Literature Review Stancu Simina MPI, anul 2 1. Online payment processing 1.1 Online payment processing or E-Payment World Overview Donal O. Mahony, Michael Perice, Hitesh Tewari(2001) have emphasized the fact that purchasing goods and services online doesnt represent a brand new idea. There are attestations everywhere around us of transaction processes which occur electronically. The appearance of Internet has definitely eased the achievement of progress. The network of networks has expanded significantly to todays global medium. This growth had been determined by the WWW (World Wide Web) availability technology which gives the opportunity for information to be accessed from everywhere around the world which also lead to the growth of the business to consumer ecommerce. A new market has also emerged for individuals that are completing their purchases through the phone or handheld wireless devices. The Mobile commerce (also called mcommerce) will rapidly become a broad industry that many payment providers try to cover. Studies from Humphrey, Pulley, and Vesala (1996) contribute to the definition of e-payments by saying that the payments are initiated, processed and received electronically. They also show that the e-payment world constitutes a new concept, above the original payment techniques which were offered by the banking industry. Epayment can be viewed as a part of the whole e-commerce transactions which has the element of electronic payment for buying/selling goods or services which are provided through the mean of Internet, according to Odlyzko (2003). Odlyzko(2003) also claims that electronic payments mean more than online transactions on the Internet, as there are various forms of electronic payments. The technology is expanding and offers many developments as the variety of devices and processes for electronic payment is on a continuous raise. In the case of e-payments, the monetary claims are held in digital form. Kaynak and Harcar(2005) argue that the use of internet banking based operations has been enhanced by all banks, no matter the type or size. They both mention that online banking has arrived to the point to become the newest breakthrough expansion in the ever-developing world of financial services. Because the Internet has increased in a huge proportion and its expected to increase even more, the online payments are expected to increase as well in a rapid pace. One of
the advantages of online banking is represented by the commodity and convenience which is provided to the individuals by doing business in the comfort of their own homes. The emerge of the Internet and also the universality of consumers owing personal computers or laptops exhibit both an opportunity and a challenge within the industry because for a long period of time the financial institutions have utilized powerful computer networks to process thousands of transactions compared to nowadays when the customers bank are connected to the internet through their own personal computers. The increasing pace through which the epayments are growing making it forcing financial providers to adapt to the volume augmentation of all the transactions that are processed in all corners of the world everywhere on the Internet, as Baddeley(2004) is stipulating. The claim of Huang and Chen (2002) states that together with the popularity of the internet the explosion of the online payments has also expanded and epayments will develop with a rapid pace because this method presents many operational advantages and efficiencies. They also recognize that electronic payment will take the place of the basic cash in the physical world as a method of payment in the online, virtual world. This happens because by keeping the privacy of the customer, the electronic payment will be utilized over telecommunications and data networks. Moreover, the virtual cash is easier and not so expensive to be used compared to the traditional cash and also if the electronic process is secured, it cannot be counterfeited. Other studies by Yu, His and Kuo (2002) have converged to the point that online payments have been risen from the worldwide expansion of the internet.the electronic commerce has proliferated because of the many benefits that the electronic transfer of transactional information brings, benefits such us: availability, security, speed, anonymity and openness. These have lead to the ease and facilitation of many business processes including paying for merchandise, auctioning, negotiation ordering etc. There are also authors which contradict the utility of the e-commerce. Chou, et al. (2004) mentioned that the business of online payments wasnt as exciting as other have expressed it. Some of the first innovators either went bankrupt, switched to a new business or gave up the product. They question which payment methods are more appropriate for the e-business
landscape as they have observed the failure of many e-cash mechanism and the large number of users of credit cards over the internet. 1.2 Security within the online payment environment The concern of any new development is security. The emphasis is located on the risk minimization with each transaction that takes place. A business process is viewed as a set of logical inputs which logically relate to achieve the business outcome (Gunasekaran et al., 2002). Every task of the business process must be secured. As the current time is all about information and data, there is the risk of data fraud, thievery, misappropriation of funds and stealing and when it comes to money and any other financial information the risk increases dramatically. Raja (2008) makes a good point that it is highly compulsory and important for the all data regarding financial information or information about individuals account or credit cards should be extremely secured and this also establishes the trust and the success for every commercial institution, the secrecy of information being a critical factor of success. Zheng et al. (2009) suggest that as online payments are processed through the Internet, a more secure, stable and efficient program for supporting the payments is required. Venkataiahgari (2006) explains on E-commerce Technology study that all online payment settings must present security characteristics such as authentication, authorization and data confidentiality. The most common protocols used are SSL, TLS and SET which provide secrecy for online transactions. Raja (2008) argues that the confidence theories were based on the relationship between the entities participating to the transactions and the history of any exchanges between them, but as the online market is widely spread and there are many participants makes the trust difficult to be assessed due to the feebleness to demonstrate the reliability of the partners. Moreover there isnt necessary for a human relationship to be established prior to the transaction which creates an opportunity for a security threat. Generally speaking, security is composed of subsets of technics and mechanisms together with various programs whose role is to authenticate the information source and make sure to keep private the integrity of the information. The main security procedures comprise: encryption, digital signatures and algorithms.
Jing (2009) recognizes that to be able to prevent stealing of information and in order for only the rightful owner to see the data, there are several elements which must be checked such as: integrity of information, validity of information, non-repudiation of information, authenticity of the transaction status and reliability of the system. The integrity of information refers to the fact that trade partens can affect the integrity of the information by accidental data entry errors, duplication of information or difference in information provided. The validity of information concerns the idea that the online payments will be affected by the validity of information from customers, companies to the country scale as the validity of the transaction price and period is mandatory. The Non-repudiation of information focuses on the point that the transfer of the information must include a reliable source of identification for individuals and companies, identification which is mad ein original so it cannot be denied. The authenticity of the transaction status refers to internet transactions which are lead at a large distance and there should be an understanding that in order for any transaction to be well accomplished there should be trust. The reliability of the system means that the system should provide security and reliability by making impossible the computer failures, hardware/software failures or transmission errors. Murdoch and Anderson (2009) have introduced in their studies the concept of 3D secure protocol which is branded Verified by Visa and MasterCard Secure Code. The goal of the 3DS is to permit the merchant to make a connection to see if a customer is the rightful owner of the specific card number. The system is designed by Visa and MasterCard and it has proven that the merchants that use the 3Ds have diminished the liability for disputed transactions. With 3Ds the cardholder must register a password with their bank and then enter the password every time they are making an online purchase. The authors are criticizing the method of 3DS because they observe that the 3DS form has no address bar, therefore there is no clue as to the where the form is originating from and this is against the guideline of the bank which advises clients to avoid phishing sites. Moreover, another important point is that 3DS conceals the communication of the merchant, acquirer, issuer and payment scheme but it does not cover the way in which the customer verification is done. Because of this, the fraud liability is on customers shoulders.
1.3 Risk Management in Online Processing Michael Levi (2000) states that the global networks, credit