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`DDR Holdings, LLC - Ex. 2004
`Shopify, Inc. v. DDR Holdings, LLC
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`

`auditor. Every time l found someone, it destroyed their life." So she decided
`to turn her skills to helping people find others who wanted to be found.
`in l990, she started The Seeker in a printed publication as a service to
`help siblings and other separated relatives find one another.Then in I995.
`she decided to take The Seeker on—line. She hired a programmer to build a
`database and allowed people to send in photos that she scanned and put
`on~line.The site was met with resounding support from people all over the
`country She said.”Now l have aWeb site and people love me.”
`Linda said she'd never met an adoptee before she started this project.
`And she said some of the stories will break your heart. Like one woman
`who told the story of how she got pregnant at age seventeen. had twins. but
`her mother told her one of the babies was stillborn.The mother told the
`doctor she just couldn’t handle twins, got the doctor to go along with
`the deception, then sold the twin to an adoptive family for $5.000.When the
`mother died, the woman found the papers concerning the twin and started
`searching for this long—lost daughter who she thought was dead.
`But she added that people look for each other for all kinds of reasons
`you’d never think of. For example. Linda says there are 27 million living vet—
`erans from wars the US. has been involved in and those people are often
`looking for friends made in these crisis times. Insurance companies are also
`looking for people who are beneficiaries of life insurance policies.
`Getting publicity for the site has never been a problem. Linda said her
`site has been featured numerous times in print radio. and television media
`such as MSNBC, Internet World, and even the NewYork Times.Wrth over a mil-
`lion visitors a month,’her numbers were good but her ISP expenses were
`mounting as the gigabytes of information on the-server expanded and her
`page views rocketed. Her problem was a lack of information on how to pre-
`sent her site to potential advertisers She tried to do it herself but between
`running the site and her other responsibilities, she \Arasn't attracting the ad—
`vertisers she needed to support the site. After some research in discussion
`groups, Linda was able to determine that her page views were high enough
`to get an lntemet public relations agency to handle getting advertisers for
`her: and she signed up Flycast, who is now marketing her site to advertisers.
`As for the future. Linda is mulling over writing a book on how to find
`someone. She plans to include actual stories from her Web site concerning
`the more interesting searches people have made and how they ended.W
`DFNDT0004576
`
`Promoting Your Site
`
`as a starting point. As you know, the Internet is subject to rapid
`change, so we would encourage you to use the resources listed in the
`appendix as well as search engines to find further resources for pro-
`moting your site. Discussion lists and newsgroups as well as other
`sites will provide you with more information on the latest trends in
`promoting your site, creating effective banner ads, and generally
`keeping up to make your site a success. One of the most important
`parts of any successful business site is generating income. We'll talk
`about how to get paid in the next chapter.
`
`DFNDT000457K
`
`ne final way to promote your site is to win awards from other
`Opopular sites. When we say awards,.we mean getting special
`recognition from sites and publications that already have an audi-
`ence. Search engines, on—line publications, large ISPs, and other
`popular sites choose on a weekly, monthly, or annual basis “best”
`sites to feature to their audience. Being recognized as a best site can
`bring you an increase in traffic that will peak when you’re first listed,
`and then continue to bring you additional new visitors for weeks or
`months. This is because sites that give awards often archive their
`choices for visitors to scan through. For example, USA Today on~line
`has its daily “Hot Site” list archive of past sites, and Yahoo allows vis—
`itors to search back several months through its “Weekly Picks.” Also,
`sites that give awards are always looking for something new, and
`many of them read one another's award lists for new sites they have
`not considered.
`Registering with the search engines is a good way to get your site
`considered, although some sites that give awards allow you to submit
`a site for consideration. We’ve placed a list of sites that give awards in
`the appendix, and we recommend you visit the sites to see what their
`current policy is on submitting sites for consideration.
`Be prepared for lots of visitors, once you receive rocognition, as
`you’re sure to get them, especially if a popular site picks your site.
`Also, once you’ve gotten an award, often you’ll be provided with an
`icon that you"can place on your homepage. The icon is usually a link
`to the site that gave your site the award, which has obvious advan-
`tages to the award giver.
`
`
`
`Promoting Your Site
`
`Making Money in Cyberspace
`
`Awards
`
`Conclusion
`
`isting your site in search engines, building reciprocal links, cre—
`Lating banner ads, sponsoring other sites, using e—mail, making
`sure your URL is displayed in any traditiohal advertising materials,
`and competing for awards are all ways you can promote your Web site
`on the Internet. The ideas and concepts we’ve presented here provide
`you with the basics of promoting your site and are intended to serve
`DFNDT0004577
`
`Getting Paid
`
`Be prepared, be sharp, be careful, and use the King’s
`English well. And. you can forget all the [other rules]
`unless you remember one more: Get paid.
`—-Robert N. C. Nix,
`father ofPennsylvania Chizfjustice Robert N. C. Nix, Jr.
`(New York Times, 7 January, 1984)
`
`- Doing business on the Internet is all about.
`getting paid. This is an area that’s received a lot of
`attention because it requires a new way of thinking.
`In the past, our banks and financial institutions were
`, f
`made out of granite and marble to connote strength and security.
`People performed transactions face—to-face. But it’s now common—
`place to conduct transactions using a telephone, and people are be—
`ginning to find -it’s secure and convenient
`to perform financial
`transactions on the Internet as well.
`Rather than talking about the obvious, like having customers mail
`you checks, we're going to spend our time here on the various ways
`to accept payment electronically—such as credit cards, demand
`drafts, and electronic cash. (Much of the information about accept—
`ing credit cards will be familar to existing businesses, but information
`on demand drafts, commissions, and avoiding fraud will probably
`
`DFNDT0004579
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`Making Money in Cyberspace
`
`be new territory for most businesspeople entering cyberspace.) We’ll
`also talk about security precautions in conjunction with accepting
`payments in cyberspace. As a final note, we’ll show you how commis-
`sion sales can be another way to supplement your bottom line. And
`along the way, we’ll provide ways to avoid fraud.
`One thing we want to emphasize is that the cost figures are pro-
`vided simply as a starting point and can change almost daily without
`notice. We provide these figures here so that you can get a better idea
`of what to expect and as a basis for discussion when you start your
`own investigation. So do check for yourself before making plans
`based on the figures we provide here.
`
`Accepting Payment
`
`f you’re selling something, especially if you’re selling something to
`Iindividuals, you need to find a way to accept payment‘ Outside the
`Internet, this usually isn’t a problem, but in cyberspace it can become
`more of a challenge. In general, accepting payment on the Internet is
`a lot like accepting payment through mail—order or telephone sales,
`which is why the term mail order/telephone order (MOTO) transac-
`tion is commonly applied to cyberspace commerce.
`You can always accept payments from your on-line customers the
`traditional way by accepting checks or money orders by mail. This is
`a time—honored method though not as convenient or fast for cus-
`tomers. For some business operators, the mail is the only way. to build
`credibility and establish a track record so that they can later accept
`other forms of payment. But in a medium as universal and fast as cy—
`berspace, people do not usually expect to deal with barriers such as
`time and distance. With a focus on meeting customer expectations,
`we want to cover the variety of ways to accept payment on the Inter-
`net that are fast and convenient for consumers.
`By far, the most widely accepted form of payment in cyberspace is
`the credit card, but other popular payment methods include demand
`drafts and digital cash. The important thing is to find a method of
`payment that is as convenient for your customer as possible. You may
`find, especially if you’re a new business, that it may take some time to
`DFNDT0004580
`
`Making Money in Cyberspace
`
`What Does Accepting Credit Cards Cost?
`The merchant who takes the cards is charged a “discount rate,”
`which is really a fee for accepting the card based on the amount of
`the transaction and the potential risk to the bank in allowing that par—
`ticular business to be an authorized merchant. Discount rates can
`range from 2 to 3 percent or higher. In addition to the discount rate,
`there’s often a monthly minimum charge of between $10 and $25.
`A lease agreement for the equipment you will get to process the
`credit card transactions is also part of the cost. This equipment is
`usually either a terminal that requires a phone line and allows you to
`enter the credit card number and other information for authorization
`or a software package that does the same thing and works with a mo—
`dem~equipped PC or Macintosh. This equipment is leased, usually
`for twenty-four to forty—eight months, and you’re liable for the lease
`payments even if your business shuts down, unless you can success-
`fully sell the lease to another business. Lease payments are usually
`$35 to $50 per month automatically deducted from your business
`checking account, plus a balloon payment at the end of the lease of
`as much as IO percent of the total lease payments. You can shorten
`the term of the lease, but usually at the expense of higher lease pay—
`ments. If you manage to purchase credit card equipment or software
`from someone else, you can expect to pay a reprogramming fee of be-
`tween $300 and $500.
`You can also expect to pay an application fee and the first and last
`months’ lease payments in advance. The application fee can be as
`much as $ 1 ,000 or more. Altogether, a new business accepting credit
`cards can figure on paying between $2,500 and $4,500 over a two-
`year period, in addition to a percentage of sales.
`If you find a better deal in one cost area, it’s often offset in an—
`other. For example, some banks may not require you to pay a monthly
`minimum but will require that all credit card payments be deposited
`in an account you open at that bank. This can be especially true of
`banks offering merchant status on the Internet since they want to
`have control over the deposit of credit card payments. If you have to
`set up a checking account out-of-state, you may face delays in ac-
`cessing your funds. You may have to write out-of-state checks to pay
`for your business expenses or write yourself a check that you deposit
`DFNDTOOO4582
`
`DFNDT0004583
`
`build up to the level of success you’ll need to accept the form of pay-
`ment you'd most like to offer your customers. You’ll discover why as
`you read this section.
`
`Getting Paid
`
`Credit Cards
`
`Credit cards are one of the safest and best—understood ways for ac-
`cepting payments from consumers in cyberspace. Credit card associ—
`ations, such as MasterCard and Visa, have earned the trust of
`consumers by going to great lengths to protect them from fraud and
`misuse. One of the mechanisms that protects consumers is the Fair
`Credit Billing Act (FCBA). Under the FCBA, the consumer is al-
`lowed to dispute charges before payinghthem, and the consumer's li-
`ability for unauthorized charges is only $50.
`Credit cards are issued by banks but run through associations
`such as MasterCard, Visa, American Express, and others. For deter-
`mining merchant status for businesses, these associations also oper-
`ate through banks.As we all know, banks tend 'to be very conservative,
`but they tend to be even more conservative when it comes to grant-
`ing credit card merchant status.
`
`How to Become a Credit Card Merchant
`In order to accept credit cards, you have to be approved, usually
`through a bank. The approval process is the most difficult part for
`small and home-based businesses, especially if there is no storefront
`involved. Credit card associations are nervous about allowing busi—
`nesses with no track record to obtain merchant status. There are
`businesses on the Internet that specialize in granting credit card
`merchant status to home—based or Internet businesses, but many of
`these will send a representative to your home or- business to photo—
`graph your operation. They may also require a copy of your business
`documents, such as your business license and sales tax license from
`your local government authorities. The best way to get merchant sta-
`tus is to be able to demonstrate a track record of sales or show the
`bank your storefront.
`
`DFNDT0004581
`
`Getting Paid
`
`to access your funds. In addition, your bank might hold a check writ-
`ten on an out—of—state bank to yourself until the check clears, causing
`further delays.
`
`Credit Card Equipment
`The equipment you use to accept credit cards varies from a keypad
`terminal that you can swipe a credit card through to special software
`for your computer. For new Internet businesses, software is recom-
`mended, because most of the time you probably will not have an ac—
`tual credit card in your physical possession to swipe through a
`reader.
`The procedure to process a credit card sale is to enter (or write or
`buy a program to enter the data into the software for you) the credit
`card information including customer name, address, phone, card
`number, expiration date, and the amount of the sale. Using your com-
`puter’s modem and a free telephone line, the computer will call either
`a local or a toll-free number at an authorization center and within a
`matter of seconds receive either verification or refusal. Once the
`transaction has been authorized,
`the money is moved into your
`checking account—usually within one to three business days You
`can “batch process" sales, meaning you can enter a group of transac-
`tions for many customers and then make one call to process all the
`transactions.
`If you can afford the additional cost, you can have software devel—
`oped that will perform this function on-line while the customer is
`waiting. This can be very important for any business selling on—line
`services such as access to subscription information or anything that
`can be downloaded by the customer immediately. Artec Interna—
`tional, the company that sells electronic greeting cards on—line, has
`developed software and found a bank credit card system that will al—
`low it to verify customer credit card information within avfew seconds
`so the customer can immediately download the product.
`
`AVS Fraud Protection
`For those starting out, we recommend you choose an option offered
`by the bank who issues your merchant account called the address
`verification system (AVS). Using AVS you can verify information the
`
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`Making Money in Cyberspace
`
`Getting Paid
`
`customer supplies to you such as zip code and street address, which
`helps prevent the unauthorized use of credit cards to obtain goods.
`The AVS system checks the address information you supply about the
`customer against the information in the billing address database of
`the bank’s computer and will tell you if there’s a discrepancy. (If the
`customer is buying a gift and asking that it be shipped to another ad-
`dress, you can and should ask for both the customer’s address and the
`shipping address.) If the information you have and the bank’s address
`for the customer do not match up, that’s one of the signs the trans-
`action may not be legitimate.
`Should the AVS detect a discrepancy in the address information,
`you can protect yourself by asking the customer for further verifica—
`tion to confirm the customer is the valid card holder. It’s common to
`ask for a correct billing address or proof of address. If the customer
`claims she's moved, ask for another type of verification, such as ask—
`ing for a fax of their identification with the new address shown on it.
`If someone is using a stolen credit card number and you ship your
`product or provide your service without getting a signed delivery re—
`ceipt, you run the risk of getting a “charge back." This is something
`you want to avoid, and We’ll tell you why in the next section.
`
`
`At the time of this writing, there was no way to get AVS veri-
`fication on credit cards for international customers. Most merchants
`we've talked with ship to international customers using credit cards
`anyway because international orders tend to be more lucrative and
`fraud has been rare.
`
`Charge Backs
`A hated term in the credit card industry, charge back is the automatic
`deduction from your merchant checking account of funds that were
`deposited there after a customer transaction. Charge backs occur be-
`cause a customer successfully disputed charges you made to his
`credit card account. While this isn’t always the case, charge backs
`connote til-rat someone is fraudulently using a credit card.
`DFNDT0004584
`
`Making Money in Cyberspace
`
`worrying about exchange rates, like Marilyn Butz of bizcardpro (pro-
`filed in the introduction).
`The main disadvantage of accepting credit cards is the expense
`and hassle of becoming a credit card merchant, the additional work
`on your end to accept credit cards, and the increased cost over other
`methods of payment.
`
`Demand Drafts
`
`One way to accept payments is to simply have the customer write a
`check and send it to you. However, in the U.S., there is a way to ac-
`cept checks without ever seeing or handling the customer's actual pa—
`per check. It’s called the “demand draft.” This method of payment is
`typically used for a fast turnaround and is perfect for Internet trans—
`actions and subscription services. Sanctioned by the US. Federal Re-
`serve SYStem, demand drafts allow businesses to serve millions of
`consumers with credit card—er convenience.
`
`What Is 3 Demand Draft?
`Demand drafts look just like checks and are printed in the location
`where they will be deposited. The printing is usually done by a third—
`party service, called a demand draft service bureau, that handles pay—
`ment processing for businesses. Once a consumer provides his or her
`checking account number, bank number, check number, and address
`information to the business, that information is turned over to .the
`service bureau.
`The service bureau then generates the demand draft, which is a
`document that looks like one of the checks in the consumer’s check—
`book. These documents are imprinted with the consumer’s name, ad—
`dress, phone number, account numbers, and the numbers necessary
`to route the draft through the bank’s check-clearing system. The
`main difference is that, instead of a signature, the demand draft has
`either the customer’s name or a statement such as “preapproved” or
`“signature on file” printed on it. The demand draft is then deposited
`and clears just like a check. The lack of a handwritten signature is not
`a problem in processing.
`DeroooAsse
`
`
`
`Customers must dispute in writing charges they believe were in-
`correctly placed on their credit card accounts. You as a merchant
`have thirty days once contacted to show proof that the charges are
`valid and that the customer received the goods or services that show
`on their credit card account. A signed delivery'slip is the most com—
`mon way to answer a customer challenge.
`I
`In addition to costing you money, charge backs can also get your
`merchant status canceled with the bank. Too many charge backs can
`make the bank believe your business is not a good risk. Once your
`merchant status has been canceled, it is extremely difficult to rein-
`state. For businesses doing a brisk credit card business, a flag goes up
`at the bank if charge backs total more than 1 percent of total gross
`sales via credit card. The most common way to protect yourself from
`charge backs is to use AVS to get validation of each card holder's ad—
`dress information before you send a charge through.
`
`*
`Advantages and Disadvantages
`The main advantage to accepting credit cards is the convenience for
`the customer, the fact that customers understand the use of credit
`cards, and credit card use is more secure than other convenient
`forms of payment. In addition, customers can do everything required
`to place orders right there on-line._ They don’t have to hang up their
`Internet connection to dial your number or find an envelope and
`stamp to mail you .a check. The bottom line is, accepting credit cards
`means more business for you.
`In addition, credit card processing can improve your delivery time
`to the customer, especially if you’re waiting for orders to arrive before
`garnering product to ship or having another company ship the orders
`for you (called»“drop shipping"). If you have payment guaranteed, you
`can order goods more quickly and deliver to your customers faster. If
`your business depends on recurring paymentS'to 'be made by cus-
`tomers, such as subscriptions or installment payments, you don’t
`have to concern yourself about customers forgetting to pay or being
`late sending payments. You can also skip the expense of sending
`monthly notices and hiring additional staff to process checks and
`postage costs. And you can sell to international customers without
`
`DFNDT0004585
`
`Getting Paid
`
`Who Uses Demand Drafts?
`Millions of businesses use demand drafts for payment in lieu of
`credit cards from consumers who either don’t have or don’t want to
`use credit cards. Demand drafts are commonly used by Fortune 500
`companies, insurance companies, and mortgage companies as well as
`airlines, car rental companies, on—line services such as AOL, and In—
`ternet businesses. Drafts can be printed on a recurring or one-time
`basis, and are even used by collection agencies for incremental pay—
`ment of bad debits. They’re most often used for recurring payments
`such as car payments or subscriptions.
`Processing demand drafts is a lucrative business. Telephone
`Check Payment Systems (TCPS) of Kihei, Hawaii, a demand draft
`service bureau, reported to the FTC that it has over 700 business
`clients for whom it processes approm'mately 38,000 demand drafts
`totaling about $5 million each week. Another bureau, Baltimore,
`Maryland—based Accelerated Payment Systems (APS), told the FTC
`it processes half a billion dollars worth of demand drafts each year.1
`
`What Does It Cost to Use Demand Drafts?
`To accept demand drafts, you have to contract with a service bureau.
`Set~up costs run between $300 and $500. The service bureau will
`probably require you to open a checking account with its bank for de-
`posit of demand drafts to your business, though some service bureaus
`will overnight to you the printed demand drafts instead of depositing
`them (this costs extra). Most service bureaus charge $1 per draft or
`I .75 percent of the amount of the draft, whichever is more, and they
`automatically deduct the fee from your checking account.
`
`Advantages and Disadvantages
`The advantage of accepting demand drafts for payment is that cus-
`tomers can complete their orders on—line, so they don’t have to hang
`up their Internet connection to call in the order or remember to mail
`
`‘Jody Bernstein, Director of the Bureau of Consumer Protection, as Federal Trade Commission,
`from a speech entitled "Demand Draft Fraud,” presented before the House Banking Committee,
`Washington, DC, April 15, 1995.
`DFNDT0004537
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`Making Money in Cyberspace
`
`Getting Paid
`
`volved in using electronic cash are those who sell software on the In-
`ternet, especially those who develop shareware.
`Electronic cash is simply an account that both the merchant and
`the on-line customer set up with what we’ll call electronic cash ser-
`vice bureaus. The most popular electronic cash service bureaus are
`First Virtual Holdings, CyberCash, and DigiCash. These companies
`require the customer to make previous arrangements to be assigned
`either an account number or special software that can be used with
`participating merchants for purchases on the Internet. To set up an
`account, customers usually call a toll—free number and give their
`credit card or bank account information over the phone rather than
`over the Internet. For people who have intimate knowledge of how
`the Internet works or who are concerned about Internet security,
`these companies are an attractive option. These bureaus say credit
`card and account numbers are never transmitted over the Internet or
`stored on a computer connected to the Internet.
`For merchants, these services tend to be expensive, both in the
`fees paid and in cash flow. The merchant pays an application fee that
`can vary from $10 to $400, an annual fee that can range from $ 10 to
`$400, a percentage of sales ranging from 2 to 3 percent, and fees that
`can range from $1.30 to over $2.00 per transaction. Also, funds can
`be held by the service bureau for anywhere from four to ninety days,
`depending on the length of time the business has been around and
`the size of the transaction(s) involved.
`If you’re a small or new Internet business, you'll probably pay
`lower application and annual fees for electronic cash than other op-
`tions. Also, you won’t have to be concerned about special program-
`ming of your site to guarantee security to customers. But you’ll face
`a trade-off of higher percentages and fees as well as those ninety—day
`hold times for funds.
`So the main advantage of electronic cash is that it keeps people
`from having to send their bank account or credit card information
`over the Internet and small or new businesses can get set up easily to
`accept it. The disadvantage of electronic cash is that it requires more
`work on the part of the customer and it can stifle cash flow for the
`merchant, especially for smaller merchants.
`
`DFNDT0004589
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`Getting Paid
`
`227
`
`you a check later. You can also deliver to your customers faster. If
`your business depends on customers making recurring payments, you
`don’t have to concern yourself about their forgetting to pay or being
`late sending payments. You also do not have the cost of salaries, pa-
`per, and mailing for processing recurring transactions. And you can
`sell to millions more customers because all you need is that the cus-
`tomer have a checking account instead of requiring a credit card.
`A disadvantage of using demand drafts includes the FTC require—
`ment that one of three methods of verifiable authorization take place:
`Written authorimtion, a recording of the customer’s voice authorizing
`the transaction, or a written confirmation notice sent to the con—
`sumer before the demand draft is submitted for payment. Penalties
`for failure to conform to this FTC requirement include fines of up to
`$10,000 per violation, nationwide injunctive relief, rescission of con-
`tracts, damages, and giving up any money obtained.2
`Another problem is that customers may be nervous about provid—
`ing their checking account information to a company on the Internet.
`The FTC says demand draft fraud has already cost consumers tens of
`millions of dollars, and demand drafts are much less secure for the
`consumer than credit cards.
`As with accepting credit cards, you’ll be faced with fees for the
`service bureau, but these fees are usually less than those associated
`with credit cards. You could face delayed access to funds, however, if
`the service bureau insists on depositing the drafts to a bank in an—
`other state.
`Finally, demand drafts are a U.S.-only option. Unless your inter-
`national customers have an account in a US. bank, you cannot make
`use of a demand draft to accept payment.
`
`Electronic Cash
`
`This type of service tends to be attractive to people with a lot of In-
`ternet experience, such as programmers and people who deal on the
`Internet on almost a daily basis. Most of the merchants who are in-
`
`2Ilzaid.
`
`DFNDT0004588
`
`Making Money in Cyberspace
`
`What's interesting is how the concern over Internet security is giv-
`ing electronic cash firms a hold in' the service bureau marketplace.
`We’ll talk about security issues in cyberspace next.
`
`Security Issues
`
`q nything sent over the Internet is sent through several different
`computers before it reaches its destination. The concern regard—
`ing Internet security is that unscrupulous hackers can capture credit
`card or checking account data as it's transferred or break into the
`computers connected to the Internet to steal the same information.
`The answer is to encrypt the sensitive data into a code and send it
`across the Internet where it’s decoded on the other end. This process
`of securing data is what is usually meant by the terms “e-commerce”
`or “e-business." With security in mind, the major vendors of Web
`servers and Internet browsers have implemented encryption tech—
`niques and attempted to standardize those encryption techniques
`across the Internet. The software handles the encryption or encoding
`on one end and the decoding on the other. Users are informed of the
`secure transaction because their Internet browser puts a special mes—
`sage on the screen and/or offers a visual clue. A common clue is to
`show an image of a broken key in the lower left—hand corner'of the
`Web browser when regular, nonsecure transactions are taking place
`(see Figure. 9-1) and a Whole key when secure transactions are taking
`place (see Figure 9—2).
`In order for you as the merchant to implement security functions
`for Internet transactions, you must use a Web server capable of those
`security functions. The most popular of these security codes is the
`Secured Sockets Layer (SSL). Other encryption schemes can be used
`with SSL, such as the Secure Electronic Transaction (SET)-standard.
`Netscape and Microsoft both provide “secure Web server” software to
`those setting up Web servers, and the most popular Web browsers are
`built to accept and use these security functions. The bottom line is
`that you must check with your ISP about implementing security fea-
`tures for Internet transactions or purchase secure Web server soft-
`ware if you set up your own server.
`One of the reasons for the popularity of electronic cash among
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`FIGURE 9-1: Internet transactions that are not security encrypted are often
`indicated by a visual symbol such as this broken key.
`
`FIGURE 9-2: Secure Internet transactions can be indicated by a visual clue
`such as this whole key
`
`people who frequent cyberspace is that they understand what it takes
`to capture and illegally use sensitive information passed over the In-
`ternet. Standardizing encryption techniques can mean criminals can
`also learn the standard and use it to their advantage. But decoding
`encryption takes greater skill, so fewer criminals can do it.
`.
`Security on the Internet is much like security for your home.
`There’s a point where the effort outweighs the advantages. As with
`your home, you usually stop adding security features when you feel
`safe. Making your customer feel safe is what’s important in doing
`business on the Internet. If your customers tend to be very Internet
`savvy, then they may be willing to go to the extra effort to get an elec—
`tronic cash account, and that type of security may make a lot of sense
`for your business. If your customers are average people accustomed
`to using credit cards, then more standard methods such as SSL and
`AVS are probably enough protection to make both you and your cus-
`tomers feel secure.
`Knowing the needs of your customers determines the level of se—
`curity you choose. In addition, if you know the needs of your cus-
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`Getting Paid
`
`Some sites offer a lower commission on referred sales but pay on
`any purchase made. If a specialty item is involved, such as medical
`book titles from a site specializing in medical texts, commissions go
`down even further. The argument here is that manufacturers or pub—
`lishers who produce items for a narrow market don’t offer discounts,
`so the distributor must pay a lower associate commission.
`Delayed purchases present another problem. Visitors may be re—
`ferred from an associate site, browse the site, and then go back hours
`or days later to buy. Few retailers address this problem. However,
`there are sites