Ecommerce business technology society Ecommerce business technology society

E-commerce: business. technology. society. E-commerce business. technology. society. Global Edition seventh edition Kenneth C. Laudon Carol Guercio Traver Copyright © 2011 Pearson Education, Ltd. Copyright © 2011 Pearson Education,

Chapter 4 E-commerce Security and Payment Copyright ©© 2010 Pearson Education, Inc. Copyright 2011

Cyberwar: Mutually Assured Destruction 2. 0 Class Discussion n What is the difference between hacking and cyberwar? n Why has cyberwar become more potentially devastating in the past decade? n What percentage of computers have been compromised by stealth malware programs? n Will a political solution to MAD 2. 0 be effective enough? Copyright © 2011 Pearson Education, Ltd. Slide 5 -3

The E-commerce Security Environment n Overall size and losses of cybercrime unclear v Reporting issues n 2009 CSI survey: 49% of respondent firms detected security breach in last year v Of those that shared numbers, average loss $288, 000 n Underground economy marketplace: v Stolen information stored on underground economy servers Copyright © 2011 Pearson Education, Ltd. Slide 5 -4

Types of Attacks Against Computer Systems (Cybercrime) Figure 4. 1 SOURCE: Based on data

What Is Good E-commerce Security? n To achieve highest degree of security v New technologies v Organizational policies and procedures v Industry standards and government laws n Other factors v Time value of money v Cost of security vs. potential loss v Security often breaks at weakest link Copyright © 2011 Pearson Education, Ltd. Slide 5 -6

The E-commerce Security Environment Figure 4. 2 Copyright © 2011 Pearson Education, Ltd. Slide

Table 4. 2 Copyright © 2011 Pearson Education, Ltd. Slide 5 -8

The Tension Between Security and Other Values n Ease of use: v The more security measures added, the more difficult a site is to use, and the slower it becomes n Public safety and criminal uses of the Internet v Use of technology by criminals to plan crimes or threaten nation-state Copyright © 2011 Pearson Education, Ltd. Slide 5 -9

Security Threats in the E-commerce Environment n Three key points of vulnerability: 1. Internet communications channels 2. Server level 3. Client level Copyright © 2011 Pearson Education, Ltd. Slide 5 -10

A Typical E-commerce Transaction SOURCE: Boncella, 2000. Figure 4. 3 Copyright © 2011 Pearson

Vulnerable Points in an E-commerce Environment SOURCE: Boncella, 2000. Figure 4. 4 Copyright ©

Most Common Security Threats in the E-commerce Environment n Malicious code v Viruses v Worms v Trojan horses v Bots, botnets n Unwanted programs v Browser parasites v Adware v Spyware Copyright © 2011 Pearson Education, Ltd. Slide 5 -13

Most Common Security Threats (cont. ) n Phishing v Deceptive online attempt to obtain confidential information v Social engineering, e-mail scams, spoofing legitimate Web sites v Use of information to commit fraudulent acts (access checking accounts), steal identity n Hacking and cybervandalism v Hackers vs. crackers v Cybervandalism: Intentionally disrupting, defacing, destroying Web site v Types of hackers: White hats, black hats, grey hats Copyright © 2011 Pearson Education, Ltd. Slide 5 -14

Most Common Security Threats (cont. ) n Credit card fraud/theft v Hackers target merchant servers; use data to establish credit under false identity n Spoofing n Pharming n Spam/junk Web sites n Denial of service (Do. S) attack Hackers flood site with useless traffic to overwhelm network v Distributed denial of service (DDo. S) attack v Copyright © 2011 Pearson Education, Ltd. Slide 5 -15

Most Common Security Threats (cont. ) n Sniffing v n Eavesdropping program that monitors information traveling over a network Insider jobs v Single largest financial threat n Poorly designed server and client software n Mobile platform threats v Same risks as any Internet device v Malware, botnets, vishing/smishing Copyright © 2011 Pearson Education, Ltd. Slide 5 -16

Technology Solutions n Protecting Internet communications (encryption) n Securing channels of communication (SSL, S-HTTP, VPNs) n Protecting networks (firewalls) n Protecting servers and clients Copyright © 2011 Pearson Education, Ltd. Slide 5 -17

Tools Available to Achieve Site Security Figure 4. 7 Copyright © 2011 Pearson Education,

Encryption n Encryption v Transforms data into cipher text readable only by sender and receiver v Secures stored information and information transmission v Provides 4 of 6 key dimensions of e-commerce security: 1. 2. 3. 4. Message integrity Nonrepudiation Authentication Confidentiality Copyright © 2011 Pearson Education, Ltd. Slide 5 -19

Symmetric Key Encryption n Sender and receiver use same digital key to encrypt and decrypt message n Requires different set of keys for each transaction n Strength of encryption v Length of binary key used to encrypt data n Advanced Encryption Standard (AES) v Most widely used symmetric key encryption v Uses 128 -, 192 -, and 256 -bit encryption keys n Other standards use keys with up to 2, 048 bits Copyright © 2011 Pearson Education, Ltd. Slide 5 -20

Public Key Encryption n Uses two mathematically related digital keys v Public key (widely disseminated) v Private key (kept secret by owner) n Both keys used to encrypt and decrypt message n Once key used to encrypt message, same key cannot be used to decrypt message n Sender uses recipient’s public key to encrypt message; recipient uses his/her private key to decrypt it Copyright © 2011 Pearson Education, Ltd. Slide 5 -21

Public Key Cryptography – A Simple Case Figure 4. 8 Copyright © 2011 Pearson

Public Key Encryption using Digital Signatures and Hash Digests n Hash function: v Mathematical algorithm that produces fixed-length number called message or hash digest Hash digest of message sent to recipient along with message to verify integrity n Hash digest and message encrypted with recipient’s public key n Entire cipher text then encrypted with recipient’s private key – creating digital signature – for authenticity, nonrepudiation n Copyright © 2011 Pearson Education, Ltd. Slide 5 -23

Public Key Cryptography with Digital Signatures Figure 4. 9 Copyright © 2011 Pearson Education,

Digital Envelopes n Address weaknesses of: v Public key encryption n Computationally slow, decreased transmission speed, increased processing time v Symmetric key encryption n Insecure transmission lines n Uses symmetric key encryption to encrypt document n Uses public key encryption to encrypt and send symmetric key Copyright © 2011 Pearson Education, Ltd. Slide 5 -25

Creating a Digital Envelope Figure 4. 10 Copyright © 2011 Pearson Education, Ltd. Slide

Digital Certificates and Public Key Infrastructure (PKI) n Digital certificate includes: v Name of subject/company v Subject’s public key v Digital certificate serial number v Expiration date, issuance date v Digital signature of CA n Public Key Infrastructure (PKI): v CAs and digital certificate procedures v PGP Copyright © 2011 Pearson Education, Ltd. Slide 5 -27

Digital Certificates and Certification Authorities Figure 4. 11 Copyright © 2011 Pearson Education, Ltd.

Limits to Encryption Solutions n Doesn’t protect storage of private key v PKI not effective against insiders, employees v Protection of private keys by individuals may be haphazard n No guarantee that verifying computer of merchant is secure n CAs are unregulated, self-selecting organizations Copyright © 2011 Pearson Education, Ltd. Slide 5 -29

Insight on Society Web Dogs and Anonymity Class Discussion n What are some of the benefits of continuing the anonymity of the Internet? n What are the disadvantages of an identity system? n Are there advantages to an identity system beyond security? n Who should control a central identity system? Copyright © 2011 Pearson Education, Ltd. Slide 5 -30

Securing Channels of Communication n Secure Sockets Layer (SSL): v Establishes a secure, negotiated client-server session in which URL of requested document, along with contents, is encrypted n S-HTTP: v Provides a secure message-oriented communications protocol designed for use in conjunction with HTTP n Virtual Private Network (VPN): v Allows remote users to securely access internal network via the Internet, using Point-to-Point Tunneling Protocol (PPTP) Copyright © 2011 Pearson Education, Ltd. Slide 5 -31

Secure Negotiated Sessions Using SSL Figure 4. 12 Copyright © 2011 Pearson Education, Ltd.

Protecting Networks n Firewall v Hardware or software v Uses security policy to filter packets v Two main methods: 1. Packet filters 2. Application gateways n Proxy servers (proxies) v Software servers that handle all communications originating from or being sent to the Internet Copyright © 2011 Pearson Education, Ltd. Slide 5 -33

Firewalls and Proxy Servers Figure 4. 13 Copyright © 2011 Pearson Education, Ltd. Slide

Protecting Servers and Clients n Operating system security enhancements v. Upgrades, patches n Anti-virus software: v. Easiest and least expensive way to prevent threats to system integrity v. Requires daily updates Copyright © 2011 Pearson Education, Ltd. Slide 5 -35

Management Policies, Business Procedures, and Public Laws n U. S. firms and organizations spend 12% of IT budget on security hardware, software, services ($120 billion in 2009) n Managing risk includes v Technology v Effective management policies v Public laws and active enforcement Copyright © 2011 Pearson Education, Ltd. Slide 5 -36

A Security Plan: Management Policies n Risk assessment n Security policy n Implementation plan v Security organization v Access controls v Authentication procedures, inc. biometrics v Authorization policies, authorization management systems n Security audit Copyright © 2011 Pearson Education, Ltd. Slide 5 -37

Developing an E-commerce Security Plan Figure 4. 14 Copyright © 2011 Pearson Education, Ltd.

The Role of Laws and Public Policy n Laws that give authorities tools for identifying, tracing, prosecuting cybercriminals: National Information Infrastructure Protection Act of 1996 v USA Patriot Act v Homeland Security Act v n Private and private-public cooperation CERT Coordination Center v US-CERT v n Government policies and controls on encryption software n OECD guidelines Copyright © 2011 Pearson Education, Ltd. Slide 5 -39

Insight on Technology Think Your Smartphone Is Secure? Class Discussion n What types of threats do smartphones face? n Are there any particular vulnerabilities to this type of device? n What did Nicolas Seriot’s “Spyphone” prove? n Are apps more or less likely to be subject to threats than traditional PC software programs? Copyright © 2011 Pearson Education, Ltd. Slide 5 -40

Types of Payment Systems n Cash v Most common form of payment in terms of number of transactions v Instantly convertible into other forms of value without intermediation n Checking Transfer v Second most common payment form in U. S. in terms of number of transactions n Credit Card v Credit card associations v Issuing banks v Processing centers Copyright © 2011 Pearson Education, Ltd. Slide 5 -41

Types of Payment Systems (cont. ) n Stored Value v Funds deposited into account, from which funds are paid out or withdrawn as needed, e. g. debit cards, gift certificates v Peer-to-peer payment systems n Accumulating Balance v Accounts that accumulate expenditures and to which consumers make period payments v e. g. Utility, phone, American Express accounts Copyright © 2011 Pearson Education, Ltd. Slide 5 -42

Table 4. 6 Copyright © 2011 Pearson Education, Ltd. Slide 5 -43

E-commerce Payment Systems n Credit cards v 55 % of online payments in 2009 (U. S. ) n Debit cards v 28 % online payments in 2009 (U. S. ) n Limitations of online credit card payment v Security v Cost v Social equity Copyright © 2011 Pearson Education, Ltd. Slide 5 -44

How an Online Credit Transaction Works Figure 4. 16 Copyright © 2011 Pearson Education,

E-commerce Payment Systems (cont. ) n Digital wallets v Emulates functionality of wallet by authenticating consumer, storing and transferring value, and securing payment process from consumer to merchant v Early efforts to popularize failed v Newest effort: Google Checkout n Digital cash v Value storage and exchange using tokens v Most early examples have disappeared; protocols and practices too complex Copyright © 2011 Pearson Education, Ltd. Slide 5 -46

E-commerce Payment Systems (cont. ) n Online stored value systems v Based on value stored in a consumer’s bank, checking, or credit card account v Pay. Pal, smart cards n Digital accumulated balance payment v Users accumulate a debit balance for which they are billed at the end of the month n Digital checking: v Extends functionality of existing checking accounts for use online Copyright © 2011 Pearson Education, Ltd. Slide 5 -47

Mobile Payment Systems n Use of mobile handsets as payment devices wellestablished in Europe, Japan, South Korea n Japanese mobile payment systems v E-money (stored value) v Mobile debit cards v Mobile credit cards n Not as well established yet in U. S v Majority of purchases are digital content for use on cell phone Copyright © 2011 Pearson Education, Ltd. Slide 5 -48

Insight on Business Mobile Payment’s Future: Wavepayme, Textpayme Group Discussion n What technologies make mobile payment more feasible now than in the past? n Describe some new experiments that are helping to develop mobile payment systems. n How has Pay. Pal responded? n Why haven’t mobile payment systems grown faster? What factors will spur their growth? Copyright © 2011 Pearson Education, Ltd. Slide 5 -49

Electronic Billing Presentment and Payment (EBPP) n Online payment systems for monthly bills n 65% + of households in 2010 used some EBPP; expected to continue to grow n Two competing EBPP business models: v Biller-direct (dominant model) v Consolidator n Both models are supported by EBPP infrastructure providers Copyright © 2011 Pearson Education, Ltd. Slide 5 -50

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