Flick Switch To Safe E-commerce
Sydney Morning Herald
Tuesday September 14, 1999
FOR the past few weeks, we've been checking out the security issues around making sure both parties to an online transaction are who they say they are. As we have seen, there is no iron-clad way of doing this, only relative degrees of certainty. So how can we settle financial transactions online?
The method you will end up using depends on the amount of money involved, the number of transactions processed and any special commercial arrangements surrounding the payments.
For example, for transactions involving a lot of money between manufacturing businesses, using credit cards with secure sockets Web pages is completely inappropriate.
As mentioned in previous weeks, the 1.5 to 4 per cent transaction fee charged by credit card companies, added every time a component is bought by one manufacturer, has value added and is sold to the next, would significantly add to the cost of all business inputs.
Additionally, we touched on the difficulties of only one party to the transaction being authenticated - the seller's server, creating a "seller-beware" online business environment. But there's also another catch with secure Web pages for business-to-business e-commerce - they're hard to automate, meaning someone has to physically push the buy button for a transaction to proceed.
Thus secure Web pages can only be part of a highly assisted manual purchasing system, not a fully automatic one.
What business really wants to do is to automatically settle transactions by transferring funds under program control between accounts. We have been able to do this for quite some time where both accounts were held by the same business with the same bank. Direct debit, B-pay and direct salary payments have also been available for some time.
But very few Australian banks offer a live electronic gateway into the banking system, allowing one company to deposit funds in another's account at another bank at will. So far, Australian banks are only offering off-line batch processing between their respective systems to settle your financial transactions, which, as we have seen in previous weeks, isn't nearly good enough for e-commerce.
Perhaps the exception to this rule is the Colonial Bank. I'm not privy to its marketing plans, however it's known that the Victorian Automobile Chamber of Commerce (VACC) will settle transactions between its members for auctioned vehicles and auto parts through Colonial, without its members opening an account with the bank.
Additionally, Colonial is believed to be trialling a Java-based e-commerce/banking system gateway, developed by Sienna Software, potentially filling the Secure Electronic Transactions (SET) vacuum left by the worldwide banking community's failure to implement the system.
The Sienna solution, which will probably be announced when its trials with Colonial are complete, dovetails into the company's GateWare commerce switch. As we saw a few months ago, a commerce switch is built on top of an application server, allowing companies to quickly integrate customers and suppliers into their business processes running on multiple back-end systems.
Having the switch also plugged into the banking system using the Java cryptographic architecture is an attempt to provide the missing link in e-commerce. Sienna has a solid track record in electronic banking technology, so it will be interesting to see if it can pull off the big one.
However, my information is that the VACC isn't using Sienna's solution, meaning Colonial probably has at least two technologies at its disposal to make business-to-business e-commerce happen. The next few months will reveal all, but one thing is for sure: as far as Australia's so-called "big four" banks are concerned, while they've been playing around the barn door, the e-commerce horse has bolted.
Next week we will look at options for integrating credit card transactions into business-to-consumer e-commerce systems and some e-commerce insurance.
© 1999 Sydney Morning Herald