Design and Implementation of Anti-fraud Payment System in E-commerce Sector
Chapter One
AIMS AND OBJECTIVES OF THE STUDY
The purpose of the design and implementation of an anti-fraud payment system is to:
- Design a buyer/seller registration system with a facility to verify and authenticate users
- Implement a system that reduces the risk of fraud
- Improve constantly the verification and authentication facility
CHAPTER TWO
REVIEW OF LITERATURE
This chapter examines in detail, the history and developments made in the e-commerce sector, through e-payment systems, previous research work on this subject, the characteristics, models, architectures and limitations as pointed out by various scholars and researchers. This will provide the ground work for figuring out an efficient way to prevent fraud in payment systems
HISTORY OF E-COMMERCE
The technologies that e-commerce systems seem to be based on were developed roughly in the 1960s with the development of the Electronic Data Interchange (EDI). This technology was designed to allow companies carry out electronic transactions. This standard was used and modified in some form or another up through the 1990s when the real implementation of online payment systems for e-commerce began. Michael Aldrich in 1979 came up with the idea of online shopping when he was on a stroll in a supermarket with his wife. He connected a domestic television and a computer with telephone lines so as to start selling groceries online via this model. This basically was the groundwork for more advanced implementation of the online shopping systems. In 1981, the first Business to Business online shopping was implemented by Thomson Holidays whereby they picked up 66 travel agents from around England and connected them. These agents were able to extract data online and understand what was available from the Thomson Brochure so as to serve customers instantly.
The Minitel was invented in France in 1982 by a telecom company which has since been considered as the most happening pre-World Wide Web online service. Users of this service had a privilege of making online purchases, check phone directories, chat with each other and basic search.
In England, Tesco pioneered the concept of Online Shopping Basket or Online Trolley in 1984 and is referred to as the first Business-to-Consumer online shopping system. In April of that year, CompuServe released Electronic Mall which is almost like the ecommerce of today. In 1987, SWREG was released as the first online software store which helped developers sell their software online.
The World Wide Web era ushered in some improvement in the e-commerce world. Back then, NSFNET was the backbone of the Internet, but it wasn’t available for commercial use. It was in the year 1991 when the NSF (National Science Foundation) cleared the way for the commercial use of NET. This was considered to be a major boost for the e-commerce industry and its future growth.
Studied patterns on NSF back bone network state that the traffic jumped to over 1 trillion bytes per month in the year 1991 itself after it was opened for commercial use. By 1996 there were over 10 million hosts online and by then the Internet was now a global phenomenon.
It was also in the year 1991 itself when University of Minnesota launched “gopher”, the first point-and-click based browser that could be used to navigate files on the Internet. At times this has been tagged as the birth of Internet. Gopher was originally designed to ease campus communication.
Netscape launched encryption certificate in 1994 and it became the trustworthy means of transmitting data over the Internet.
Certificates gave the browsers a chance to trust a source before displaying its data and sharing personal information. Something that helped the end consumer shower more interest on the Internet and indirectly on e-commerce transactions.
The year 1994 also marked the launch of Yahoo! although the domain was registered later in the year 1995. This truly gave the Internet and e-commerce a completely new direction.
PayPal came into existence in the year 1998. The current PayPal system that we see is actually the merger of X.COM, a financial service company of the late 2000s, and Confinity which happened to be both a payment and cartographic company.
It was the year 1998 only when Google entered the world of e-commerce and Yahoo! launched Yahoo! Stores online.
HISTORY OF E-PAYMENTS
The idea of an electronic transfer of funds or electronic payment is not a new idea. The was developed as far back as 1871 with its introduction by the Western Union, the electronic fund transfer. It was based on its pre existing telegraph network.
In 1918, the Federal Reserve of America also began using the telegraph to transfer money as described by Charles R. Graham(Graham, 2003) The Diner’s Club International established itself as the first independent credit card company in the 1950s. In 1959, the American Express created its first plastic cards for electronic payments.
By the 1970s, there was reasonable reliance on computers as part of the buying process. In 1972, the Automated Clearing House (ACH) was developed to batch process large volumes of transactions. The NACHA established operating rules for ACH payments just two years later.
RESEARCH WORK ON E-PAYMENT SYSTEMS
Electronic payment(e-payment) systems was described by Bidgoli(2002) as “utilizing integrated hardware and software systems that enable a customer to pay for the goods and services online”. He rightfully described the increased efficiency, improved security, improved and enhanced customer convenience and the ease of use. He also examined many methods and instruments can be used to enable electronic payment system implementations.
Bushry (2005, p.161) considered a more general role for e-payment systems anywhere that money needs to change hands and considered mutual relations of e-payment systems between organizations and customers. “Electronic payment systems are proliferating in banking, retail, health care, online markets and even government, in fact, anywhere money needs to change hands. Organizations are motivated to use electronic payment systems in order to deliver products and services more cost effectively and to provide higher quality of service to the customers. Customers are encouraged to use the electronic payment systems because of the ease of making payments through them.” John (2003) argued more details about e-payment systems and its functions and defined it as a ‘neo-payment’ mode that can be defined as any transfer of funds initiated through an electronic terminal, telephonic instrument or computer or magnetic tape so as to order, instruction or authorize a financial institution to debit or credit an account. In addition, he knew it was the same as the Electronic Fund Transfer (EFT). Asokan et al (1997) pointed out different types of electronic payment systems with its basic framework and primary requirements including integrity, authorization, confidentiality, availability, and reliability for security requirements.
Quah (2006, p. 908) pointed out main requirements of e-payment systems as:
- Sufficient security;
- Similar running scenario as the traditional business; and
- Minimum changes on the current financial.
On the other hand, Ferreira et al (1998) presented the scheme to analyse payment systems characteristics with its four sub parts, each serving a single purpose.
CHAPTER THREE
METHODOLOGY
This chapter reviews how the existing system works as well as how to produce a better alternative for its improvement. The relationship among actors, entities, platform and information flows within the organization is very important. In a nutshell, system investigation and analysis studies an existing system with the view of improving on it or developing an entirely new system to replace the existing one. The major task here is to design a new system using tested and trusted development methods that is as efficient and probably more efficient than the existing one. The software development model is the Waterfall model.
FACTS FINDING
Fact finding is an approach taken to acquire data about a specific or subject with the aim of analyzing and synthesizing the analyzed data to come up with a better system. Fact finding for this study was done by examining related publications, research work, journals and books.
ANALYSIS OF THE EXISTING SYSTEM(S)
In this section, thorough studying and analysis of the gathered data and fact were done on the existing system.
The typical process of an anti-fraud system generally follows the processes of:
- Fraud prevention
- Fraud detection
- Fraud reporting
- Fraud mitigation
SYSTEM DESIGN
The system as extensively described in previous chapters seeks to prevent, detect, report and mitigate against fraud that may arise in the course of e-payment. Credit/Debit card fraud are the most common forms of fraud. For this web based system, we detect fraud in the following ways:
- Compare billing address with visitor location: This involves using simple codes to compare billing addresses verified by the card networks. Fraudsters tend to fill in real cardholder address to make fraudulent orders online. Therefore by default, a visitor to the site that is located in a country different from their billing address raises red flags and is treated like a potential fraudulent case.
- Detect Tor, VPN, anonymous proxy usage and hosting providers
- Check for known cyber attack vendors
CHAPTER FOUR
IMPLEMENTATION AND RESULT
INTRODUCTION
This chapter discusses the deployment and testing of the anti-fraud e-payment system after the design and development. The Hardware and Software Requirements as well as Development tools are identified in this chapter.
PROGRAMMING LANGUAGE SELECTION
The programming languages used in this project include PHP, CSS, HTML and JavaScript. PHP was chosen as the server scripting language due to its reputation as a secure framework. It also has ease of use as all its functions are executed on the server. PHP was also considered based on its friendliness with databases. It is database driven.
CHAPTER FIVE
CONCLUSION, SUMMARY AND RECOMMENDATION
SUMMARY
An online payment system was developed in this project and integrated with an e-commerce platform with anti-fraud capabilities with the view to embrace technology in our everyday life. The system was able to register customers and store their information and enabling login to place orders and buy on the platform. This project also emphasized on the fraud prevention, fraud reporting and the fraud mitigation aspects of an ideal e-payment system. This emphasizes the need for a robust and well maintained e-commerce and increases the level of trust between buyers and sellers on the online market.
CONCLUSION
In conclusion, the online payment system development is providing a way to practice commerce effectively and reduce the cost, slow nature and labour of the traditional methods. However, we have been able to integrate the level of trust in the traditional physical commercial sector with the ease brought about by the World Wide Web.
RECOMMENDATION
For future works, improvements can be made in terms of user identification and verification. Data security, data retrieval and fraud detection and reporting should be a vital consideration in development of any further e-payment systems.
REFERENCES
- Abrazhevich, D., (2001). Classification and Characteristics of Electronic Payment Systems, In. Bauknecht, K., Madria, S.K. and Pernul, G., Electronic Commerce and Web Technologies: Second International Conference EC-Web, September 4-6, Munich, New York: Springer.
- Asokan, N., and Janson, P.A., (1997). The State of the Art in Electronic Payment Systems, Computer Volume, 30(9), 28-35.
- Bushry, M.,( 2005). E-Commerce, Delhi: Firewall Media.
- Bidgoli, H., (2002). Electronic Commerce: Principles and Practice, San Diego: Academic Press.
- Dani, A.R. and Krishna, R., 2001. An E-check Framework for Electronic Payment Systems in the Web Bsed Environment, In. Bauknecht,
- Ferreira, L.C. and Dahab, R., (1998). A Scheme for Analyzing Electronic Payment Systems, In. 14th ACSAC (Annual Computer Security Applications Conference), 7-11 December 1998, Arizona, New York: Springer.
- Graham, B., (2003). The Evolution of Electric Payments. Thesis, (BA), The University of Queensland.
- Jean Camp, L., (2002). Designing for Trust, In. Falcone, R., Barber, S., Korba, L. and Singh, M., Trust, Reputation, and Security: Theories and Practice: AAMAS 2002 International Workshop, Bologna, Italy, July 15, New York: Springer, 15-28.
- John, S.M., 2003. Information Technology: Its Application On The Small Scale Industries Sector, New Delhi: Discovery Publishing House.
- Kim, C., Tao, W., Shin, N., and Kim, K., (2010). An Empirical Study of Customers’ Perceptions of Security and Trust in E-payment Systems, Electronic Commerce Research and Applications, 9 (1), 84-95.