More
and more economies are realizing the potential of the opportunity presented by
online commerce, and governments are gearing themselves to harness it. India is
not lagging much behind, although its sheer geographical size and the population
post huge constraints. It has emerged as a country with one of the highest
growths in Internet usage.
The Boston Consulting group predicts that the growth of business-to-business
online purchasing in the US will rise from $1.2 trillion in 2000 to $4.8
trillion by 2004, accounting for nearly forty percent of the offline ordering.
The Gartner group predicts Rs 300 crore of business-to-business online
purchasing in India, by 2004. Online commerce not only provides a more efficient
and effective means of conducting business for corporates, irrespective of their
size, but also opens up new markets. True online commerce is not possible
without a proper online payment mechanism in place, as a true online purchase is
possible only when the buyer can pay online and the seller can receive those
payments online.
Globally, banks have realized this and are quickly deploying technologies to
serve their clients better. Some initiatives worth mentioning are that of
NETS-Singapore, which is a consortium of five different banks using shared
infrastructure for inter-bank switching and settlement through a Third Party
Service Provider (TSP), viz. Cash Card International. US initiatives worth
mentioning are First Data Corporation and Checkfree who provide third party
transaction services.
However, this is an area where our country has still to catch up, with only a
bunch of private banks providing or building up these facilities for their
clients. Given the Indian scenario of nationalized banks who are still
struggling to establish basic connectivity between their branches to provide
"anywhere, anytime banking", the very thought of commerce banking
looks like a far fetched idea.
In India, Global Tele-Systems Ltd. is providing third party processing and
switching services to the banks to enable them to conduct commerce banking.
Global Tele-Systems is establishing connectivity between various banks to
provide inter-bank fund transfer over the Internet for the bank’s clients.
For any such financial transactions to happen in an open network (i.e.
Internet), it is imperative to have a proper security mechanism in place. The
issues are different for the business-to-business (B2B) and business-to-consumer
(B2C) segments.
Providing Non-repudiation to E-payments |
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Typically, the payments in the B2C segment for online retail business are
carried out using credit/debit cards. The high charge backs that are pinching
the online merchants as well as the issuing bank mar the growth in B2C sales.
Charge back happens when a cardholder denies the sale. In absence of cyberlaws
and any proper mechanism to protect the online merchant and issuing bank,
virtual wallets become a very viable and safe method of protecting the merchants
as well as the customers. Virtual wallets typically work in an SSL/SET
environment to provide non-repudiation, confidentiality and integrity to online
B2C purchase. They also provide the customer better convenience by providing
auto form fill functionality.
The payments in the B2B segment are usually done through directly debiting
the bank account of the buyer. Here, typically, the web server of the corporate
is protected by firewalls (a software that protects the web server from
hacking). The data travelling between the payer and the banks through a payment
gateway is protected by encrypting and sending it over the Internet using SSL
(Secured Socket Layer — a standard accepted by VISA & MasterCard for
encrypting data).
For providing non-repudiation for the payments done electronically, various
methods can be deployed. Some popular ones are:
Checksum can be integrated with the service to protect the integrity of the
data that is exchanged. The moment anybody tries to alter the data or hack into
it, the checksum detects it and denies the transaction.
Providing smart cards with a digital signature for the initiation of a
transaction. The smart cards can act as a safe medium for storing the access
information and the digital certificate of the initiator. Every transaction done
by the initiator will then be signed using the digital signature stored on the
smart card. Thus, the initiator cannot deny the purchase later and the seller as
well as the banks involved in the transaction can be safeguarded.
A safer way of providing non repudiation is by using biometrics for the
initiator, but this technology is still in its infancy and very expensive.
We have a long way to go before we can achieve significant progress in the
arena of e-commerce, but, despite all the odds and constraints, the phenomenon
is picking up in the country. With the proper support of the banking industry,
the day is not far when India can also boast of a robust Internet economy.
Santosh D Khanolkar, general manager-consulting, e-commerce services, Global
Tele-systems
Who would your target customer be?
Our primary focus is the ISP customers, those of who have
an access PoP, those who may have a data centre, they may be content service
provider. Primarily it is going to be the service provider market. But
interestingly, we are seeing the enterprise making use of the application of
streaming media coming to the forefront. Customers like the financial
institutions who want to serve in a reliable and a high quality way through
streaming have shown keen interest. It’s because we can control the end point
of the content and end point of the subscriber edge. We can enable the
enterprises to serve the customers have a rich experience. So enterprises are
looking to that kind of a business.
In terms of geographical potential growth areas in APAC,
Korea, Australia, Japan, and China would be key. Personal Internet will pick up
where the concentration of Internet users pick up.
What is your estimate of revenues in Nortel’s earning
map?
Personal Internet revenues! Our business unit has plans to
achieve a billion dollars by the year end.
Ch. Srinivas Rao