22:010:622 Internet Technology and E-Business Dr. Peter R. Gillett - - PowerPoint PPT Presentation
22:010:622 Internet Technology and E-Business Dr. Peter R. Gillett Associate Professor Department of Accounting & Information Systems Rutgers Business School Newark & New Brunswick Dr. Peter R Gillett March 26, 2003 1 Overview
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Associate Professor Department of Accounting & Information Systems Rutgers Business School – Newark & New Brunswick
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Privacy
Eavesdropping & spying Rights?
Protection against impersonation Message Integrity Non-repudiation
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Online Offline
Smart Cards
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“The State of the Art in Electronic Payment Systems”
Check-like systems: ATM, Credit/Debit Cards Integrity and authorization Out-band authorization (‘phone, mail, . . .) Password authorization (Digital) signature authorization Confidentiality
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Allow micro-payments! Will micro-payments facilitate many of the
The cost of cutting a physical check and the cost
Key attacks:
Fake terminal Freshness and replay (using nonces)
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Three Key Needs for Digital Cash
Privacy Authenticity Non-repudiation
Key features of “legacy” cash
Portable Recognizable Readily accepted Transferable Untraceable Anonymous Changeable
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Is digital cash counterfeiting worse then the
What are some other risks of digital cash?
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Ease of spending it all, very easily
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The need for a banking intermediary Simple withdrawal
Alice sends a withdrawal request to the bank The bank creates and digitally signs an e-coin The bank sends the coin to Alice and debits her
The hard part is person-to-person transactions
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Payment from Alice to Bob
Alice emails Bob the e-coin Bob forwards the e-coin to the bank The bank verifies its own e-signature The bank verifies the e-coin has not already been
Bank marks the e-coin as “spent” Bob’s account gets the money Bob gives Alice the bicycle . . .
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Prove you know something without revealing
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Checkfree Clickshare Digicash (eCash) eCoin.Net InternetCash Millicent PayPal Scrip
Beenz Flooz
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Transferability issue with multiple banks
Swedish Mail (SM) and Mark-Twain Bank (MT)
How are these currencies transferable? At what rates? Who verifies the transfer?
Traditional cash: the payer’s default does not
Hopefully, central banks will not default
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National settlement systems By-and-large: internationally no loss-sharing
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Opportunity for small business?
For individuals to use it, it must be cheap and
Also, for B2B, to a lesser extent
Issues of taxation Money laundering Exchange rates State/country money supplies Cross-country financial crisis
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Very low cost transactions Micro-payments possible Large transactions made up of many smaller
No borders and no records! Most of our money is already electronic in many
World currency?
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Is digital-cash a form of privately issued
Can a bank in some far-away land have valid
The possibility of confusion abounds! Whose cash will you accept? Can a central bank act as a meta-intermediary
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Shipping and billing information Credit cards names, numbers, expirations Electronic cash
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What is a Smart Card? Embedded chip for cryptography and storage of
Most are made in Gemenos, France Economics:
2000: $2.4 Billion, 2004: $8 Billion Cellular? Popular in Europe for years Big US players getting in…
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Amounts ID for accounts (less common)
Readers and other devices, cumbersome and
Theft?
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Security Ease of use
Hardware Peer-to-Peer hard
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Fraud protection Worldwide acceptance Currency conversion Convenience Deferred payment
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Not everyone can get one! Merchants need to become authorized Set-up costs and procedures for merchants Transaction fees preclude minor purchases Generates information trail on purchasing
Security concerns
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Brokerage Advertising Infomediary Merchant Manufacturer Affiliate Community Subscription Utility (fee-for-transaction) Disintermediation and reintermediation
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Offer in various states: final offer, all or none,
Many participants, buyers, sellers, etc. Open information exchanges Well defined process flow Settlement and confirmations well defined
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Auction Types
English (Open-cry) auction: start low, encourage
Yankee auctions Dutch auction: start with a “high price” and keep
Vickrey auction: the auction winner gets the item at
Double auctions: stock markets Sealed Bid Auctions and the Internet
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Many bidders Information Buyers and sellers benefit Others?
Location (not on the Internet) Others?
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Most are B2C strategy implementations Some B2B have taken hold Milacron Milpro example: machine tools and lots
Site includes:
Catalogue Ordering, tracking and locating services Machinery flea-market Discussion rooms
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Customers (B2B, no less!) stay longer Check site regularly Sticky web site Build customer loyalty Get the opinions of diverse customer base Branding using a web site
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Dell and Cisco: disintermediate middlemen
Sell direct over the Internet
Are e-hubs becoming the new middlemen? Estimated $20 Billion in 2002 e-hub commerce B2C hubs are one-way hubs (Sarnoff networks) B2B hubs are often two-way hubs (Metcalfe
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It is argued that the benefit of B2C hubs
The B2B hubs increase in square terms to
The issue is point-to-point: the B2B hubs focus
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Amazon: for the consumer no difference if 100
For an industrial auction, the more suppliers and
Also, true on eBay Domain expertise Customer acquisition and retention Many more efficiencies than in traditional
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Focuses on one industry Why?
Focus on same function or business operation Why?
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If large amount of fragmentation between
If big inefficiencies in supply chains
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Can create critical mass of suppliers and
Domain knowledge and industrial deals Information organization: master catalogues,
Ability to leverage v-hubs offerings
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Examples: I-mark.com, processors.com,
Likely successes
Standardization of industry or area Workflow and process knowledge expertise Complement process automation Ability to customize processes for each firm served
Different industries do things differently
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Web presence goals
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Purchasing Procurement Logistics EDI
ASC X12 Standards
VANs Open EDI via the Internet
New standards?
Financial EDI - EFTs
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Value creation Technology
ERP B2B Commerce Software Supply Chain Management Software
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Supply Chain Management via the Web
Share information about customer demand Rapid notification of design changes and adjustments Provide specifications and drawings more efficiently Faster processing of transactions Reduce the cost of handling transactions Reduce errors in entering transaction data Share information about defect rates and types