Are You Ready For
E-Commerce?
Last year, consumers bought an estimated $2.6 billion worth of goods through
the World Wide Web. Web-based sales are expected to grow to anywhere from $100 billion to
$600 billion in the next several years.
Last year's $2.6 billion, however, only accounts for about four one-hundredths of a
percent of total personal consumption in the United States alone. Electronic commerce - or
e-commerce - is a mine most buyers and sellers have yet to explore. One major concern
holding them back is the insecurity of Web transactions.
About 80 percent of on-line consumers use credit cards to pay for their purchases.
Account numbers are typed in and sent directly to the retailer's Web site when the order
is placed. In the interests of transaction security, however, some merchants take the
number during a subsequent telephone call.
Merchants who call their customers back are trying to avoid the first peril of
e-commerce. When a customer places an order through an on-line catalog, the information on
the order form -- including the credit card number -- is sent hurtling through the network
of computers and transmission lines that make up the Internet. Lurking in the side alleys
of that network are hackers waiting to steal account numbers. Merchants who place a
follow-up phone call to get the number are using old-fashioned technology to foil the
hackers. But there are more modern techniques.
The most common Internet security measure is an encryption technique called secure
sockets layer (SSL) that scrambles information sent over the network, protecting against
hackers who would steal the information. When an Internet user installs browser software,
SSL is automatically included.
But how does the merchant receiving the order know that the buyer is not using a stolen
credit card? At a store or restaurant, he can compare the signature on the back of the
card with the signature on the bill. The latest e-commerce development gives each
cardholder a personalized digital signature that confirms his identity.
Several credit card companies have joined together to implement this technology by
developing an open standard known as the secure electronic transactions (SET) protocol.
The SET protocol is now being tested by, among others, Chase Manhattan Bank and Wal-Mart,
They have established an on-line store (http://www.wal-mart.com) featuring more
than 40,000 items spanning 27 merchandise categories. A group of about 50 friendly users
(employees of the bank and the retailer) have been supplied with an SET "credit
card" to use to make purchases.
Instead of carrying a piece of plastic in a wallet, the customer has a digital
certificate that resides on the hard drive of the computer. The information on the
magnetic stripe on the back of the credit card has been replaced by the digital
certificate. Both the buyer and the seller authenticate the purchase using the
certificate.
If you would like to apply the SET protocol or other security measures to your Web
site, talk to your in-house computer personnel or the people who host your site.
As acceptance of e-commerce spreads, the forces of competition will force merchants to
establish stores on the Internet. Protecting transaction security will become another
facet of customer service.
Robert D. McRae is senior vice president and
information services director for Associated Industries of Florida.
May/June 1998 -- Florida Business Insight, 501 N. Adams St., Tallahassee,
Fla. 32302,
(850)224-7173, insight@aif.com
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