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Scheme of Presentation1. Introduction2. Traditional Transaction3. Internet Transaction4. Parties in Internet Transaction5. Steps in Internet Based Transaction6. Protocols for Internet Based Transaction7. Issues in Internet Based Transaction8. Challenges in Internet Based Transaction9. Legal Paradigm10. Conclusion Sunday, December 02, 2012 2
INTRODUCTION• Internet age is the age of the desktop shopper.• It is the age that saw the birth of a new kind of seller: the “unprofessional Internet merchant”.• But what about an Internet-based transaction, where the buyer has no knowledge of the seller and the seller’s knowledge level of the good is higher-than-average, yet does not rise to the level of the professional merchant? Sunday, December 02, 2012 3
TRADITIONAL TRANSACTION• Parties have trust in Traditional transaction.• Trust is a judgment made by the user, based on general experience learned from being a consumer and from the perception of the particular merchant.• Users are more confident in terms of payment and also to the quality of product delivered Sunday, December 02, 2012 4
INTERNET TRANSACTION• In computer science, information processing that is divided into individual, indivisible operations, called transactions.• In Internet based transaction, ACID is a set of properties that guarantee the reliability of transaction process. Atomicity (transaction executes exactly once) Consistency (Data is in a consistent state in start and at end) Isolation (Transaction should never see the intermediate stages of another transaction) Durability (A transaction has been committed, the system guarantees that its updates will persist) Sunday, December 02, 2012 5
Traditional V. Internet Based TransactionS.No. Attribute Physical Transaction Internet Transaction1. Identity Customers can easily authenticate the Customers can only authenticate the identity of a merchant identity of merchant through the certification etc.2. Immediacy A transaction that is face-to-face is One or more third parties. At least for usually unmediated, means no payment, third party must present. involvement of third party3. Value The value of an item is much easier to Difficult to appraise the value of appraise if that item is close at hand. item. Cash on delivery is a option.4. Privacy Customers can make purchases Users need to disclose their personal anonymously with cash and no need to information. disclose the personal information.5. Negotiation Is always available Usually in transaction to merchant negotiation is not available but in Sunday, December 02, 2012 6 C2C transaction it may available.
PARTIES IN INTERNET TRANSACTIONSunday, December 02, 2012 7
STEPS IN INTERNET BASED TRANSACTION 1. The customer opens an account 2. The customer receives a certificate 3. Merchants have their own certificates 4. The customer places an order 5. The merchant is verified 6. The order and payment are sent 7. The merchant requests payment authorization 8. The merchant confirms the order 9. The merchant provides the goods or service 10. The merchant requests paymentSunday, December 02, 2012 8
PROTOCOLS FOR INTERNET BASED TRANSACTION Secure Electronic Transactions Network Time Protocol Transaction Internet Protocol Secure Sockets Layer Transport Layer SecuritySunday, December 02, 2012 9
ISSUES IN INTERNET BASED TRANSACTION• Incorrect information or lack of adequate information on the Website.• Freedom of expression and the right to privacy is challenged.• How to protect the user credential personal information?• What are the best practices to secure the system?• Recovery of money or refund is always disputed.• What may be the procedure to identify the parties at transaction?• As Internet is boundary less medium thus in any legal initiative Jurisdiction is always at issue.• Enforceability of Court judgement may be challenged in other jurisdiction and there is no proper mechanism to enforce the judgement of the court. Sunday, December 02, 2012 10
CHALLENGES IN INTERNET BASED TRANSACTION Identification Privacy Anonymity Liability for failure of Secure System Electronic Signatures Jurisdiction Taxation of Internet based transactionSunday, December 02, 2012 11
LEGAL PARADIGM• The legal problems created by the Internet are due to its speed, non-physical existence and the possibility of making any digitalized content available simultaneously in multiple locations.• Unfair contract terms and consumer protection.• International treaties creating uniform law via conventions are the classical solution to achieve legal certainty in international transactions.• The suitable option for unifying Internet-related rules is model laws drafted by internationally recognized bodies, such as UNCITRAL, OECD and UNIDROIT. Sunday, December 02, 2012 12
CONCLUSION• Safety, security, soundness and efficiency of the payment systems assume critical importance.• Need of a international tribunal of Internet based transactions disputes.• Smooth functioning of payment systems becomes vital in the light of inter-linkages they have with other financial systems. Sunday, December 02, 2012 13