E-Commerce

Issues and Challenges

James J. Corbin

Cable and Wireless (West Indies) Ltd

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 Agenda

h What is e-Commerce
h How does credit card processing works
– In the real world
– In cyber space
h Requirements for going online
h The Legal Issues
h E-Commerce Law in the Caribbean
h 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)
¾ Buying groceries from the supermarket
– Business to Business (B2B)
¾ Hotels buying supplies from manufacturers
– Consumer to Consumer (C2C)
¾ Auctions
– Business transactions via cell phones
¾ m-Commerce

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e-Commerce worldwide market (US$
B)
3000
2500
2000
1500
1000
500
0
2000 2001 2002 2003 2004

Source: International Data Corp

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5
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 Why Business Go Online?

h Another Sales Channel with low entry barriers

h Incremental cost of selling additional goods is negligible
h Availability of products and services
– 24*7*365
h Global Reach

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 Credit Card Processing

h The Real world

h The virtual world

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 POS payments with credit cards

Third
Merchant POS
Shop Terminal
Party Bank
Processor

Visa
Master Card
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Accepting credit cards on the Internet

Third
Web Site Virtual
POS
Party Bank
Processor

Visa
Master Card
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11
 Flow of Hard good Transactions Name
Digital Receipt
Soft and Cuddly,
Name Peter Sheppard
who could ask for
Address 1 The Strand
Address
A Digital Offer is a just a Query String URL London, aSW1
better and more
1DF
traditional gift.
Web Item
Item
PaymtAwaiting
Card
Price Qty
Price
Shipped
Shipment
Qty Total
Total
Commerce
Contains all the information about the item Teddy
Teddy £25:00
£25:00
that is needed to process the order 1
VAT
VAT
1 £25:00
£25:00
:- Buy
£4:37
£4:37
£25 Me
Unique Id Bear1 Total £29:37
Total £29:37

Description Soft-fur Teddy Bear

Price 25.00
Customer Currency GBP
Tax rate 17.5%
Weight 1.25Kg
etc. Settle
All protected by a Message Authentication
Auth Code (MAC).
Created using a secret key and the MD5 Algorithm

ac1c7b489d400e4a98a6e9c8b9851a37

Payment
Authorizer

Web Site 12
 Key Steps to e-Business

h Web Site Development

h Hosting For Web Site
h Payment Gateway (Virtual POS)
h Internet Bank Account
h Fulfillment
h 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 Registration
h IPR
h Privacy
h 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 Bermuda
h Cayman
h Barbados
h Bahamas
h 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
¾ FEDS
– Three payment gateways ( Virtual POS)
– Offshore Web Hosting Centers
– Two Telecommunications Carriers
– Multiple cable paths to Internet Back Bone

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 Bermuda
Electronic 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 programs
h 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 21
 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 22
 Current Status
h Banks are getting on the Act
– Barclays
– Bank of Nova Scotia
– Others in pipeline
h Web development teams
h Web Hosting
h 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??

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