2. Scheme of Presentation
1. Introduction
2. Traditional Transaction
3. Internet Transaction
4. Parties in Internet Transaction
5. Steps in Internet Based Transaction
6. Protocols for Internet Based Transaction
7. Issues in Internet Based Transaction
8. Challenges in Internet Based Transaction
9. Legal Paradigm
10. Conclusion
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3. 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?
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4. 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
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5. 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)
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6. Traditional V. Internet Based Transaction
S.No. Attribute Physical Transaction Internet Transaction
1. 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 party
3. 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
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C2C transaction it may available.
8. 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 payment
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9. PROTOCOLS FOR INTERNET BASED TRANSACTION
Secure Electronic Transactions
Network Time Protocol
Transaction Internet Protocol
Secure Sockets Layer
Transport Layer Security
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10. 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.
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11. CHALLENGES IN INTERNET BASED TRANSACTION
Identification
Privacy
Anonymity
Liability for failure of Secure System
Electronic Signatures
Jurisdiction
Taxation of Internet based transaction
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12. 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.
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13. 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.
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