An exciting freeware that promises you aneasy-to-implement payment infrastructure.

Most online sales have been "hardgood" purchases from the Web. An example is books from Amazon.com.Financial transactions are done via credit cards and delivery throughtraditional shipping methods.

This model simply transfers theshopping experiences of the physical world to cyberspace. However, it does nottake advantage of the tremendous potential of the Internet in creating new valuechains, markets, distribution systems, and pricing structures.

What we are seeing today is a newInternet purchasing model evolving. Increasingly, electronic goods—software,computer games, information are being both purchased (or leased) and deliveredvia the Net. In addition, new forms of network services are emerging (IPtelephony, Web TV, and mobile payments). Pricing structures today include avariety of pay-by-use options. This model, however, requires paymentinfrastructure that takes care of the business model they are built on anddeployed.

Present Payment Systems

The Internet payment systems currentlyin use or under trial, broadly fit into two categories—account-based ortoken-based.

Credit card payment systems areaccount-based, linking each user—whether a consumer or merchant (contentprovider)—to a specific account. Few account-based solutions in use today havesufficient security to prevent fraud. Credit card sales are costly to a merchantas each payment transaction requires multiple participants. In order to becost-effective, credit card transactions require a $5-10 minimum purchase.

Existing bank and credit card systemsare not designed to handle small values, which means that the cost for handlinga small value is as expensive as that of a large value.

Token-based systems include"electronic cash" solutions. These systems can handle micro-paymentsdown to fractions of a paisa. However, current implementations require that theconsumer exchange his/her money into some form of cyber currency, which isstored in an electronic wallet on the consumer’s hard drive. The fund exchangerequirement can be a barrier to its deployment and the use of electronic walletmakes the cash less portable (limited to Internet payments only) and moreexposed to risks. If the hard drive crashes, the money is lost.

Need for a New Payment Infrastructure

This limited approach to web shoppingdoes not take into account the broader aspects of e-commerce. If we definee-commerce as conducting business with the assistance of data communications,greater possibilities get revealed.

With mobile payment mechanism, usersare now able to access the e-commerce market through not just a computer, butalso with a mobile phone, Personal Digital Assistant (PDA) or any portabledevice.

Another aspect of e-commerce that iscurrently under-utilized is the sale and delivery of "soft" goods overthe Internet. While these capabilities are currently available on a limitedbasis, their potential has not yet been fully realized.

The primary roadblock to widespreadimplementation is the payment mechanism. Today’s payment systems either do notprovide micro-payment capabilities or cannot support Internet access via anydevice other than the PC. A new payment infrastructure must evolve to fullyrealize these yet-untapped aspects of e-commerce.

Revolutionary Payment Method

Jalda is a secure, flexible Internetpayment method that creates opportunities for new products, services, andpricing structures on the Internet. It is a non-proprietary, open system-basedset of Application Programming Interfaces (APIs). The best thing is it is afreeware.

It allows payments of any size to bemade anywhere and at any time—whether shopping online or in the physicalworld. It enables transactions from stationary PCs as well as from mobile phonesor any other communications device with Internet access, turning these devicesinto portable payment terminals.

Jalda also supports sales of any amount—froma fraction of a cent to large sums. Transactions are measured by"ticks" and charges can be defined by whatever parameter thee-commerce provider chooses. For example, one or several ticks can representelapsed time, mouse clicks, quantities, items, data files, searches, points,levels or any parameter the customer will be paying for. Each tick is assigned amonetary value according to the vendor’s pricing structure.

An account-based system, it associatesevery user with a specific account. The API enables application developers tointegrate the functions of a payment system into, for example, a web server or alocal application such as software. When a payment transaction is initiated, theconsumer signs an agreement, which outlines the terms of the agreement,including cost (by time, click or other), which Internet payment provider topay, etc. Once the agreement is signed and the Internet payment provider isnotified, the application can then begin sending ticks over the secureconnection between the user application and the Internet payment server.

The Jalda API protects the data streamfrom tampering and eavesdropping and it provides the mechanisms for trackingticks.

It even gives content providers theability to pay customers online, such as winnings from a contest or lottery, orpayment for participation in a survey.

Its wireless extension, Mobile Jalda,works in mobile operators’ networks. It is compatible with SMS-C, WAP, as wellas GPRS and UMTS.

Security

Jalda incorporates the most reliablesecurity solutions available today. Through the use of SSL and RSA Public KeyInfrastructure (PKI), an encryption technique using digital certificates forauthentication, buyers and merchants can be sure that the transferredinformation is protected. Unlike passwords, which could be different on everyweb site, the same digital certificate can be used everywhere whereidentification is required. Using digital certificates is easy withpoint-and-click interfaces and the technique is available in all of the standardbrowsers. Digital certificates are accessed through a personal identificationnumber and can be stored on hard disks or smart cards.

Vision for the Future

There is a definite need for a de factopayment standard for open and secure commerce. Such a solution involves amulti-purpose payment system. The system would work with online gaming, onlineretail, software providers, Internet protocol operators, and other providers ofpractically any product or service over the Internet.

The Internet Payment Provider (IPP)maintains the payment server to deliver a secure payment service for consumersand content providers. The IPP might be a bank, credit-card company, an ISP or anetwork operator. The payment provider can offer value-added services over theInternet. These payment services can help IPPs attract new customers and retainexisting customers for their primary businesses.

Rajesh Rajdan, is with EHPT