New Rules for E-commerce – An Exclusive SPN Article – Part One

ecommerceWhen the Internet was conceived, it was developed as an ‘information highway.’ It has evolved into an e-commerce solution that is a mandatory component for every business.

In this article we introduce the new rules and how they impact consumers.
• In Part 2 we will discuss how the new rules impact online merchants.
• In Part 3 we will discuss how the new rules impact web hosting companies.
• In Part 4 we will discuss how the new rules impact shopping cart developers.
• In Part 5 we will discuss how the new rules impact smart phone application developers.
• In Part 6 we will discuss how the new rules impact smart phone banking applications.

E-commerce Rules Have Changed

In September 2011, both Visa® and MasterCard® launched their own digital wallets as mobile payment (m-payment) applications for smartphones equipped with NFC chips. With the introduction of these two applications, the rules of e-commerce have forever changed for both the bricks and mortar retailers and online merchants.

On the surface there does not appear to be a real advantage for bricks and mortar retailers to adopt the new hardware required to be installed at the cash register. However, there are significant advantages to the online merchants and the businesses that offer online sales.

The new digital wallets (DW`s) will be a complete m-payment solution. They will not only provide all the functions of existing retail Point of Sale devices, but will also provide several new levels of security and identity protection. In the future there will be hundreds if not thousands of DW`s offered to consumers by not only Banks but also Major Retailers.

In summary all DW`s will consist of two components. The front end will be the Bank or retailers smart phone application and the back end will be the payment side consisting of the new NFC or QR codes for payment at the retail counter and a fully functioning Personal Point of Sale devices (PPOS) for payments online via an e-commerce enabled web site.

This article discusses the new rules for e-commerce and the performance of the PPOS.

Initially, the PPOS is being deployed to interact with e-commerce enabled websites. The shopping cart applications will no longer ask for any information from the consumer. The software will simply generate a transaction number that will be pasted into the PPOS.

How the PPOS Operates

The new PPOS is not a storage device, but rather a payment application. None of the data entered on the application is saved or stored within the application. All saved and stored data resides in a cloud computing service, which is usually owned and operated by the bank or the company that issued the credit cards.

Consumers concerned about identity theft need to know that the new digital wallets equipped with a PPOS are guaranteed to protect your identity. The safest place to store your credit card details is with the bank or institution that issues your credit card. The second safest place to store your profile and card data is in one of the cloud computing services designed specifically for that purpose. After all, they already have this information.

When the PPOS is initially launched, you are presented with data collection forms to create your profile and enter your card details. The submit function uploads the profile to the gateway server that encrypts the data, returns an unlock key, and then stores the encrypted file with the appropriate cloud. The returned unlock key is stored within the PPOS, along with a description of the card, but not the card details. For example, the stored description might read Capital One MC Platinum.

New Rules Protect Consumers

Doing business online can be an alarming situation for both merchants and consumers. Merchants are concerned about fraud, chargebacks, high discount rates, and being sued if someone steals data from them. Consumers are concerned about identity theft.

It seems to us, the solution to both problems is the same. The consumer never gives the merchant any data that can be stolen. In reality, the merchant never needs the consumer’s identity or card details. The merchant only needs confirmation the credit or debit card was approved. If that is all the merchant needs, then why does current shopping cart software ask for so much more information that could be deemed to be confidential?

The new PPOS will guarantee:

1. The User is, in fact, the owner of the PPOS.
2. The Merchant is, in fact, the operator of the website and duly accredited.
3. The Service works with every merchant account provider.
4. The Service operates across all web-based applications that accept credit cards.
5. The Service will work with an ever-growing collection of smartphone applications.
6. The Data collected within the PPOS is not saved on the application but with a secure cloud.
7. The off-site data storage facility, or facilities, allows for data retrieval in the event the smartphone is ever lost or stolen.

When the time comes to make a purchase, the consumer simply enters the transaction number and selects the card description. The PPOS uploads these two pieces of data, along with the unlock key, to the gateway processor. The processor then retrieves the card details from the cloud and processes the transaction.

These security features and the employed methodology of the PPOS guarantees that confidential information of the consumer is never revealed to the merchant, and thus can never be saved, stored or compromised.

The new PPOS is a smartphone application that will be introduced in three versions. The first application is for older model smartphones which do not have forward facing cameras. The second is an application for newer model smartphones with forward facing cameras. This application will employ facial recognition software to confirm the owner of the PPOS. Third is a desktop application that will also employ facial recognition software to confirm the owner of the PPOS.

The digital wallet will protect the cardholder’s identity and will provide a new and convenient way to make purchases, both online and on multiple hardware platforms.

The PPOS equipped DW’s will be a welcome solution for merchants who wish to save costs on card-not-present sales, chargebacks and fraud attempts. With its ease of implementation for merchants and the inherent acceptance by consumers, merchants will benefit extensively.

The PPOS equipped DW’s will become the distinct leader and will set the standard in digital wallet technology by meeting the security needs of cardholders, merchants, and card issuers.

Victor Arcuri is a Canadian businessman who, for greater than 10 years, has operated CQRPAY, Inc., a secure gateway for credit card processing for Internet-based merchants. Our independent gateway service is unique in that it is the only application that connects to every merchant account provider and every bank in Canada and the USA.

Our platform enables merchants to use the service regardless of any affiliation they may enjoy with a merchant account provider, bank, POS device supplier or shopping cart software developer.

We invite your questions by phone 403-234-0844 or e-mail.

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Victor Arcuri


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