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E-CommerceIssues and Challenges

James J. Corbin

Cable and Wireless (West Indies) Ltd

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Agenda

h What is e-Commerceh How does credit card processing works

– In the real world– In cyber space

h Requirements for going onlineh The Legal Issuesh E-Commerce Law in the Caribbeanh Questions

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What is E-Commerce?

h Business transactions that occurs on the Web and via the Internet– Business to Consumer (B2C)

Buying groceries from the supermarket– Business to Business (B2B)

Hotels buying supplies from manufacturers– Consumer to Consumer (C2C)

Auctions– Business transactions via cell phones

m-Commerce

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e-Commerce worldwide market (US$ B)

0500

10001500200025003000

2000 2001 2002 2003 2004

Source: International Data Corp

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Why Business Go Online?

h Another Sales Channel with low entry barriersh Incremental cost of selling additional goods is negligibleh Availability of products and services

– 24*7*365h Global Reach

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Credit Card Processing

h The Real worldh The virtual world

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POS payments with credit cards

Merchant Shop

POS Terminal

Third Party

ProcessorBank

VisaMaster Card

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Accepting credit cards on the InternetAccepting credit cards on the Internet

Web Site VirtualPOS

Third Party

ProcessorBank

VisaMaster Card

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Flow of Hard good Transactions

Customer

Web Site

Web Commerce

Payment Authorizer

Soft and Cuddly, who could ask for a better and more traditional gift.

£25 Buy Me

NameAddress

Paymt CardItem Price Qty TotalTeddy £25:00 1 £25:00

VAT £4:37Total £29:37

Auth

Digital ReceiptName Peter SheppardAddress 1 The Strand

London, SW1 1DFAwaiting Shipment

Item Price Qty TotalTeddy £25:00 1 £25:00

VAT £4:37Total £29:37

Digital ReceiptName Peter SheppardAddress 1 The Strand

London, SW1 1DFShipped

Item Price Qty TotalTeddy £25:00 1 £25:00

VAT £4:37Total £29:37

Settle

A Digital Offer is a just a Query String URL

Contains all the information about the item that is needed to process the order :-Unique Id Bear1Description Soft-fur Teddy BearPrice 25.00Currency GBPTax rate 17.5%Weight 1.25Kgetc.

All protected by a Message Authentication Code (MAC). Created using a secret key and the MD5 Algorithm

ac1c7b489d400e4a98a6e9c8b9851a37

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Key Steps to e-Business

h Web Site Developmenth Hosting For Web Siteh Payment Gateway (Virtual POS)h Internet Bank Accounth Fulfillmenth Legal Environment

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Security Issues

h Secure Socket Layer (SSL)– Encryption technique

h Secure Electronic Transaction (SET)– pioneered by VISA and MasterCard

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Security Issues

h Secure Socket Layer (SSL)– Encryption technique

h Secure Electronic Transaction (SET)– pioneered by VISA and MasterCard

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Legal Issues

h Domain Registrationh IPRh Privacyh Digital Signatures

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Legal Issues

h Existing laws and regulations that may hinder e-commerce must be reviewed and revised or eliminated to reflect the needs of the new electronic age

h UN Commission on International Trade Law has created a model law

h International e-commerce policy by country– http://www.ecommerce.gov/internat.htm

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Electronic Transaction Act

h Bermudah Caymanh Barbadosh Bahamash Others will follow

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Bermuda

h Most advanced e-commerce enabled country– All Banks will accept credit cards via the Internet– Clearing House

FEDS– Three payment gateways ( Virtual POS)– Offshore Web Hosting Centers– Two Telecommunications Carriers– Multiple cable paths to Internet Back Bone

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BermudaElectronic Transactions Act

h Electronic Records– Information required by law can be sent or

delivered by electronic means. Where the law requires a signature, an electronic record meets that requirement if the method of identifying the signatory meets certain requirements

h Communication of electronic records– transactions conducted in electronic form do not

affect their validity– Process for acknowledgement of receipt of

electronic records

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Electronic Transactions Act

h Electronic signatures– Minister recognise certificates and certification

service providers in any other jurisdiction, to be treated as equivalent to accredited certificates issued in Bermuda

h Encryption– Minister can make regulations relating to the use,

import and export of encryption programsh Data Protection

– Objective is to create a regime consistent with the European Unions’s - safe harbour - principles for the transfer of personal data outside the European Union

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Electronic Transactions Act

h E-Commerce Service Providers– Not liable for content of electronic records if

Service Provider has no actual knowledge or is not aware of the facts that would objectively indicate a likelihood of civil or criminal liability in respect of material carried on the network.

h Defines Process Intermediaries must follow if they become aware of facts or circumstances that give rise to civil or criminal liability in respect of information on their networks.

h E-Commerce Advisory Board– Guide Minister on the exercise of Ministerial

functions

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Current Statush Banks are getting on the Act

– Barclays– Bank of Nova Scotia– Others in pipeline

h Web development teamsh Web Hostingh Many sites

– Using USA banks– Using Caribbean banks

h Governments see e-Commerce as providing future economic growth

h Many Projects are in the pipeline

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Questions??