IIBF CYBER CRIMES AND FRAUD MANAGEMENT | ELECTRONIC TRANSACTIONS

IIBF CYBER CRIMES AND FRAUD MANAGEMENT | MODULE – C: ELECTRONIC TRANSACTIONS

Online Transactions: This unit contains Concepts related to Electronic Transactions, Emerging Trends in them, and the Legal Implications related to them.

In this article, we will go through the meaning of electric transactions, how they are done, frauds that happen in online transactions, preventive measures, etc.

WHAT IS AN ELECTRONIC TRANSACTION?

Transaction: This term is used mostly to describe everything starting from a stock trade to the transfer of money or goods that may involve people, businesses, accounts, or even software applications such as ATMs & POS terminals. 

Electronic Transaction: It is a paperless transfer of funds to or from a trust or fiduciary a/c. It does not include transfers that are initiated by voice or automated teller or cash dispensing machines.

When the ‘transaction’ is used by IT operations or in relation to fraud & channel managers, e-transactions take on a more complex form. In terms of application performance monitoring (APM), we dive deeper into what appears to be a seamless transaction on the surface usually revealing a no. of messages & distinct operations that are being correlated & get performed underneath it. 

The no. of related interactions that make up the transaction depends on the no. of applications & services that actually touch along the transaction’s end-to-end path.

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If we take a simple transaction example, like paying for your tea at a café with a credit card. All that involves in this one simple transaction is the transfer of money to the merchant & a transfer of tea into your mug. 

The Process: Although all this seems pretty simple, if we take a deeper look into this process of purchase, it will reveal a series of sub-transactions that move from the POS application, to the acquiring bank’s processing switch, to the back-end credit authorization connections, and all the way back to the POS application to deliver the final approval. And when we add the in-support for a 3rd party loyalty program & fraud detection analysis system in this whole process of sub-transactions, there are even more exchanges of data & transaction is faces with application complexities to finally consider this single transaction ‘successfully complete’.

The process can also fail for any no. of reasons. You might not get your tea & the merchant might lose his/her business because of: 

• your card is rejected, or 
• the network of EFT might be down, or 
• a processing switch fails due to being over-utilized. 

Each one of the mentioned sub-transactions plays an important part in the end-to-end chain. It is critical to understand where, when, & why these failures occur in this whole chain to maintain the integrity & performance of a transactional system.

ONLINE TRANSACTIONS FRAUDS

The electronic transaction is a complex process at the backend that has to face many risks related to fraud. The fraud could be that the complainant might allege that an unknown person had withdrawn money/made transactions by using his/her credit or debit cards via purchasing goods online. 

In most of these fraud cases, it is done by using the below information of the debit or credit card:

1. The 16 Digit Debit or Credit Card No.
2. The validity period of the cards
3. The 4-digit confidential One-Time-Password (OTP) or Card Verification Value (CW) will be sent on the registered mobile no. of the Debit or Credit Cardholder.

While it could be the case that the Card No. & the card validity is made available to the fraudsters through insiders in the bank, the fraudsters get the OTP by deceiving the account holders & influencing them to share the OTP on the pretext that it is required to verify their accounts, etc.

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PREVENTIVE MEASURES/PRECAUTIONS

Though fraudsters could have your critical information related to the cards, there still can be enough precautions that you can employ to prevent this from happening to you. Following are some of the important preventive measures that you can follow:

• Don’t hand over your account number to anyone over the phone unless you’ve yourself made the call to a co. you know to be authentic. 

Note: If you’ve not done business or transacted with them before this, then you should do an online search first for any reviews or complaints in relation to the company online.

• While doing a transaction related to your card, keep your eyes on your card & make sure that you get it back before you leave the business place.

• Monitor your bank as well as credit card statements.

• Monitor your credit report.

• Do not store your information on your Credit Card online, anywhere.
• Do not use a Credit or Debit Card on a Public Computer.

ONLINE TRANSACTION 

Online transactions are done with the internet’s help. Therefore, they really can’t take place without having an internet connection. 

They occur when buying & selling takes place on the internet. When a consumer purchases a product or a service online, he/she pays for it through online transactions. 

Online transaction processing (OLTP): The information systems, OLTP, facilitate & manage transaction-oriented applications, which is typical for data entry & retrieval transaction processing. 

STAGES OF ONLINE TRANSACTION

There are usually 3 stages involved in the process of Online Transactions:

• Pre-purchase/Sale: In this first stage, the product or service is advertised on online platforms with some details to get the attention of the customers.

• Purchase/Sale: When a customer is interested in a particular product or service, he/she buys it online & makes the payment for the product/services via online mode.

• Delivery Stage:  In this final stage, the goods bought get delivered to the consumer.

STEPS INVOLVED IN ONLINE TRANSACTION

The following are the steps involved in Online Transactions when dealing with e-commerce stores:

1. REGISTRATION: The consumer is required to register online on the particular website to buy a particular good or service. Usually, the customer is asked for his/her email id, name, address, & some other details are saved and get secured on the website, that’s why for security reasons, the buyer’s ‘Account’ & his/her ‘Shopping Cart’ is always protected by password.

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3. PLACING AN ORDER: When a customer likes a product or a service and want to buy them, he/she puts the product in the ‘shopping cart’ which gives a record of all the selected items by the buyer to be purchased such as the no. of units or quantity desired to be bought per item, the price for each item etc. The buyer is then required to proceed to the payment option after selecting all the desired products.
4. PAYMENT: The buyer then is required to select the payment option from the various available payment options. These payment pages are secured with very high-level encryptions so that the personal financial information of your bank or card details are completely secure.

Some of the payment methods are:

1. Cash On Delivery: The Cash on Delivery (COD) option lets you pay when you actually receive the product at the doorstep.
2. Cheque: In this, you send a cheque to the seller while the seller sends the product after the cheque is realized.
3. Net Banking Transfer: Here, the payment gets transferred from the buyer’s a/c to the seller’s a/c electronically i.e. through the internet. After the seller receives payment, he/she dispatches the goods to the buyer.
4. Credit or Debit Card: The buyer is required to send his debit or credit card details to the seller, & the price of his/her purchase gets deducted from his/her account.
5. Digital Cash: Digital Cash is a form of e-currency, here, the money in buyer’s bank account gets converted into a code which could either be saved on a microchip, a smart card or on the hard drive of the buyer’s computer. When the buyer makes a purchase, he/she just needs to mention that particular code in the requisite field on the website & thereafter, the transaction is duly processed.