 The Internet continues to grow at a dramatic rate, with the number of global users now estimated at 195 million - nearly 5% of the world's population*. A major trend within this growth is the increase in electronic commerce, with 1999 seeing revenues from Internet shopping grow by 150%*, and business to consumer electronic commerce generating nearly $12 billion in sales revenue. These figures are literally changing by the minute as more and more companies, organisations and individuals around the world embrace the Internet.
A survey conducted by Internet Arab World magazine early this year revealed that the number of internet users in the Arab world has edged towards 2 million, but constitutes only 0.7 % of the population. The number of Arab world users is expected to grow to 12 million by 2003.
Saudi Arabia has seen the highest growth rate in the number of Internet users. Since the service was launched there in 1998, the number of users has grown by 160 percent. The UAE had the second highest growth rate. The highest number of Internet Service Providers (ISPs) is in Egypt with 34 companies providing access to the Internet.
This expansion creates huge opportunities for consumers, merchants and financial institutions alike:
- Consumers are given the convenience of shopping from home or work and now have unprecedented access to goods and services from around the world
- Merchants can access a global consumer base through a low cost distribution channel, enabling entirely new business models and revenue streams
- Financial institutions have the opportunity to expand their payment card customer base as Internet-based payment security improves and the number of purchase options increases
It is the issue of security, which still presents the largest hurdle to even greater use of the Internet for shopping. In the USA nearly half of consumers (44 percent) who have Internet access have ordered products or services online in 1999, according to a survey conducted for that country's National Consumers League. But while consumers are clearly excited about this new shopping medium, they continue to voice reservations and concerns about the potential risks, and are confused about their rights and remedies.
Despite the fact that most consumers said they prefer to pay for online orders with credit cards (67 percent) and that few reported any problems in that regard, the most common concern (41 percent) was that their credit card numbers would be stolen if they provided them online.
"What is even more distressing is that 69 percent of consumers incorrectly believe that it is safer to pay for an online purchase by cheque or money order than by credit card," said Mohamed Belarj, MasterCard International's Vice President and General Manager, Middle East and North Africa. "Nothing could be further from the truth, and MasterCard has been one of the prime movers in ensuring the highest levels of secure on-line purchasing," he said.
"The payments industry faces increased security challenges as credit-card counterfeiters and other criminals employ more sophisticated techniques and technologies to defraud financial institutions and their customers," said Belarj. "For electronic commerce to thrive, businesses and organisations such as ours must reassure consumers about the safety of their financial and other personal information, and consumers need to know how to minimise the risks of fraud and other abuses. MasterCard develops and supports innovative technologies that can and do protect consumers and merchants from card fraud and unsafe transactions when purchasing products at the point of sale by phone and mail, as well as over the Internet," he added.
MasterCard has led the industry in the development of security features such as the first tamper-evident signature panel, the use of three-dimensional holograms and card validation codes. Building on this history of innovations, MasterCard continues to lead the industry in researching and piloting new security initiatives that strengthen fraud prevention even as criminals who perpetrate fraud develop new schemes and technologies.
Among the new initiatives is SET (Secure Electronic Transaction™), which is increasingly being implemented for safeguarding personal information contained on a consumer's credit and debit cards. To do this, SET uses the highest level of data encryption to transport customer data and payment information over the Internet. Digital certificates enable parties to positively identify each other, in much the same way that a driver's license or passport does.
Currently, MasterCard is working to improve the flexibility and capabilities of SET to support multiple cardholder authentication schemes, including SET certificates, PIN, Chip cryptograms, digital Ids and non-SET certificates. A new model for SET called the Three Domain Model, or 3D-SET, accommodates the preferences of issuers in determining their own cardholder authentication and security schemes.
The most current security initiative for remote transactions involves the use of pseudo-accounts, which 'stand in' for actual accounts in a unique way in Internet transactions. This is a sophisticated, easy to implement and highly secure way to protect cardholders, merchants, and financial institutions. MasterCard is developing a comprehensive pseudo-account security program, which it will announce shortly.
Cardholder and card identification are important in both the real and virtual worlds. The CVC2 - Card Validation Code 2 consists of a three-digit number uniquely derived for each account and indent printed, not embossed, on the signature panel of all MasterCard cards. This is one way that a merchant can verify that cardholders have the card in their possession in a card-not-present environment.
Digital identification can be placed in more sophisticated ways on a smart card, making it totally portable and the ultimate security tool. Once consumers have a smart card imbedded with their digital identification, they can take that card anywhere, insert it into any personal computer that has a chip reader and begin shopping or receiving information safely and securely.
Consumers then have the ability to use any personal computer and the security of the chip card guarantees that someone else cannot sit at a computer and pose as the cardholder simply by fraudulently logging on. In the future, it is expected that hardware manufacturers will begin installing smart card readers as a standard feature on all computers.
In another major development, MasterCard has for the last five years been studying biometric technologies, which use unique physical characteristics to positively identify cardholders. As currently piloted, this technology extracts minutiae from a cardholder's fingerprint, and using a unique algorithm, creates a value, which in turn is matched to the value stored on the chip embedded in the card. MasterCard has already launched a pilot program using biometrics at its Purchase, NY headquarters. This technology will soon migrate to the MULTOSÔ multi-application platform where it will reside securely with other functions such as stored value purses, and loyalty programs.
In 1999, MasterCard announced the availability of the IBM Consumer Wallet v2.1, a new version of its digital wallet that uses universal standards for data entry to simplify the online shopping experience. Once consumers have entered their personal information into the Wallet, it can be retrieved and securely transferred to any merchant website. The wallet is designed for maximum efficiency when used on one of the growing number of websites that support the Electronic Commerce Modeling Language (ECML) standard that makes online shopping easier and safer for consumers.
The wallet resides right on a consumer's desktop. Personal information is entered and encrypted with the use of several established Internet payment standards such as SSL (Secure Sockets Layer). The wallet's efficiency is further increased when the consumer shops on a SET-enabled website, since the software recognizes and supports this protocol as well
"The payments industry, which every day moves billions of dollars and millions of transactions electronically, is uniquely positioned to take advantage of the burgeoning opportunities in electronic commerce, whether it is by way of a personal computer, a mobile phone or other device. Through its many fraud-fighting programmes, MasterCard continues to work proactively with its members, the industry and the public to build consumer confidence and ensure that remote transactions are totally safe and secure," concludes Mr. Belarj.
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