The basics of Electronic Commerce abbreviated as e-commerce. The advantages and disadvantages of e-commerce

Transcription

1 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/ Electronic Commerce Learning Objectives Learning Goals The basics of Electronic Commerce abbreviated as e-commerce The advantages and disadvantages of e-commerce Architecture of e-commerce systems Electronic Data Interchange in e-commerce The need for security in e-commerce transactions and how to ensure it How Electronic payment schemes work in e-commerce. V. Rajaraman/IISc. Bangalore //V1/June 04/1 Indian Institute of Science Bangalore

2 System Analysis and Design Prof. V.Rajaraman System Analysis and Design / Electronic Commerce Motivation Motivation With the emergence of internet and the world wide web new methods of carrying out business transactions using the world wide web began to be explored. Electronic Commerce emerged as a very important application of the world wide web. Today it is difficult to find an isolated computer. Computers in an organization are interconnected to form intranets and intranets of the cooperating organizations are interconnected to form extranet. It is cheaper and faster to carry out business transactions within an organization and among organizations electronically using the network connection. Thus it is important to understand how business transactions are carried out electronically reliably and securely When designing information systems it is essential to understand the emerging web based transactions A number of organizations are exploring how to carry out all day-to-day operations electronically using the intranet in a so-called paperless system It is thus important for a student to understand how to design such systems V. Rajaraman/IISc. Bangalore //V1/July 04/1 Indian Institute of Science Bangalore

3 Electronic Commerce 13.1 What is E-Commerce? V.Rajaraman SAD/M13/LU1/V1/2004 1

4 What Is Electronic Commerce Definition Sharing Business Information, Maintaining Business relationships and conducting business transactions using computers connected to a Telecommunication Network is called E-Commerce Classification Classified As : Business To Business (B2B) Business To Customer (B2C) Customer To Customer (C2C) V.Rajaraman SAD/M13/LU1/V1/2004 2

5 E-commerce Applications-example Retail Stores - Books, Music Auction Sites Cooperating Businesses Placing orders,paying invoices etc. Electronic Banking Booking Tickets - Trains, Cinema, Airlines Electronic Publishing Filling Tax Returns With Government Dept. V.Rajaraman SAD/M13/LU1/V1/2004 3

6 Business To Business E-commerce LAN of buisness2 Public switched telephone network LAN of buisness1 Vendor Local computers PSTN or LEASED LINE Purchase store accounts Local computers V.Rajaraman SAD/M13/LU1/V1/2004 4

7 Business To Business E-commerce (contd.) Local LAN of business would normally follow TCP/IP protocol of internet and is called corporate intranet Purchase order entered by business1 in its PC and electronically dispatched to vendor (by ) Vendor acknowledges electronically the order Vendor dispatches goods(physically) and delivery note electronically to business1 V.Rajaraman SAD/M13/LU1/V1/2004 5

8 B2B E-commerce (Contd) Business 1 can compare delivery note against order -both are in computer readable form Discrepancy note(if any) can be immediately sent to the vendor Business 1 can carry out all local transactions using its LAN Local transactions are inventory update by stores - advice to accounts to pay for goods taken into stock Accounts can make payment electronically to Vendor V.Rajaraman SAD/M13/LU1/V1/2004 6

9 Implementing B2B E-commercerequirements 1. Agreed on formats for Purchase order, delivery note, payment order etc. Standard known as EDI (Electronic Data Interchange Standard) is used to send documents electronically 2.Each Business must have corporate intranet and the two nets are connected by PSTN or leased line 3. Transactions must be secure - particularly if PSTN is used 4.Secure electronic payment methods are required V.Rajaraman SAD/M13/LU1/V1/2004 7

10 Steps In B2C E-commerce 1. Customer uses a browser and locates vendor or he has vendor's web page address 2. Sees Vendor's web page listing of items available, prices etc 3. Customer selects item and places order. Order may include credit card details or may be cash on delivery 4. Vendor checks with credit card company customer s credit V.Rajaraman SAD/M13/LU1/V1/2004 8

11 Steps In B2C E-commerce 5. Credit card company OKs transaction 6. Vendor acknowledges Customer s order and gives details of delivery date, mode of transport, cost etc 7. Vendor orders with distributor who ships item to vendor's warehouse from where item supplied to customer 8. Customer's credit card company debits his account, credits vendor's account and sends bill to customer for payment V.Rajaraman SAD/M13/LU1/V1/2004 9

12 Customer to Customer E-Commerce Customer1 Internet Customer2 Wants to sell Item 1 Wants to buy Item 1 Broker s website Advertises - "for sale" Brings together buyer and seller Transports items Collects fee from both Seller &Buyer V.Rajaraman SAD/M13/LU1/V1/

13 Advantages Of E-commerce 1. Buying/selling a variety of goods and services from one's home or business 2. Anywhere, anytime transaction 3. Can look for lowest cost for specific goods or service 4. Businesses can reach out to worldwide clients - can establish business partnerships V.Rajaraman SAD/M13/LU1/V1/

14 Advantages Of E-commerce 5. Order processing cost reduced 6. Electronic funds transfer faster 7. Supply chain management is simpler, faster, and cheaper using e-commerce - Can order from several vendors and monitor supplies. - Production schedule and inventory of an organization can be inspected by cooperating supplier who can in-turn schedule their work. V.Rajaraman SAD/M13/LU1/V1/

15 Disadvantages Of E-commerce 1. Electronic data interchange using EDI is expensive for small businesses 2. Security of internet is not very good - viruses, hacker attacks can paralise e-commerce 3. Privacy of e-transactions is not guaranteed 4. E-commerce de-personalises shopping.people go shopping to meet others - window shop and bargain V.Rajaraman SAD/M13/LU1/V1/

16 E-commerce System Architectures LOGICAL LAYERS SERVICES IN LAYER Application layer B2B,B2C,C2C Middleman services Hosting services,value added nets payment services,certificates Secure messaging Encryption,EDI,Firewalls World wide web services HTTP,HTML,XML,OLE Software agents Logical network Intranet,internet,extranet Physical network PSTN,LAN,Bridges,routers Layered architecture V.Rajaraman SAD/M13/LU1/V1/

17 Electronic Data Interchange Computer readable forms for business documents such as invoices, purchase orders, delivery notes needed in B2B e-commerce so that e-documents can be exchanged. Essential to eliminate manual data entry which is error prone Essential to agree on common formats for commonly used forms. V.Rajaraman SAD/M13/LU2/V1/2004 1

18 Electronic Data Interchange (contd.) Electronic data interchange (EDI) standard gives specifications for commonly used standard business forms Currently two standards are available for EDI forms It is possible to adapt these standards for documents which use XML for specification. V.Rajaraman SAD/M13/LU2/V1/2004 2

19 EDI Standards ANSI X.12 standard proposed by American National Standards Institute EDIFACT (Electronic Data Interchange For Administration Commerce and Trade) standardized by United Nations Economic Commission for Europe for international trade EDIFACT used in India for government transactions - customs, central excise etc. V.Rajaraman SAD/M13/LU2/V1/2004 3

20 EDI Transactions in B2B E-commerce Cooperating businesses agree on EDI standard Programs needed to translate data received in EDI format to a form needed by the application program Method of sending/receiving data between businesses to be agreed on - is it PSTN, Extranet or VAN (value added network) service? Important to ensure reliable, guaranteed and secure receipt of electronic documents by intended receiver V.Rajaraman SAD/M13/LU2/V1/2004 4

21 EDI Using Value Added Network Service VAN provides post box for all subscribers Guarantees delivery Open 24 hours, 7 days a week Provides security, acknowledgement, audit trails for transactions, non repudiation by users Some VAN S provide conversion of EDI forms to application format Disadvantage high cost. Used by large businesses - may not be cost-effective for smaller businesses V.Rajaraman SAD/M13/LU2/V1/2004 5

22 EDI Using Internet Cheaper method for use by small business is to use XML for EDI and ,instead of VAN Establish EDI form standard - XML appropriate Document Type Definition(DTD) publicised using organization s web page-cooperating business can use a DTD to interpret XML documents. Use MIME (multipurpose internet mail extension) to attach EDI forms to messages V.Rajaraman SAD/M13/LU2/V1/2004 6

23 EDI Using Internet Can use Simple Mail Transfer Protocol(SMTP) of internet If secure transmission needed use S/MIME (Security enhanced MIME) which uses encryption and digital signature (We will describe encryption and digital signature later in this module) If very long document or many documents are to be sent together File Transfer Protocol (FTP) may be more appropriate. V.Rajaraman SAD/M13/LU2/V1/2004 7

24 EDI Standard Defines several hundred transaction sets corresponding to each type of business document such as invoice, purchase order etc. Defines data segments - corresponding to groups of data elements such as purchase order line Defines data elements - which are individual fields such as price, quantity etc V.Rajaraman SAD/M13/LU2/V1/2004 8

25 Security In E-commerce Transactions between organizations take place in many e-commerce applications using the Internet Internet is widely accessible and insecure as eavesdropping is possible Need to protect company confidential information from snoopers V.Rajaraman SAD/M13/LU3/V1/2004 1

26 Security In E-commerce We need to protect a company's network from unauthorised entry - both hardware and software techniques used When an organization receives a message it has to be sure from whom it came and whether the message is authentic and not changed by an unauthorised person We thus need a digital signature which can be used in a court of law V.Rajaraman SAD/M13/LU3/V1/2004 2

27 Network Security Using Firewall Firewall is a security device deployed at the boundary of an organization' s network to protect it from unauthorised external access It links an organization's intranet to the internet and restricts the type of traffic that it will pass, thus providing security V.Rajaraman SAD/M13/LU3/V1/2004 3

28 Network Security Using Firewall Simple firewalls may be implemented in some routers, called packet filtering firewalls, they pass only some packets based on simple specified criteria such as -Type of access (such as , ftp, telnet as determined by TCP port number) -Direction of traffic -Source or destination IP address -Time of day V.Rajaraman SAD/M13/LU3/V1/2004 4

29 Proxy Application Gateway Primarily for allowing members of an organization on corporate intranet to access internet facility ensuring organizational discipline and security Proxy application program running on a firewall machine is the one which acts on behalf of all members of an organization wanting to use the internet V.Rajaraman SAD/M13/LU3/V1/2004 5

30 Proxy Application Gateway This program monitors all requests - allows access to only designated addresses outside, limits use of certain browsers and disallows use of some protocols with known security holes Proxy application program may also be allowed to run on some user's machine who have authorization for internet use V.Rajaraman SAD/M13/LU3/V1/2004 6

31 Hardened Firewalls With Proxy Application Gateway Any one from inside or outside an organization give their user id, password, service required to the firewall machine which acts as one's proxy (ie.does ones work on his behalf) Proxy firewall is now server to the requestor's desktop PC and also a client to some other requested service acting on requestor's behalf Firewall needs proxy agent for each service requested such as FTP, HTTP, TELNET etc V.Rajaraman SAD/M13/LU3/V1/2004 7

32 Hardened Firewalls With Proxy Application Gateway Now proxy firewall is the initiator of all sessions and thus knows every activity - thus ensuring security Firewall with a proxy function replaces the source address of transaction requestor with its own IP address -this ensures that others on internet see only firewall's IP address - all other IP addresses of organization are hidden V.Rajaraman SAD/M13/LU3/V1/2004 8

33 Data Encryption With Secret Keys Data sent via a public network may be accessed and used by unauthorized persons Thus necessary to scramble it so that even if one accesses it, it cannot be understood Similarly data stored in data bases accessible via internet should be scrambled Method of scrambling known as encryption Method of unscrambling known as decryption V.Rajaraman SAD/M13/LU3/V1/2004 9

34 Plain Text And Ciphertext Plain text is data in its natural form Encryption is taking data in any form(text, Audio,Video etc.) and transforming it to another form which cannot be understood Transformed data is known as cryptogram or cipher text V.Rajaraman SAD/M13/LU3/V1/

35 Example Text Encryption Start plaintext This Is A Message X Block plaintext (5character blocks) Thisi Sames SAGEX 4 1 Transpose characters with permutation ( ) Sthii Esasm Esaxg Substitute character by the one 4 letters away Wxlmm Iwewq Ixebk (eg A E,Z D) Cipher Text This is an example of two transformations - permutation followed by substitution The keys are permutation function and substitution function V.Rajaraman SAD/M13/LU3/V1/

36 Symmetric Encryption. PLAINTEXT (m 1,m 2 m n ) CIPHER TEXT (c 1 c 2, c 3.c n ) Where c i = k( T i (m i ) ) In which T i is permutation of i th character and k is substitution. Decryption by applying same transformations in reverse on cipher text. This method called symmetric key encryption as encryption and decryption performed using same key. Normally the encryption/decryption algorithm is publicised. Only key is secret. V.Rajaraman SAD/M13/LU3/V1/

37 Symmetric Encryption Problem is to ensure secrecy of key when it is sent to partner. If the key is to be sent to many partners need for separate key for each partner.directory of who was sent which key is to be kept and used for each transaction.directory should be secure. If large number of partners are there key distribution very difficult. Advantage of symmetric key is easy and fast to transform plain text to cipher text. V.Rajaraman SAD/M13/LU3/V1/

38 Digital Encryption Standard DES - Proposed by IBM in 1975 Standardised by US Govt in 1977 Reasonably secure It is a combination of permutation and substitution on blocks of 64 bits. A message is broken up into 64 bit blocks and each block is separately encrypted. V.Rajaraman SAD/M13/LU3/V1/

39 Digital Encryption Standard #General idea used in DES M = PLAINTEXT K = KEY E = M + K encryption M= E + K decryption See simplicity of Transformation using Exclusive OR V.Rajaraman SAD/M13/LU3/V1/

40 Digital Encryption Standard Algorithm Before applying DES the text is split up into the 64 bit blocks. DES applied on each 64 bit block. V.Rajaraman SAD/M13/LU3/V1/

41 Encryption method Digital Encryption Standard Algorithm Step 1: Apply an initial permutation on a block.result is B=IP(P) where P is the 64 bit block IP Initial Permutation function and B the result. Step 2: Split B into 32 bit blocks Li = leftmost 32 bits Ri = rightmost 32 bits. Step 3: Pick a 56 bit key. Permute it V.Rajaraman SAD/M13/LU3/V1/

42 Digital Encryption Standard Algorithm Step 4: Left circular shift it by 1 bit giving K1. Step 5: Perform a complex sequence of operations and obtain X 1 = F(R 1,K 1 ) (The complex set of operations include table look up and dropping bits). V.Rajaraman SAD/M13/LU3/V1/

43 Digital Encryption Standard Algorithm Step 6: Find R2 = L1 + X1 Step 7: Set L2 = R1 Repeat steps 2 to 7 16 times to get B16 = L16,R16 Step 8: Apply inverse of initial permutation on B16 The result is the encrypted block V.Rajaraman SAD/M13/LU3/V1/

44 Digital Encryption Standard Algorithm In summary the DES encryption applies the following transformation 16 times.the i th round transformation are L i+1 = R i R i+1 = L i + F(R i,k i ) Each round has a different key K i For Decryption the process of encryption is reversed.the encrypted block is permuted using IP -1. On this transformations are applied starting with K 16 and going to K 1 last.the keys and F are same as those used in encryption process. V.Rajaraman SAD/M13/LU3/V1/

45 Digital Encryption Standard Algorithm The encryption process uses simple binary operations. They can thus be realised in hardware as an integrated circuit chip. DES chips are inexpensive. Key externally fed. The complex encryption algorithm is explained using two block diagrams in the next two transparencies. V.Rajaraman SAD/M13/LU3/V1/

46 64 bit block of plain text DES Encryption Block Diagram 56 bit key IP Initial Permutation R O U N D 1 L1 R1 L2 R2 F + K1 + L 1 F(R 1,K 1 ) P1 Permute Permute Left circular shift R O U N D 2 F + L3 R L16. R16 K2 L + 2 F(R 2,K 2 ) K16 P2.... P Left circular shift Left circular shift IP bit Cipher text Inverse of Initial permutation (F is a complex function involving two table look ups and dropping bits of K 1 to get 3 bits for bitwise Exclusive OR of L 1 and F(K 1,R 1 ) ) V.Rajaraman SAD/M13/LU3/V1/

47 Details of One Round of DES Encryption 64 bit Plain Text 56-bit key Permute Permute 32 bits 32 bits 28 bits 28 bits L 1 R 1 KL KB Left Shifts Round1 L 1 F(R 1,K 1 ) + K 1 48 bits Permute and Contract L 2 R Repeat 15 more times KL KB For next key V.Rajaraman SAD/M13/LU3/V1/

48 DES Chip Input block Key DES CHIP 64 Encrypted Block Observe that from initial key others are derived by circular shifts Decryption chip inputs encrypted block and key and the output is decrypted block V.Rajaraman SAD/M13/LU3/V1/

49 DES - Discussion Cryptanalysis is technique for breaking a code, given samples of encrypted messages. If plain text also known it is somewhat easier. DES code can be broken if key is found. The easiest method of breaking a code is by brute force of trying out all possible keys to decrypt message. V.Rajaraman SAD/M13/LU3/V1/

50 DES - Discussion With increase in speed of computers it has now been shown that DES key can be found in less than 12 hrs with a fast computer (1 Million decryption per microsecond) Thus DES is practically useless now (original DES was invented in mid 70s) New more secure symmetric encryption algorithm is needed An extension of DES called triple DES is shown to be more secure. V.Rajaraman SAD/M13/LU3/V1/

51 Triple DES Triple DES uses three different keys and three executions of DES algorithm. The algorithm is Cipher text = E k3 [D k2 [E k1 [Plain Text]]] where E k [X] = DES Encryption of X using key K and D k [X] = DES Decryption of X using key K Remember that in DES Decryption of encrypted plain text with a different key is almost same as another encryption. This is true as encryption and decryption use the same algorithm V.Rajaraman SAD/M13/LU3/V1/

52 Triple DES To decrypt cipher text we reverse the operations. Plain text = D k1 [E k2 [D k3 [Cipher Text]]] Block Diagrams Of Triple Des Plain text (64 bit block) Cipher text Encryption K1 K2 K3 E D E Decryption K3 K2 K1 E D E Cipher text (64bit block) Plain text V.Rajaraman SAD/M13/LU3/V1/

53 Triple DES(Contd) Using DES thrice is equivalent to having a DES key length of 168 bits. Brute force method to break triple DES with 10 6 decrypts per micro second will take 5.9 X years! Even at fold increase in computer speed will make triple DES secure against brute force attacks to break code V.Rajaraman SAD/M13/LU3/V1/

54 Triple DES(Contd) The only reason D is used as middle step in triple DES is to allow data encrypted using single DES hardware.in this case K3=K2=K1 (Single key used) (See block diagram) Triple DES will be quite popular for a foreseeable future as it is very secure, can be realised by simple hardware. Triple DES has two disadvantages 1. It is slow to implement in software 2. It uses 64 bit blocks. Thus new standards were explored. V.Rajaraman SAD/M13/LU3/V1/

55 Requirements of Symmetric Key Cryptography Algorithm(NIST) Advanced Encryption System(AES) National Institute for Standards Technology put out a call for proposals for new crypto system with following requirements. Must provide a high level of security (i.e. difficult to decrypt in finite time) Must be completely specified and easily understood Security must reside in key Not in algorithm V.Rajaraman SAD/M13/LU3/V1/

56 Requirements of Symmetric Key Cryptography Algorithm(NIST) Advanced Encryption System(AES) Must be available for all users Adaptable for use in diverse applications e.g.credit cards Implementable economically in electronic devices Must be efficient to use as both software and hardware Must allow one to validate it. V.Rajaraman SAD/M13/LU3/V1/

57 Requirements of Symmetric Key Cryptography Algorithm(NIST) Advanced Encryption System(AES) Must be exportable No trap door Must use 128 blocks and key lengths of 128,192 or 256 bits depending on the level of security desired. In October 2000 it announced the selection of an algorithm called Rijin dael(pronounce RAIN DOLL) as new Advance Encryption Standard (AES) Details may be found in V.Rajaraman SAD/M13/LU3/V1/

58 Public Key Encryption In Private Key Encryption transmission of key without compromising not easy It is necessary to assign different private key to each business partner. When this is done a directory of keys should be kept which should be secret.this is difficult. Only secure way is to change the private key every time a message is sent V.Rajaraman SAD/M13/LU3/V1/

59 Public Key Encryption Public Key Encryption eliminates the key distribution problem There is a pair of keys for each organization - A Private Key and its Public Key If A wants to send message to B, A encrypts the message with B's Public Key When message is received by B he decrypts it with his Private Key V.Rajaraman SAD/M13/LU3/V1/

60 Public Key Encryption A Plain text ENCRYPT B s Public Key Cipher text DECRYPT B s Private Key Plain text B SENDER A RECEIVER B V.Rajaraman SAD/M13/LU3/V1/

61 RSA Code Details. R Wants To Find His Public And Private Keys 1. Pick large primes p and q. Let n =p * q 2 Find ø = (p-l)*(q-l) 3 Find e relatively prime to Ø, i.e. gcd(ø,e)=1; 1<e<ø. {e,n} is R's Public Key V.Rajaraman SAD/M13/LU3/V1/

62 RSA Code Details. R Wants To Find His Public And Private Keys 4 Find a number d which satisfies relation (d * e) mod (ø) =1 {d,n} is R s Private key 5. Let plain text = t. Encrypt t using R s public key. Encryption = t e (mod n) = c (cipher text) 6. Decryption c d (mod n) =t (Both n and e should be known to encrypt.similarly both n and d should be known to decrypt) V.Rajaraman SAD/M13/LU3/V1/

63 Example Of RSA Use This example is a toy example to illustrate the method.in practice the primes p and q will be very large each at least 300 digits long to ensure security. RSA Algorithm 1. Pick as prime numbers p=3,q=11 n = p * q=33 Note : The message to be encrypted should be smaller than 33.If we do letter by letter encryption of English alphabets (A to Z 1 to 26) this is OK 2. Ø = (p-1) x (q-1) = 2 x 10 = 20 V.Rajaraman SAD/M13/LU3/V1/

64 Example Of RSA Use RSA Algorithm (Contd) 3. Pick a number relatively prime to 20. We pick 7. The Public key of R = {7,33} 4. To pick private key of R find d from relation (d x e)mod(ø) = 1 (d x 7) mod (20) =1 This gives d =3 Therefore, the private key of R = {3,33} V.Rajaraman SAD/M13/LU3/V1/

65 Applying RSA Algorithm 1. Let the message be CODE If we use code C=3, O=14,D=4,E=5 The message is 3,14,4,5 2. We will encrypt one letter at a time Thus cipher of plain text 3 is 3 e mod (n) =3 7 mod(33) 3 7 mod (33) =2187 mod (33)=9 (14) 7 mod (33) = mod(33)=20 (4) 7 mod (33) =16384 mod (33) =16 (5) 7 mod (33) =78125 mod(33) = 14 V.Rajaraman SAD/M13/LU3/V1/

66 Applying RSA Algorithm 3. Thus cipher text = 9,20,16,14 4. Decryption : c d mod (n) d=3,n= mod (33) = 729 mod(33) = mod(33) = 8000 mod(33)= mod(33) = 4096 mod(33) = mod(33) = 2744 mod(33) =5 We see that we get the original text 3,14,4,5 V.Rajaraman SAD/M13/LU3/V1/

67 Discussion on RSA The security RSA encryption is dependent on the fact that factorising a large prime number to its factors is very difficult. RSA algorithm is symmetric.in other words if a plain text is encoded by the private key of S, the sender, it can be decrypted using the public key of R, the receiver (We will find later that this symmetry property is used in creating digital signature) Example using S s keys S s Private key = {3,33} S s Public key = {7,33} V.Rajaraman SAD/M13/LU3/V1/

68 Discussion on RSA If we encrypt a plain text using S s private key and send it to R,R must be able to decrypt it with S s public key. Assume Plain text is encrypted with S s private key and get cipher text = (14) 3 mod (33)=5 Decrypting with S s Public key we get (5) 7 mod (33) =78125 mod(33) ={(2367 x 33) + 14} mod (33) =14 V.Rajaraman SAD/M13/LU3/V1/

69 Discussion RSA Vs DES RSA Public key has two keys a private secret key and a public open key. RSA implemented as a program (software) It is computationally complex to encode plain text and decode cipher text using RSA DES Same key for encryption and decryption It is a single key system - Also called symmetric key system V.Rajaraman SAD/M13/LU3/V1/

70 Discussion RSA Vs DES DES computationally simple-implemented in hardware - thus very fast Each communication between two businesses can use a different key provided key is securely exchanged If key can be sent separately encrypted using RSA, then a recipient can use this to decrypt DES encrypted message. We look next at combining DES and RSA. V.Rajaraman SAD/M13/LU3/V1/

71 Combining RSA And DES KEY ENCRYPT DECRYPT RECOVERED KEY SENDER Public key Of the receiver Private key Of the receiver RECEIVER PLAIN TEXT DES DES PLAIN TEXT CIPHER TEXT V.Rajaraman SAD/M13/LU3/V1/

72 Combining RSA And DES Advantages: Key is sent along with the plain text. Encrypted using RSA Key small-fast to encrypt/decrypt Each transaction using DES can have a different keyhigher security and also fast.key directory not needed. V.Rajaraman SAD/M13/LU3/V1/

73 Digital Signature Requirements Needed to ensure that a message received from say A is indeed from him Signature should be tied to the message sent by A Sending Step Sender sends key using RSA system Sender sends plain text M using DES Receiver decrypts cipher text using DES and the key received from sender call it MR V.Rajaraman SAD/M13/LU3/V1/

74 Digital Signature Sender hashes plain text "M' using a hashing function - let the hashed text be "H" Hashed text "H" encrypted by sender using his Private key DS is his signature as H encrypted with his private key DS decrypted by receiver using sender's Public key and obtains "H" V.Rajaraman SAD/M13/LU3/V1/

75 Digital Signature (Contd) Authentication step Receiver hashes MR" using hash function and gets HR" Receiver compares H" with HR" If they match then it is a signed authenticated plain text TM is signed as sender has encrypted the hashed text using his private key which he only knows.if H=(MR)(HASHED) = HR where MR is the received message then MR must have been sent by sender. He cannot repudiate. V.Rajaraman SAD/M13/LU3/V1/

76 Signing A Message Using Digital Signature R s Private key R s Public key K ENCRYPT KE DECRYPT Forgery K K SENDER M ENCRYPT ME DECRYPT MR RECEIVER no Hash H ENCRYPT DS DECRYPT H Equal HR Hash S s Private key S s Public key yes Signature OK Accept M V.Rajaraman SAD/M13/LU3/V1/

77 Certificate Authority For Digital Signature As the hashed message in Digital Signature system is decrypted using senders public key,this key must be certified as belonging to sender by an independent authority Certification needed to ensure authenticity of public keys of organizations as public key is used to verify signature V.Rajaraman SAD/M13/LU3/V1/

78 Certificate Authority For Digital Signature Certification authority keeps data base of public keys of organizations participating in e-commerce after verifying their credentials. Potential business partners can authenticate public keys by sending request to certifying authority who certifies after receiving a fee for his services V.Rajaraman SAD/M13/LU3/V1/

79 Electronic Payment Systems In any commercial transaction payment is an integral part for goods supplied. Four types of payments may be made in e-commerce they are Credit card payments Electronic cheque payments Micro or small payments for internet based services such as music download. Electronic-cash payments Each of these requires a different system of payment. We will examine first credit card payments. V.Rajaraman SAD/M13/LU4/V1/2004 1

80 Review Of Manual Credit Card Payment Four parties are invoked in credit card payments. They are: Customer having a credit card Merchant accepting credit cards (such as VISA, MASTER CARD etc) Bank which issues credit cards to customers and collects payments from customers V.Rajaraman SAD/M13/LU4/V1/2004 2

81 Review Of Manual Credit Card Payment Acquirer which is financial institution that establishes an account with a merchant,validates credit card information sent electronically by merchant and authorises sale based on customer s credit status. Acquirer accepts credit cards of several card companies and guarantees payment to merchants. Acquirer gets reimbursed by bank issuing credit card. V.Rajaraman SAD/M13/LU4/V1/2004 3

82 Sequence Of Transactions In Manual Credit Card Payment Step 1: Customer presents credit card after purchase. Merchant swipes it on his special phone and enters amount Step 2: Data from merchant s terminal goes to acquirer via a private telephone line Step 3: Acquirer checks with the issuing bank validity of card and credit-available V.Rajaraman SAD/M13/LU4/V1/2004 4

83 Sequence Of Transactions In Manual Credit Card Payment Step 4: Acquirer authorizes sale if all OK and sends approval slip which is printed at merchant s terminal. Step 5: Merchant takes customer s signature on the slipverifies it with the signature on card and delivers the goods. Step 6: The acquirer pays the money to merchant and collects it from the appropriate issuing bank. The bank sends monthly statement to customer and collects outstanding amount. V.Rajaraman SAD/M13/LU4/V1/2004 5

84 Block Diagram Of Steps In Credit Card Transaction Customer Step1 Step5 Merchant Step 4 Step2 Step6 Step6 Acquirer Step3 Step3 Issuing bank Steps correspond to that given in previous 2 PPT s V.Rajaraman SAD/M13/LU4/V1/2004 6

85 Credit Card In E-commerce Main Problems Main Problem is: if a merchant had only a web presence, a Customer needs to be reassured that the merchant is genuine. 1. Customers Signature cannot be physically verified.customer needs electronic signature. 2. Secrecy of credit card number has to be ensured. 3. Dispute settlement mechanism must be worked out. V.Rajaraman SAD/M13/LU4/V1/2004 7

86 Secure Electronic Transaction Protocol Standardised credit card payments in e-commerce by major card companies such as Visa, MasterCard etc. To use SET protocol it is assumed that 1. Each party involved in e-commerce transaction has a public and private key.a public key encryption is used. 2. All parties have their public keys certified. 3. A standard hashing algorithm is used to create message digest for signature verification. V.Rajaraman SAD/M13/LU4/V1/2004 8

87 Main Features Secure Electronic Transaction Protocol Customers credit card number is not revealed to a merchant. It is revealed only to the acquirer who authorises payment. Purchase invoice details are not revealed to the acquirer.only the credit card number and total amount are revealed to him Purchase invoice + credit card number is digitally signed by the customer.in case of a dispute an arbitrator can use this to settle the dispute. (Computer protocol runs to 262 pages and may be found in V.Rajaraman SAD/M13/LU4/V1/2004 9

88 Dual Signature Scheme Secure Electronic Transaction Protocol Dual signature scheme is an innovation in SET protocol Steps followed in the protocol are: 1. Customer purchase information has 3 parts (i) Purchase Order (PO) (ii) Credit Card Number(CCN) (iii) Amount to be paid 2. Merchant should know (PO + Amount)=POA 3. Acquirer should know (CCN+Amount)=CCA V.Rajaraman SAD/M13/LU4/V1/

89 Secure Electronic Transaction Protocol 4. Hash POA using standard Hash algorithm such as RSA s MD5.Call it POD. 5. Hash CCA using MD5. Call it CCD 6. Concatenate POD and CCD.Call it (POD CCD) 7. Hash (POD CCD) giving PPD V.Rajaraman SAD/M13/LU4/V1/

90 Secure Electronic Transaction Protocol 8. PPD is encrypted using Private key of customer.this is customer s digitally signed purchase order DS = Encrypt (PPD) with C PRK C PRK is Private key of customer. This is sent to merchant by customer.ds is called Dual Signature as a private key is used to sign two separate digests concatenated together. 9. POA separately encrypted by customer using merchant s public key and sent to merchant 10. Merchant decrypts it using his private key.he thus gets Purchase order +Amount V.Rajaraman SAD/M13/LU4/V1/

91 Secure Electronic Transaction Protocol 11. CCD and DS also sent to merchant. From CCD merchant cannot find CCN. 12. Merchant can decrypt DS using customer s public key and get PPD. Customer must have a certified public key for verification. 13. Merchant can compute H(POD CCD) If H(POD CCD)=PPD,then customer s signature is OK. 14. Merchant forwards to acquirer CCA,POD,DS each separately encrypted using acquirer s public key. V.Rajaraman SAD/M13/LU4/V1/

92 Secure Electronic Transaction Protocol 15. Acquirer s forwards to bank. 16.Bank finds CCN and Amount.Verifies balance amount.bank also verifies customer s digital signature using CCD,POD and DS.If all OK acquirer is informed. 17. Acquirer OK s transaction to merchant 18. Merchant supplies item.gets payment from acquirer.bank collects from customer. V.Rajaraman SAD/M13/LU4/V1/

93 C U S T O M E R P.O+Amount C.C No + Amount POA CCA Dual Signature System To Merchant To Bank Hash Hash POD PPD Concatenate Hash Encrypt DS CCD POD CCD Private key Of customer C PRK Dual signature POA: (Purchase Order + Amount) POD: Purchase Order Digest CCA: (Credit card + Amount) CCD: (Credit card + Amount)Digest : Concatenation operator which strings together POD and CCD PPD : Purchase Payment Digest C PRK : Private Key of Customer V.Rajaraman SAD/M13/LU4/V1/

94 Secure Electronic Transaction Protocol - Step1 : [(POA) EM + (CCA) EB + CCD +DS] to Merchant - Step2 : Merchant sends [(CCA) EB + DS + POD] to Acquirer - Step3 : Acquirer sends (CCA) EB + DS +POD to Bank. - Bank finds (CC No. + amount) sees if OK Computes H(CCD POD) Decrypts DS with customer s public key If (DS) CPK = H(CCD POD) Signature verified V.Rajaraman SAD/M13/LU4/V1/

95 Secure Electronic Transaction Protocol - Step4 : OK to acquirer if credit and signature OK - Step5 : Ok to Merchant - Merchant finds H(H(POA) CCD)=PPD - Decrypts DS with public key of customer.if match signature verified. - Step6 : Sends delivery details - Step7 : Bill to customer V.Rajaraman SAD/M13/LU4/V1/

96 Secure Electronic Transaction Protocol Merchant Step 1 Step5 Step2 Step6 Customer Acquirer Step3 Step4 Bank Step 7 V.Rajaraman SAD/M13/LU4/V1/

97 Secure Electronic Transaction Protocol Step1: Customer fills Purchase order, amount and credit card number in his PC. A software in PC strips it into two parts Purchase Order + Amount (POA), Credit Card No. + Amount(CCA) POA is encrypted using merchants. Public key and CCA with bank s public key.these are sent with customer s public key certificates, CCD and DS. Merchant verifies DS. Step2: Merchant forwards to acquirer DS and CCD (These are encrypted using acquirer s public key) Step3: Acquirer forwards to bank. Bank decrypts CCA with its private key.checks validity of credit card and balance. If OK informs acquirer V.Rajaraman SAD/M13/LU4/V1/

98 Secure Electronic Transaction Protocol Step4: Acquirer OK s transaction to merchant and credits merchant's account. Step5: Merchant accepts customer s order and proceeds to dispatch items. Step6: At the end of the month bank sends bill to customer. (All these done by clicks of mouse button) V.Rajaraman SAD/M13/LU4/V1/

99 Electronic Cheque Payment Most cheque based transactions will be between businesses -thus special hardware attached to PC s for signing payments Signature encrypted by hardware All public keys of business partners authenticated by certifying agencies V.Rajaraman SAD/M13/LU4/V1/

100 Steps in transaction Electronic Cheque Payment 1 Purchaser sends purchase order and payment advice signed with his private key to vendor.he also sends his public key certificate encrypted with vendor's public key to vendor 2 Vendor decrypts with his private key, checks certificate and cheque, attaches deposit slip, encrypts with bank's public key and sends it to bank. he also sends his public key certificate 3 Bank checks signatures, credits and clears cheque 4 Credit advice goes to vendor,& consolidated debit advice sent to purchaser periodically V.Rajaraman SAD/M13/LU4/V1/

101 Purchaser Clearing Cheque Payment Electronically Vendor Signature Card Order form Signature Card Debit Advice Purchaser s Bank Clearing House Order Cheque Signature Certificate Secure Envelope Vendor s Bank Deposit Cheque Credit Advice Deposit slip Cheque Signature Certificates Endorsement Certificate V.Rajaraman SAD/M13/LU4/V1/

102 Payments Of Small Amounts On Internet Netbill's Proprietary System Customer charged only when information delivered Vendor guaranteed payment when information delivered Netbill is the intermediary V.Rajaraman SAD/M13/LU4/V1/

103 Major Steps Payments Of Small Amounts On Internet When customer accepts quote for information, vendor sends encrypted information without key to customer Payment order sent to vendor with checksum of information obtained. It is signed by customer Vendor sends to NET BILL copy of purchase order and the key for decryption NET BILL checks credit of customer. If ok it sends key to customer. Credits vendor account and debits customer account. Key sent to customer to decrypt information Customer decrypts information V.Rajaraman SAD/M13/LU4/V1/

104 Paying for Small Internet Transactions Customer 1. Request for information. 2. Quote 3. Order 4. Encrypted Text 5. Customer Bill+key 6. Ok to vendor 7. Key to customer Customer s Bank Credit in Account Net Bill s Server Net Bill s Server 7 Batch Payment Vendor Vendor s Bank V.Rajaraman SAD/M13/LU4/V1/

105 Electronic Cash Cash for small payments Cash preserves anonymity Cash should not be traceable We will discuss only traceable cash payments V.Rajaraman SAD/M13/LU4/V1/

106 Electronic Cash (contd.) STEPS 1.Customer withdraws coins in various denominations signed by bank STRUCTURE------> serial no, denomination, signature of bank Bank stores issued coins copy 2.Customer pays vendor using signed coins 3.Bank checks whether it is current or spent 4.If current it authorises dispatch of goods and credits vendor account with electronic coins V.Rajaraman SAD/M13/LU4/V1/

107 Electronic Cash(contd) Cheaper than credit card transaction DES normally used for these transaction as it is cheap and amounts involved is small V.Rajaraman SAD/M13/LU4/V1/

108 Electronic Cash Payment Amt ID Signature ABC ABC Customer Yes Vendor 3 OK? Bank 1. Withdraw 2. Pay 3. Check if OK 4. Replying OK 5. Accept order Spent Coins Amt ID.... V.Rajaraman SAD/M13/LU4/V1/

109 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions 13.1 By Electronic Commerce we mean: a. Commerce of electronic goods b. Commerce which depends on electronics c. Commerce which is based on the use of internet d. Commerce which is based on transactions using computers connected by telecommunication network 13.2 For carrying out B2B e-commerce the following infrastructure is essential: (i) World Wide Web (ii) Corporate network (iii) Electronic Data Interchange standards (iv) Secure Payment Services (v)secure electronic communication link connecting businesses a. i, ii, iii b. ii, iii, iv c. ii, iii, iv, v d. i, ii, iii, iv, v 13.3 For carrying out B2C e-commerce the following infrastructure is essential (i) World Wide Web (ii) Corporate network (iii) Electronic Data Interchange standards (iv) Secure Payment Services (v) Secure electronic communication link connecting businesses a. i, iv b. i, iii, iv c. ii, iii d. i, ii, iii, iv 13.4 For carrying out C2C e-commerce the following infrastructure is essential (i) World Wide Web (ii) Corporate network (iii) Electronic Data Interchange standards (iv) Secure Payment Services (v)secure electronic communication link connecting businesses a. i and ii V. Rajaraman/IISc. Bangalore M13/V1/July 04/1 Indian Institute of Science Bangalore

110 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions b. ii and iv c. i and iii d. i and iv 13.5 Advantages of B2C commerce are (i) Business gets a wide reach to customers (ii) Payment for services easy (iii)shop can be open 24 hours a day seven days a week (iv)privacy of transaction always maintained a. i and ii b. ii and iii c. i and iii d. iii and iv 13.6 B2C commerce a. includes services such as legal advice b. means only shopping for physical goods c. means only customers should approach customers to sell d. means only customers should approach business to buy 13.7 Advantages of B2C commerce to customers are (i)wide variety of goods can be accessed and comparative prices can be found (ii) shopping can be done at any time (iii)privacy of transactions can be guaranteed (iv)security of transactions can be guaranteed a. i and ii b. ii and iii c. iii and iv d. i and iv 13.8 Disadvantages of e-commerce in India are (i) internet access is not universally available (ii) Credit card payment security is not yet guaranteed (iii) Transactions are de-personalized and human contact is missing (iv) Cyberlaws are not in place a. i and ii V. Rajaraman/IISc. Bangalore M13/V1/July 04/2 Indian Institute of Science Bangalore

111 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions b. ii and iii c. i, ii, iii d. i, ii, iii, iv 13.9 Electronic Data Interchange is necessary in a. B2C e-commerce b. C2C e-commerce c. B2B e-commerce d. Commerce using internet EDI requires a. representation of common business documents in computer readable forms b. data entry operators by receivers c. special value added networks d. special hardware at co-operating Business premises EDI standards are a. not universally available b. essential for B2B commerce c. not required for B2B commerce d. still being evolved EDIFACT is a standard a. for representing business forms used in e-commerce b. for transaction for e-commerce c. for ftp in e-commerce d. protocol used in e-commerce EDIFACT standard was developed by a. American National Standard Institute b. International Standard Institute c. European Common Market d. United Nations Economic Commission for Europe ANSI X.12 is a standard developed by a. American National Standard Institute b. International Standard Institute c. European Common Market d. United Nations Economic Commission for Europe V. Rajaraman/IISc. Bangalore M13/V1/July 04/3 Indian Institute of Science Bangalore

112 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions In B2B e-commerce (i) Co-operating Business should give an EDI standard to be used (ii) Programs must be developed to translate EDI forms to a form accepted by application program (iii) Method of transmitting/receiving data should be mutually agreed (iv) It is essential to use internet a. i, ii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv EDI use a. requires an extranet b. requires value added network c. can be done on internet d. requires a corporate intranet EDI over internet uses a. MIME to attach EDI forms to messages b. FTP to send business forms c. HTTP to send business forms d. SGML to send business forms For secure EDI transmission on internet a. MIME is used b. S/MIME is used c. PGP is used d. TCP/IP is used EDI standard a. is not easily available b. defines several hundred transaction sets for various business forms c. is not popular d. defines only a transmission protocol By security in e-commerce we mean (i) Protecting an organization s data resource from unauthorized access (ii) Preventing disasters from happening V. Rajaraman/IISc. Bangalore M13/V1/July 04/4 Indian Institute of Science Bangalore

113 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions (iii) Authenticating messages received by an organization (iv) Protecting messages sent on the internet from being read and understood by unauthorized persons/organizations a. i, ii b. ii, iii c. iii, iv d. i, iii, iv A firewall is a a. wall built to prevent fires from damaging a corporate intranet b. security device deployed at the boundary of a company to prevent unauthorized physical access c. security device deployed at the boundary of a corporate intranet to protect it from unauthorized access d. device to prevent all accesses from the internet to the corporate intranet A firewall may be implemented in a. routers which connect intranet to internet b. bridges used in an intranet c. expensive modem d. user s application programs Firewall as part of a router program a. filters only packets coming from internet b. filters only packets going to internet c. filters packets travelling from and to the intranet from the internet d. ensures rapid traffic of packets for speedy e-commerce Filtering of packets by firewall based on a router has facilities to a. i, iii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv Main function of proxy application gateway firewall is a. to allow corporate users to use efficiently all internet services b. to allow intranet users to securely use specified internet services c. to allow corporate users to use all internet services V. Rajaraman/IISc. Bangalore M13/V1/July 04/5 Indian Institute of Science Bangalore

114 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions d. to prevent corporate users from using internet services Proxy application gateway (i) acts on behalf of all intranet users wanting to access interne securely (ii) monitors all accesses to internet and allows access to only specified IP addresses (iii) disallows use of certain protocols with security problems (iv) disallows all internet users from accessing intranet a. i, ii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv A hardened firewall host on an intranet (i) has a proxy application gateway program running on it (ii) Allows specified internet users to access specified services in the intranet (iii) Initiates all internet activities requested by clients and monitors them (iv) prevents outsiders from accessing IP addresses within the intranet a. i, ii b. i, ii, iii c. i, ii, iii, iv d. ii, iii, iv A hardened firewall host on an Intranet is a. a software which runs in any of the computers in the intranet b. a software which runs on a special reserved computer on the intranet c. a stripped down computer connected to the intranet d. a mainframe connected to the intranet to ensure security By encryption of a text we mean a. compressing it b. expanding it c. scrambling it to preserve its security d. hashing it Encryption is required to (i) protect business information from eavesdropping when it is transmitted on internet (ii) efficiently use the bandwidth available in PSTN (iii) to protect information stored in companies databases from retrieval V. Rajaraman/IISc. Bangalore M13/V1/July 04/6 Indian Institute of Science Bangalore

115 System Analysis and Design Prof. V.Rajaraman System Analysis and Design/Electronic Commerce Multiple Choice Questions (iv) to preserve secrecy of information stored in databases if an unauthorized person retrieves it a. i and ii b. ii and iii c. iii and iv d. i and iv Encryption can be done a. only on textual data b. only on ASCII coded data c. on any bit string d. only on mnemonic data By applying permutation (31254) and substitution by 5 characters away from current character (A F, B G etc..) the following string ABRACADABRA becomes a. FGWCAAADRBF b. RABCAAADRBF c. WFGHFFFIWGF d. None of the above The following ciphertext was received. The plaintext was permuted using permutation (34152) and substitution. Substitute character by character +3 (A D, etc). The plain text after decryption is: Cipher text : PDLJDLXHVQC a. MAIGAIUESNZ b. IAMAGENIUSZ c. LDPDJHPLXVZ d. IAMAGENIUSC By symmetric key encryption we mean a. one private key is used for both encryption and decryption b. private and public key used are symmetric c. only public keys are used for encryption d. only symmetric key is used for encryption The acronym DES stands for a. Digital Evaluation System b. Digital Encryption Standard V. Rajaraman/IISc. Bangalore M13/V1/July 04/7 Indian Institute of Science Bangalore