existing systems:Integrates with existing systems:
fulfillment,fulfillment,
tax calculation,tax calculation,
payment...payment...

CommercePOINT Payment GatewayCommercePOINT Payment GatewayCommercePOINT Payment GatewayCommercePOINT Payment GatewayCommercePOINT Payment GatewayCommercePOINT Payment GatewayCommercePOINT Payment GatewayCommercePOINT Payment Gateway
Payment
Gateway
Translate SET protocol elements into financial
institute-specific credit card authorization request
Translate financial institute-specific credit card
authorization responses into SET protocol elements
Existing financial networks are used for interaction
between acquirer and issuer financial institutions
Pre-existing protocols
SET
over
HTTP
Issuer Bank
BANK
Acquirer Bank
Merchant

IBM Registry (SET Compliant)IBM Registry (SET Compliant)IBM Registry (SET Compliant)IBM Registry (SET Compliant)IBM Registry (SET Compliant)IBM Registry (SET Compliant)IBM Registry (SET Compliant)IBM Registry (SET Compliant)
Generates, distributes, and manages Secure ElectronicGenerates, distributes, and manages Secure Electronic
Transactions (SET) certificates via the WebTransactions (SET) certificates via the Web
Merchant, cardholder, and payment gateway certificatesMerchant, cardholder, and payment gateway certificates
Facilitates secure payments over the Internet using the SETFacilitates secure payments over the Internet using the SET
protocolprotocol
Provides a registration processProvides a registration process
Can function as:Can function as:
Cardholder Certificate AuthorityCardholder Certificate Authority
Merchant CAMerchant CA
Payment CAPayment CA
Supports on-line requests using protocols defined by the SETSupports on-line requests using protocols defined by the SET
specification for HTTP transmission with a customer-tailoredspecification for HTTP transmission with a customer-tailored
interfaceinterface

A complementary channel to marketA complementary channel to market
Customer loyalty earned through service andCustomer loyalty earned through service and
accessibilityaccessibility
Integration with existing business processesIntegration with existing business processes
Ability to scale the solution with the businessAbility to scale the solution with the business
opportunityopportunity
Surety for financial transactions in an insecureSurety for financial transactions in an insecure
environmentenvironment
ARE YOU READY} for e-business?ARE YOU READY} for e-business?ARE YOU READY} for e-business?ARE YOU READY} for e-business?ARE YOU READY} for e-business?ARE YOU READY} for e-business?ARE YOU READY} for e-business?ARE YOU READY} for e-business?

November 19th, 1997
GUIDE SHARE Europe - UK Region
Annual Conference
© 1997 IBM United Kingdom Limted
Mark Cathcart, IT Consultant, Software Strategy,
S/390 Division, Europe, Middle East & Africa
mark_cathcart@uk.ibm.com
http://www.s390.ibm.com/sections/corner
e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?e-Commerce: A Penny for your thoughts ?

P
&
C
y
p
b
d
m
If you have the correct key you can overlay it and read the
message within, which will be to your benefit!

an
ou see how
rivacy can
e maintained by
oing electronic
essaging?
ublic keys can be given out
private keys retained by the
user for complete security
This is private key number 1.

This is private key number 2.
ongratulations
ou have won a
rize
y
ecrypting this
essage.
lease bring your handout
key to me to collect your
prize afterwards.

Electronic Commerce - A Penny for your thoughts

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Electronic Commerce - A Penny for your thoughts