E-Payments & Saudi Arabian e-Infrastructure 072

MIS 300 - Fundamentals of E-Commerce

Mr. Mustafa Faisal Ahmedmfahmed@kfupm.edu.sa

Chapter Outline

E-Payments Chapter 11 (selected coverage)• Online payments basic• The use of payment cards in electronic commerce• Electronic CashSaudi Arabian E-Commerce Scenario• Saudi e-Payment Solutions• SWOT Analysis of Saudi Arabian E-Commerce Market• Saudi Arabian Internet Users (e-statistics)• Important Organizations to know

E-Payments

Online Payment Basics

Credit cards, and debit (ATM) cards account for more than 90 percent of all consumer payments in the United States.

Saudi Arabia is not really that different. There has been a large rise in the use of ATM and credit cards in the last 10 years in Saudi Arabia.

Payment CardsDescribe all types of plastic cards used to make purchases

Credit card (Visa, Mastercard)

Has spending limit based on a user’s credit history

Debit card (ATM card)Removes an amount from a cardholder’s bank account

Transfers it to the seller’s bank account

Charge card (American ExpressCarries no spending limit

Amount charged is due at the end of the billing period

Advantages and Disadvantages of Payment Cards

Advantage

Worldwide acceptance

Built-in security for merchants

Disadvantage

Payment card service companies charge merchants per-transaction fees and monthly processing fees

Payment Acceptance and Processing

Steps followed once a merchant receives a consumer’s payment card information

Merchant authenticates payment card

Merchant checks with payment card issuer

To ensure that credit or funds are available

Puts a hold on the credit line or the funds needed to cover the charge

Settlement occurs

Merchant Accounts

To process payment cards for Internet transactions an online merchant must set up a merchant account

New merchant must supply

Business plan

Details about existing bank accounts

Business and personal credit history

Processing a Payment Card Transaction

Electronic Cash

Term that describes any value storage and exchange system created by a private entity that

Does not use paper documents or coinsCan serve as a substitute for government-issued physical currency

Attractive in two arenasSale of goods and services of less than $10Sale of higher-priced goods and services to those without credit cards

Advantages and Disadvantages of Electronic Cash

Advantages of electronic cashTransactions are more efficient

Transfer on the Internet costs less than processing credit card transactions

Disadvantages of electronic cashUse provides no audit trail

E-Cash has not been successful up to now

Problem of money laundering arises

Susceptible to forgery

Electronic Cash

Electronic cash is a commercial flop

PayPal

PayPalProvides payment processing services to businesses and to individualsPeer-to-peer (P2P) payment system

Free payment clearing service for individualsNOW AVAILABLE IN SAUDI ARABIA

Phishing – A very serious threat to E- Commerce

Basic structureAttacker sends e-mail messages to a large number of recipientsMessage states that an account has been compromised and the matter should be corrected Message includes a linkUser enters a login name and password, which the perpetrator capturesOnce inside a victim’s account, the perpetrator can access personal information

Phishing Attack Countermeasures

Most important step that companies can take today

Educate Web site users

Many companies contract consulting firms that specialize in anti-phishing workAnti-phishing technique

Monitor online chat rooms used by criminals

Saudi Arabian E-Commerce Scenario

Saudi Arabian E-Payment Solutions

Saudi Arabian E-Payment Solutions

Saudi American Bank (SAMBA) –SambaConnect is the name of the product.

Samba E-WalletSamba E-BankingVisa, MastercardSaudi ATM card

Al Rajhi Bank

National Commercial Bank (NCB)

SWOT Analysis of Saudi Arabian E-Commerce Market

Strengths WeaknessesCenter for Islamic WorldThe largest Arab economy Free market with minimum taxesHigh per capita incomeHigh youth populationThe largest IT market in the region

Lack of local IT professionalsLack of sufficient and affordable facilities for

education and training of localsVery high cost of Internet accessTelecom operator monopolyNon-existent legal environment for E-

Commerce transactionsLack of basic infrastructure for secured

transactions

Opportunities ThreatsE-commerce enables access to regional and

global marketplacesInternet is an important engine for economic

growthInternet helps reduce cost of doing business

(e.g., B2B procurement cost)With trade barriers coming down, environment

for E-Business is becoming more conduciveeGovernment systems enable convenient and

responsive services for citizens

Regional E-Business initiatives from UAE, Dubai, and Egypt Admission to WTO will lower the legal barriers thus local firms will be exposed to higher international competitionCultural backlash towards the internet

Saudi Arabian Internet Access (cont)

First Level: ISPsThese are commercial companies that provide internet access to the general public, government and private sector through dialupand leased lines. ISPs are connected to the National Backbone and to the International link at ISU. They provide their subscribers with access to these networks. In addition ISPs provide subscription accounting, customer support and other value added information services.

Second Level: National BackboneThe Saudi Telecomm Company (STC) is developing a high speed network connecting most parts of the Kingdom together. Currently, the main regions of the Kingdom are covered by this backbone with expansion planned for the remaining regions. ISU and all ISPs are connected to the National Backbone which carries Internet traffic inside the Kingdom and to the International Link.

Third Level: International LinkThis is the link which connects the National Backbone to the International Internet. The International link is operated by ISU and all international traffic to the Kingdom pass through this link.

Saudi Arabian Internet Users

Saudi Arabian Internet Users

Internet users in Saudi Arabia are estimated to be around 4.7 Million by the end of 2006, the largest number among Arab countries, as shown in the figure on the next slide. In terms of internet penetration rates, however, KSA (19.6%) ranks fourth in the Arab World (after UAE, Kuwait and Bahrain). KSA Internet penetration rate is higher than Arab countries average (7%), developing countries average (10%) and global average (16%), but is well below the developed countries average internet penetration rate of around 60%.

All IP traffic from the Eastern Province and Riyadh exits and enters KSA from Riyadh - the Western region’s IP traffic from Jeddah.

Saudi Arabian Internet Connectivity

Saudi Arabian Domain Name (.sa)

What is the Saudi Network Information Center?

SaudiNIC

is the entity that is responsible for the administration of the

domain name space for the country code (ccTLD) of Saudi Arabia (.SA). This includes the operation of the DNS root servers for .SA domains as well as the registration and maintenance of all third-level .SA domain names.

Based on the Council of Ministers' decree No. 229 dated 13/8/1427h the task of operating and administering the Saudi Network Information Center

(SaudiNIC) was moved from King Abdulaziz City for Science and Technology (KACST) to the Communications and Information Technology Commission (CITC). The

SaudiNIC

was established in 1995 by KACST.

Mission StatementThe mission of SaudiNIC

is to provide an equitable, just and competent technical and administrative management of domain name registrations and IP address allocations for Internet community in Saudi Arabia.

CERT-SA’s

Mission

To increase the information security awareness level in the Kingdom of Saudi Arabia

To coordinate national effort towards promoting IT Security best practices and creating trust among cyber community

To help managing information security attacks and incidents in the Kingdom of Saudi Arabia

To be the reference point in information security for the Cyber Community in the Kingdom of Saudi Arabia

To build Saudi talent and human capacity in the field of information security in the Kingdom of Saudi Arabia

To provide a trusted environment for e-transactions

to foster trust, cooperation and collaboration among our constituents and the general cyber community in the Kingdom

Saudi e-Statistics

Saudi e-Statistics

Important ‘Saudi Arabian’ Links

Saudi Network Information Center (SaudiNIC): www.nic.net.saCERT-SA: www.cert.gov.saInternet Services Unit www.isu.net.saCommunications and Information Technology Commission: www.citc.gov.saSaudi E-Government: www.yesser.gov.saSaudi Internet Portal: www.internet.gov.sa