`
`SELLING ONLINE WITH...
`
`
`
`Ss
`
`Bee SEs eS Ain
`
`FOREWORD BY NATHANIEL BORENSTEIN
`
`
`
`Shopify Exhibit 1013
`
`

`

`
`
`
`

`

`SELLING ONLINE WITH an
`FIRST VIRTUAL
`HOLDINGS, INC.
`
`THE INTERNET MERCHANT MASTER SERIES
`
`

`

`LIMITED WARRANTY AND DISCLAIMEROF LIABILITY
`
`CHARLES RIVER MEDIA, INC. (“CRM”) AND/OR ANYONE WHO HAS BEEN INVOLVED
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`RIAL AND PROGRAMS CONTAINED HEREIN; WE HOWEVER, MAKE NO WARRANTY OF
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`02370. CRM’s sole obligation to the purchaseris to replace the disk, based on defective materials or faulty
`workmanship, but not on the operation or functionality of the product.
`
`

`

`.
`.
`SELLING ONLINE WITH .
`FIRST VIRTUAL |
`HOLDINGS, INC.
`
`THE INTERNET MERCHANT MASTER SERIES
`
`
`
`
`
`:
`
`a
`
`CHARLES RIVER MEDIA, INC.
`ROCKLAND,
`ACHUSETTS
`
`

`

`Copyright © 1996 by CHARLES RIVER MEDIA,INC.
`All rights reserved.
`
`Nopart of this publication may be reproduced in any way, stored
`in a retrieval system of any type, or transmitted by any means or
`media,electronic or mechanical, including, but not limited to, pho-
`tocopy, recording, or scanning, without prior permission in writing
`from the publisher.
`
`Publisher: David F. Pallai
`Interior Design/Comp: ReubenKantor
`Cover: Gary Ragaglia
`Printer: InterCity Press, Rockland, MA.,
`
`CHARLESRIVER MEDIA,INC.
`P.O. Box 417
`403 VFW Drive
`Rockland, Massachusetts 02370
`617-871-4184 |
`617-871-4376 (FAX)
`chrivmedia@aol.com
`
`This bookis printed on acid-free paper.
`
`Pete Loshin. Selling Online With ... First Virtual Holdings, Inc.
`ISBN: 1-886801-41-X
`
`Ali brand names and product names mentioned in this book are
`trademarks or service marks of their respective companies. Any
`omission or misuse (of any kind) of service marks or trademarks
`should not be regarded as intent to infringe on the property of oth-
`ers. The publisher recognizes and respects all marks used by compa-
`nies, manufacturers, and developers as a meansto distinguish their
`products.
`
`Printed in the United States of America
`96 97 98 99 006 5 4 3 2 First Edition
`
`CHARLES RIVER MEDIAtitles are available for site license or
`bulk purchase by institutions, user groups, corporations, etc. For
`additional information, please contact the Special Sales Department
`at 617-871-4184.
`
`

`

`
`
`CONTENTS -
`
`
`
`FOREWORD. 00. cece te ee eee ene nets XV
`
`PREFACE... 00. 0 ccc eee eee eben trees xix
`
`Part |
`
`Introducing First Virtual and Internet
`Commerce |... cece eee 1
`
`INTRODUCTION TO INTERNET COMMERCE................eee tee 3
`
`BUYING AND SELLING ON THE INTERNET 2.0 200 es 6
`
`What's Different? o.oo eee t eee ens 7
`
`What’s the Sameé?.w cc ee eee ete ene 7
`
`THE INTERNET ENVIRONMENT. ........0...2 000005beueeeeeeeeeeees 9
`The Internet Advantage... 0. eee ee eee enn es 9
`World Wide Web,Killer App of the Intemet............. . 11
`
`THE Wor_D WIDE WEB... .........00-be eee eee nen ee eens 13
`
`World Wide Web Standards .. 0... ec cee ee 14
`Web Browsers and Web SEIVElS cc ee eens 16
`Selling on the World Wide Web... 0... eee eee es 18
`OtherInternet Sales Venues . 00... ee ee 19
`
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`

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`
`SELLING ONLINE WITH... First VIRTUAL
`
`INTERNET COMMERCE ISSUES... 0... ce tte ete eas 99
`Informal Procedures Aren’t Enough. ......... 00.0 ce eee eee 99
`Securing Financial Information.......... 0... e cece eee eee 93
`Authenticating Transaction Data ...... 0.0... cece eee 95
`Paying for the Privilege... ce cece ene eee 26
`
`THE FIRST VIRTUAL WAY. 6. et tenets 97
`A Holistic Approach to Security...........Ll ovecteneeeees 98
`Paying for the Service «oe eee tenes 30
`
`FIRST VIRTUAL OVERVIEW 20. eee ee tent tne n eee 30
`Can't People Steal My Information Products? ............... 33
`Can't VirtualPINs Be Compromised? ....... 0.00000: e eee eee 34
`It Seems Awfully Complicated oo... 0. cece ee eae 35
`
`Security Issues, SECURITY TOOLS............ 000000. c cree 37
`WHY THE INTERNET IS UNSECURE... 00.0 c ccc ccc ceeeuceeevaecens 38
`It’s the Protocols... ee cece teen eens 40
`
`Where the RISKS ALE... cece tent e ens 49
`
`What the Risks Are... ee ees eke e etree eae 49
`
`Internet Security Holes... eee teens 43
`A Bigger RISK. 0... ec te tee tee tee teens 45
`WhatIt All Means... ....ee eee ese tee e tenes 46
`
`NEW TOOLS FOR CRYPTOGRAPHY .... 0.0.0 cc tec eee eens 46
`Cryptography........., cect tn eee tte tenes 47
`Cryptographic Objectives... 6... ce ee ee es 48
`Codes and Ciphers... 6... ec cee ete eas 50
`Breaking Encryption Schemes... 0. ce ee eee ees 51
`Securing Algorithms... 6. ee ce eee eee ee eee 53
`Distributing Keys and Keeping Them Secret... 0.0... 2. eee eee 54
`The Pulolic Key Solution... eee eee 55
`Public Key Implications .. 0... ce ces 56
`Key Distribution and Certification .........0........00000. 58
`Trusted Key Distribution and Verification .............0000. 59
`
`CRYPTOGRAPHIC APPLICATIONS ...0.. 200 cc cc ccc te eee ene eee 60
`ENCHyptiOn..6 cece ett eee ene ees 60
`
`

`

` CONTENTS
`
`
`
`Digital Signature... cee e eens 61
`Nonrepudiation and Message Integrity....... 0.6.0... eee 62
`
`3
`
`SECURING INTERNET COMMERCE «0.0.6 65
`
`THE INTERNET COMMERCE STORY, SO FAR «0... cece eee ees 66
`Five Internet Commerce Techniques... 06... cece eee 66
`Security through Obscurity... ee eae 66
`Consumer/Merchant Channel Encryption... eee ee ee 67
`Digital Envelope Encryption .... 6.0.0. ccc cee eee eee 68
`Digital Currencies... ee eee eens 69
`Offline Handling of Transaction Data... 2. ee eee 69
`Representative Internet Commerce Players .... 0.6.06. eae 70
`Other Intemet Commerce Actors 20.0. ee 72
`
`TRANSACTION SECURITY THROUGH OBSCURITY 0.0.00 cece eves een2.73
`The “No Security” Choice 20... eee ee ees 73
`Choosing No Security .......... cece een eee e cere ee aee 74
`Incomplete Security Solutions... 2.2.00... ee ee eee 75
`Marks of Unsecure Solutions... 0.00. cee 76
`
`THE ENCRYPTED CHANNEL APPROACH .....0. 0.0002 c eee eens 77
`How an Encrypted Channel Works ......... eee eens ... 78
`Advantages for Merchants....... cece ete eben eee n ees 81
`Advantages for COMSUMETS .. 6. ee eee 8Q
`Weaknesses and Disadvantages..................2.00 005. 82
`
`THE DIGITAL ENVELOPE APPROACH... 0.0.00. cece eee eee 83
`How Digital Envelopes Work... eee eee 85
`Advantages for Merchants. ..... 0... cc cece eee ees 85
`Advantages for CONSUMEIS ... 6... eee eee 86
`Weaknesses and Disadvantages. .........0... 0.00 c cece eee 86
`
`DIGITAL CURRENCIES 2000 ce eee ett eee nes 87
`How Digital Cash Works... cece eet nas 88
`Advantages for Merchants... 0.0.2... 00 ccc ete cence 89
`Advantages for CONSUMEIS ..... eee ene 89
`Weaknesses and Disadvantages... 0... ees 89
`
`

`

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`SELLING ONLINE WITH .
`
`.
`
`. First VIRTUAL
`
`EXTERNAL CHANNEL APPROACH 0... ete eee nee 90
`How the External Channel Approach Works. ..........-..4. 94
`Advantages for MerchantS... 0.00.0... cece eee ee eee es 92
`Advantages for CONSUMErS 2... ee eee es 93
`Weaknesses and Disadvantages. ........ 0.0. c eve cece eees 94
`
`Part Il
`
`First Virtual: The Company,
`Its Products and Services..................... 97
`
`THE First VIRTUAL APPROACH TO INTERNET COMMERCE ........... 99
`
`THE BIRTH OF FIRST VIRTUAL... 0 ee te eee eee 100
`
`How First VIRTUAL WORKS. 0... eee eee neces 101
`Creating an Account 00.00.00 eee eee 102
`Account Requirements... 6. ett eee eens 103
`Submitting the Application... 6.6... ee eee 103
`Terms and Conditions... 0.0.0 eee 403
`
`Making a Purchase . 0... cece ete tenes 104
`Making aSalé. 0... 0. ec ec eet eee tent eee 105
`
`FIRST VIRTUAL PROTOCOLS «00... ee tee eee nas 105
`The Green Commerce Model ......... 0.00 ccc eee ee eee 107
`
`Cardholders and Cardholder Accounts ................00- 109
`
`Green Commerce Transactions .... 0... cee es 110
`
`Funds Transfer... ....,... Lee et eee ee ete eens 111
`
`Cardnumber Inquiries... cee cence eas 114
`Transfer Inquiries 2... ce eee ee 114
`Chargeoacks occ eet eee e en es 115
`Green Commerce Server Capabilities... 6... ee eee 115
`Cardholder Account Application... 0.0.0.0... 0.00000. e eee 115
`Account Maintenance «0.6... cc eee eee een 116
`
`Account History Requests... 0... cc cece ee ee ee tees 116
`Application/Green-Commerce MIME Content-Type. ........ 117
`Simple MIME Exchange Protocol (SMXP).............00005 118
`Simple Green Commerce Protocol (SGCP)............0 000. 118
`
`

`

`
`
`CONTENTS
`
`
`
`SELLING HARD GOODS WITH First VIRTUAL 20... ee ee 119
`_ Added Security Measures... ee ee eee 119
`Selling Hard Goodsvs. Information Products.............. 119
`Disital Signature Key Management....... 0.0... eee eee 120
`Validating Digital Signatures... 0... eee eee 121
`
`5 First VIRTUAL PRODUCTS AND SERVICES... ..........00 0000000 193
`
`THE FirST VIRTUAL ORGANIZATION 0.0. ee eens 194
`A Virtual Corporation... 0... ccc eens 124
`Using Automation 2.00... ee eee eee nee 125
`First Virtual Products and Services... 0. ce cece ee 126
`
`TERMS AND CONDITIONS .....0.0 0000 cece ce eee tte tenes 127
`Getting the Terms and Conditions Documents ............. 128
`Buyer's Terms and Conditions... 2.2.0.0... eee eee es 129
`Seller’s Terms and Conditions ...... 0... c cee eee ees 199
`InfoHaus Seller’s Terms and Conditions.................4. 130
`
`Buyers’ SERVICES . 0... cee ee tee ee e eee eens 130
`Account Requirements ......... 00.00.0405 cece eee 130
`Account Creation. 2.0 ccc cece eee e ene 131
`Buying Privileges... 0... eee 132
`Customer Support SErviceS. oe ee eee 132
`
`SELLERS’ SERVICES. 0. ee ee eee teen ens 133
`Account Creation and Requirements ........ne 134
`Selling Privileges... cc eee eens 135
`Customer Support Services... 6. eee eens 135
`
`Why THE 91-DAy HOLDBACK PERIOD?... 2... ee eee 136
`
`THE INFOHAUS SERVICE... 0... ee cee ees 137
`Storefront Creation and Requirements ................... 138
`Storefront Management..... 2.0... ec te eee 138
`Rights and Responsibilities .................220. Levene 139
`Customer Support Services... ce eee eee 139
`
`REACHING FIRST VIRTUAL 2.0. 0 ce ete tenn eens 139
`Contacting First Virtual via the World Wide Web. ........... 140
`
`

`

`
`
`SELLING ONLINE WITH.
`
`.
`
`. First VIRTUAL
`
`E-mail Address€sS.. 0... cece ene eee 141
`
`Automatic E-mail Responder... 0... ccc ee ees 141
`Special Addresses for Sellers... 0... ec cee ee 141
`Special InfoHaus Addresses... 0... ec ee ees 142
`OtherInternet Resource Addresses .... 0... cee eee 149
`FO eee eee erence een ene es 143
`Telnet... cece tee teen eeee 143
`First Virtual Users Mailing List... 0.0 ee eee 144
`How To Subscribe To the FV-Users List... 0... eee cee eee 144
`Unsubscribing From the FV-Users List... 0... ee ee 145
`Participating In the FV-Users List 0... cee ee eee 145
`Reaching A HUMAN. 2. cece nee eae 146
`
`Part Ill Buying and Selling with First Virtual......... 149
`6 OPENING Your First ViRTUAL ACCOUNT..............000.005. 151
`
`THE First VIRTUAL ACCOUNT PROCESS... 2.2.00... 0 eee eee ee ee eee 152
`
`MethodsforInitial Contacto... cee eee 159
`Providing Some Information Onling .......... 02.002 .008. 153
`Different Applications, Identical Followup................ 156
`Providing SomeInformation Offline ...............00006. 157
`Buying and/or Selling. 0... eee nee 158
`| Waiving the Holding Period for Merchants ................ 158
`
`SIGNING UP BY WorRLD WIDE WEB 0... ce eee 159
`Connecting to the First Virtual Web Site ...... 0. eee. 159
`Filling in the Application Form... 6... ke cee eee 160
`What FoHOWS..0. 6c ce crete ete beeen eens 164
`
`_ SIGNING UP BY TELNET. 0... eee cee tee tenes 164
`Connecting to the First Virtual Telnet Server... 00... 164
`Answering Application Questions ........ 0.0.0. eee eee 167
`Reviewing and Submitting the Application ............... 170
`What Follows... 0.0.0.0. ccs cee ee eee tenn ee bee nens 173
`
`

`

`
`
`CONTENTS
`
`
`
`SIGNING UP BY E-MAIL... 0.0.00... 0
`0 cee eee eee cece eens 174
`Getting the E-mail Application .......00... 000.000. e eves 174
`Filling in the Application Form... 2.0.0.0... eee 174
`Submitting the Application Form oo... eee ee eee eee 180
`What Follows... ence eens 181
`
`ACCOUNT VERIFICATION AND FOLLOWUP 2.0... ce ee es 181
`E-mail Confirmation of Application..... 0.0... 0.0.02 ee eee 182
`Responding by Telephone for Buyers... 2. ee ee 186
`Responding oy Mail for Sellers... 6... ee eee ees 187
`Finishing the Process .... 0... cee cee ee ee teens 188
`
`GETTING Express MERCHANT STATUS ....... eee eee ees 188
`
`ACCOUNT MAINTENANCE. 00000 ce ee te teen ees 190
`Tracking Your Account StatuS . 6. ees 190
`Making Changés. 0.00. ete eens 191
`
`BUYING WITH FIRST VIRTUAL. ........0..0 0000000000 0c eee eee 193
`
`THE TRANSACTION PROCESS 0... 0. cece ee ee ee eee eens 194
`
`A SAMPLE PURCHASE 0.00000 cc ccc eee een teen eens 195
`
`TRANSACTION COMPLETION 2.00.00. cee cece cee eee ee eee nee 199
`
`Propuct DELIVERY ..............-00. Lice eeae Loe e eee ee eens 906
`
`BuyiNG HARD Goons ........eee eee eect eect nents 907
`
`BuyING BY E-MAIL AND FIP 22.0... ec eee eee ens 908
`
`Buying bY FO.cc enter ene eee 908
`Buying by E-mail... cece ee ens 909
`
`SELLING ON THE INFOHAUS........0. 0.0.0.0... eee ee ee 913
`
`INTRODUCTION TO THE INFOHAUS..... 0.0.0 cece eccsecueueeeaees 914
`Why the InfoHaus?. 2.0... ee wee eens 914
`How It Works 00 cc ce ce eee eee ees 216
`It’s Not Just for the World Wide Weo ...... bce eee eens 216
`What It Costs 0... ccc eee eee cece nee nes 917
`
`4
`47)
`
`

`

`
`
`SELLING ONLINE WITH.
`
`.
`
`. FIRST VIRTUAL
`
`SETTING UP YOUR STOREFRONT... 0. ee ee eae 918
`Opening Your InfoHaus Storefront .. 0... ee eee 918
`Setting up a Storefront Using Telnet... 6... ee ee eee 919
`Setting up a Storefront Using E-mail..... 0.0... .0...02 000. 995
`Stocking Your Store6. ee cence eee ees 997
`Preparing Your Information Products ......... 0.0.00 e eee 998
`Uploading Products by flO... cc eee nee 939
`Uploading Products by E-mail... 0.0... cc cee eee 933
`Checking in Products by Telnet... 0... ce eee ee 933
`Installing Products by E-mail... 0... ce eee eee 935
`
`ADDING HTML TO Your INFOHAUS STOREFRONT .........5.20-005- 938
`
`INFOHAUS PERIODICALS... 6... ee ce eee ee 940
`Subscribing to a Periodical................ Cece ee ae 941
`Creating Periodicals... 0... cece eens 241
`Adding Issues to a Periodical»... 0... cee eee 949
`
`SELLING FROM YOUR WEB SERVER .........0..0. 00000 cee eeeee 943
`
`WHAT YOU NEED TO GO ONLINE 2.0.0.6 ee eee 945
`Hardware, Software, Services. ...... Leb cece eee neces 946
`HAPWAle 6 ee eect eee eee eens 946
`
`SOPWAIE ce ect te teen eens 947
`
`SENVICES. oo ce eee ence eee ences 947
`
`If You Outsource Your Web Site... ee eee 948
`
`First VIRTUAL RESOURCES... 0... eee eee eee eee 949
`Using First Virtual Programs and Templates................ 950
`Using theFirst Virtual Web Site 60.0... eee eee 951
`Scripts, Templates, and More... 6. eee eee 953
`
`THE SELLING PROCESS... 0. cee eee een eens 954
`Initiating a Transaction... 0. ee eee 954
`Using E-mail... eee eee ene eens 955
`Using Telnet. 0... eee cee eeeLeen ees 956
`Using theSimple Green Commerce Protocol. ... 6.2.0... .005 257
`Making Sales off the Internet... 6... ee eee 957
`
`

`

` CONTENTS
`
`
`
`Verifying a Buyer's VirtualPIN 000. cc ce eee 958
`FINEDoe eee eee ee eee e ens 958
`Telnet occ rere Leben enone 959
`
`E-m@il ce ce eee eee eee b en ene 260
`Using the FV-APL 00... Be ee ten ene 960
`
`INFOHAUS HTML FORMS 00... ec ee ee eee tee eens 961
`
`Emailform.. oo. ce eee en ee tee nee nes 961
`> Emailpayform.. oo. ccceceec ee t nee ene n ees 963 |
`
`CGI SELLING TOOLS... 0. cece erect eens 965
`M@MbEr. oo cee eee eee eae 965 -
`Installing and Running Member... 2... eee 266
`Websale. oo cc bee eee eee e eens 968
`Using Tel.ec eee cee teen eens 969
`Installing Websale 2... eee eee ens 269
`
`THE FIRST VIRTUAL API. 0. cc ce cette eens 2969
`Getting and Installing the First Virtual APL... 22.02.02. 0000. 971
`FV-API Operations... 0 ce eee eens 271
`Autosell URLS... oe cc cece ee ee tee eet eens 971
`
`Manusell URLS... 0. ccc eee eee ee eee ees 972
`
`Formsell URLS... cc ce ee eee teen nee 979
`
`10
`
`Tips, TRICKS, AND POINTERS 0.000.000.0000 ccc cece eee eee 973
`
`TIPS FOR EVERYONE. 2000. ce eee eee eee teens 974
`
`TIPS FOR INFOHAUS MERCHANTS 2.000000 tet ee nee nee 975
`
`GETTING YOUR STORE LISTED... 0... ce ete 979
`
`COMMERCIAL OPTIONS FOR MERCHANTS 2.0.0.0. 000 cece eee ees 980
`
`MAKING TEST SALES THROUGH FIRST VIRTUAL... 0.0 eee es 281
`InfoHaus “QuickBuy” Numbers 0... ee ee 289
`
`LEARNING More ABOUT HTML AND CGI]... ee 984
`Getting Help from the World Wide Web ............ 0005. 284
`Books about HTML and CGI... ec eee 985
`
`ASS
`
`

`

`
`
`SELLING ONLINE WITH.
`
`.
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`. FIRST VIRTUAL
`
`APPENDIX A
`
`INTERNET COMMERCE GLOSSARY. ......0.000 0 00sec cece eee eeeee 987
`
`APPENDIX B
`
`ELECTRONIC COMMERCE ONLINE RESOURCES ................... 305
`
`Wort WidE WEB RESOURCES... 0... ce ec ee ee ee eee 306
`Electronic Commerce Companies. ..... 0... cece ee eee eee 306
`Financial institutions. 00... 0. e eee ee eee ee ees 311
`International Internet Commerce Sites... 00... ...0..0008. 314
`General Catalog and News Services .... 00.0.0 eee 316
`Online Commerce Organizations 00.0... eee ee eee 318
`Online Marketing, Buying, and Selling................0--. 320
`
`MAILING LISTS 2.2.0... Pe eee ee er ee eens 399
`COMMERCENET. 0.0.00 cc cece ce ee ence neers b tenn enens 396
`
`CommerceNet Charter... 2... ec ccc eee eens 396
`CommerceNet Participation ............. 00.0 eee ee ee 397
`What CommerceNet Offers... 0... cece eee ee 327
`
`APPENDIX C
`
`First VIRTUAL TERMS AND CONDITIONS DOCUMENTS ............. 329
`
`Buyer’s TERMS AND CONDITIONS .......... teen eet nent eae 330
`SELLER’S TERMS AND CONDITIONS ........ 00.000 cece eeeeeeaeeee 341
`
`INFOHAUS TERMS AND CONDITIONS ....... 00000 ese ece eee eee eee 360
`
`APPENDIX D
`
`GUIDE TO THE CD-ROM...... 0.0.0. ee nee 371
`
`INSTALLING THE CD-ROM... 2... eee ee bet eee ees 371
`Accessing the CD-ROM Index... 0.0... ccc 372
`
`SUPPORT FOR SOFTWARE ON THE CD-ROM... 0.000. ees 371:
`
`CD-ROM CONTENTS ......Lee ee ete n ete tenes 371
`
`Structure.of the CD-ROM... 0.0... ccc cece cece 371
`First Virtual Specification Documents ......... 06.00 e eee 371
`InfoHaus Templates... 0. ee eee eas 371
`HTML Templates and CGI Scripts ..... 00... 2.00. c ee eee 371
`The First Virtual APL... 0... cee eee ee cence 371
`First Virtual Enabling Yourftp Server... 2.0.00 000000000040. 371
`
`ELECTRONIC COMMERCE LINKS 2.0.0... 0.0.00 ce cece eee e eee eeae 371
`
`INDEX. 00 cc cece een eee ee ee teens neene 377
`
`

`

`
`
`FOREWORD.
`
`
`
`WF 4ere living in very strange and interesting times.
`Nearly twenty-five years ago, as a high schoolstudent, I
`met myfirst computer. It was an IBM 360, to which I
`i
`typed via a teletype connected cross-town at 110 baud. I
`thought it was the second-coolest thing I had ever seen. Like
`many others of my generation, I quickly realized that this was
`an encounter that would change mylife, but I didn’t have a
`clue what was coming. If anyone had tried to convince me, as
`a 15-year-old would-be hippie in Columbus, Ohio, that by
`1996 I would be something like an international banker, I
`would have laughed out loud. Ten years later, as a computer
`science graduate student working on ARPAnet email technol-
`ogy, I would have been equally amused.
`
`In hindsight, it’s clear that computers, communication, and
`banking have been on a collision course for a long time. Now,
`the collision has happened. People who know howto use the
`Internet safely and effectively are suddenly considered vital to
`the future of human commerce. Established players in the
`game of international finance are on the edge of panic, so
`uncertain are they as to how the new technologies will
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`SELLING ONLINE WITH.
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`restructure their world. Their reactions vary in every conceiv-
`able way, sharing only one common theme: a desperate
`hunger to understand this strange new thing called the
`Internet.
`
`First Virtual came from anotherplanet, more or less. The FV
`founders came from inside the Internet, understood it deeply,
`and were totally comfortable with it. Of course, our igno-
`rance and naivete on the financial side of things were pretty
`impressive, too. If the established players had understood the
`Internet, they would have eaten us for lunch. As it was, we
`all found ourselves in a frantic race to learn more. Our
`biggest advantage was probably that it was easier to find
`people who could explain the financial world to us than it
`was for banks to find people who could explain the Internet
`to them.
`
`It will be a long time before the dust settles on Internet com-
`merce mechanisms. It may yet happen that all the players cur-
`rently on the scene will be swept away by forces that are, at
`this writing, just lurking in the wings. But so far, a few ofFirst
`Virtual’s key features seem to have struck a receptive chord
`with the Internet community. They seem likely to be around
`for a long time in one form or another.
`
`One such idea is open, universal access to commerce. First
`Virtual has without a doubt opened up moreentrepreneurial
`horizons than any other payment system in history. With ten
`dollars and a bank account, you canstart selling things to
`people all over the planet. There’s no credit-scoring or
`approval process that restricts merchant status to large, estab-
`lished corporations. Anyone can bea seller. This aspect of the
`FV system has met with nearly universal approval, and seems
`to be in tune with one of the most important aspects of the
`Internet — its role in opening, leveling, and universalizing
`human communication.
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`

`

` FOREWORD
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`
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`Another aspect of First Virtual’s system design that seems to
`have been. validated by experience is our reluctance to rely on
`special consumer-level mechanisms to facilitate commerce. All
`that you really need in order to be a buyer with First Virtualis
`access to Internet e-mail. This means that neither First Virtual
`nor the merchants who use our system have to be in the busi-
`ness of persuading customers to acquire, learn, and use any new
`tools. In essence, the entire Internet is our installed software
`base, and FV customers don’t have to sacrifice any freedom of
`choice regarding the software that they use for Internet access.
`
`Perhaps the most important aspect of FV’s system design,
`however, is that we have demonstrated that it is possible to
`build a secure commerce mechanism based entirely on proto-
`cols that are truly open. Programmers who wantto write
`applications that use First Virtual’s payment system can down-
`load complete specifications, sample code, and even somefully
`functioning software, all for free from our site. There are no
`woolly-headed claims for security through. obscurity, no
`requirements for programmersto license patented algorithms,
`and no dependencies on proprietary computing platforms.
`Contrary to many people’s expectations, FV demonstrates that
`it is possible to make Internet commerce as open as the
`Internet itself. Unfortunately, not everyone wants to keepit
`that way.
`
`We all know that there’s a gold rush going on right now on
`the Internet, with people and companies vying for position in
`the much-discussed butlittle-understood infrastructure for the
`future of human communication and commerce. What’s less
`recognized is that implicit in this gold rush is a struggle over
`the very organization of society in the years to come.
`Computing technology serves fundamentally to amplify
`humanabilities. Thus, it inherently tends to push organiza-
`tions towards one of two extremes, centralization or democra-
`tization, depending on how it
`is applied and in what
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`organizational structures. Nowhereis this more important
`than in the area of payment systems.
`
`Internet payment systems can be designed to enable the masses
`to be entrepreneurs, or they can be designed to further concen-
`trate power in the hands of the largest companies and wealthi-
`est individuals. If you look carefully at the technical design of
`a payment system, you will always find assumptions about the
`social structure of commerce, and you will often find a politi-
`cal agenda as well.
`
`First Virtual makes no bones aboutits political agenda: We
`want to make sure that thelittle guy has a chance, along with
`the big guy, to set upbusinesses on the Internet. Ultimately, we
`want a musician in rural Ugandato be able to sell his music
`directly to consumers in the United States, Tonga, or anywhere
`else. We don’t believe our payment system is the only way to
`enable such commerce, but we do believe that this goal is con-
`spicuously absent from many other proposed payment systems.
`
`Unlike this preface, the book you’re holding in your handsis
`not a political or ideological statement. It’s a very practical
`“how-to” book, and by the time you’re done readingit, you
`should be able to set up a whole new business in cyberspace
`starting with nothing but $10, an Internet connection, a good
`idea, and a willingness to work. I hope that’s why you’re read-
`ing these words. I don’t really mind if you don’t share my
`political agenda. If you’re an industrious would-be entrepre-
`neur with a dream of your own, you are mypolitical agenda.I
`hope you do very well.
`
`— Nathaniel Borenstein
`Chief Scientist, First Virtual Holdings
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`PREFACE
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`
`“al usiness people who heard about the Internet in 1994
`tended to ask, “What is it good for?” It was a valid
`question back then — most people had never even heard
`of the Internet. In 1996, there are still many people in all
`walks of life who aren’t sure how they can make the Internet
`pay off. This book will show you how to use the First Virtual
`Internet payment system to sell (and buy) goods andservices
`over the Internet — safely, easily, and inexpensively. What’s
`more, this book will provide you with a solid foundation for
`understandingall types of Internet commerce, as well as how
`the First Virtual approachfits into the global Internet.
`
`You'll find here everything you need to know to confidently
`get started selling on the Internet using the First Virtual sys-
`tem. Part One will give you a basic understanding of the issues
`and tools now in general use by Internet merchantsofall
`stripes. Chapter 1, “Introduction to Internet Commerce,”
`explains what it means to buy and sell using the Internet to
`carry your transaction information, as well as what problems
`you can expect to encounter in doing business on the Internet.
`Chapter 2, “Security Issues, Security Tools,” explains how
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`advances in cryptography have been providing the tools
`needed to solve Internet commerce security issues. Chapter 3,
`“Securing Internet Commerce,” explains how companies have
`been putting together the various cryptographic tools to create
`Internet commerce solutions. Here is an overview of how
`Internet commerce is developing, your choices as an Internet
`merchant, and the advantages and disadvantages of using
`these different solutions.
`
`Part Two provides an overview of the First Virtual organiza-
`tion and their products and services. Chapter 4, “The First
`Virtual Approach to Internet Commerce,” explains how the
`company came to be, the logical and technological underpin-
`nings of the First Virtual system, and how that system works.
`Chapter 5, “First Virtual Products and Services,” provides a
`summary. of First Virtual contact, product, and information
`resources,
`
`In Part Three, the nuts and bolts of buying andselling with
`First. Virtual are laid out in full. Chapter 6, “Opening Your
`First Virtual Account,” explains in detail how to open your
`- account for buying andselling, including applying for Express
`Merchant status. Chapter 7, “Buying With First Virtual,”
`examines the process of making a purchase with First Virtual.
`Chapter 8, “Selling on the InfoHaus,” explains how you can
`set up: your own Internet storefront using First Virtual’s
`InfoHaus hosting service; Chapter 9, “Selling from Your Web
`Server,” explains how to use scripts and other tools for selling
`your own information products or hard goods on your own
`Internet or World Wide Web server. Finally, Chapter 10,
`“Tips, Tricks and Pointers,” brings you tips and pointers from
`First Virtual staff and merchants to help make yourselling
`experience more profitable.
`“
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`PREFACE
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`
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`Appendices include “Internet Commerce Glossary” (Appendix
`A), “Electronic Commerce Online Resources (Appendix B),
`“First Virtual Terms and Conditions Documents” (Appendix
`C) and “Guide to the CD-ROM” (Appendix D). Included on
`the CD-ROMareFirst Virtual protocol specifications as well
`as scripts and other code for implementing your own First
`Virtual Internet storefront.
`
`This book was possible only with the cooperation, support,
`and help of many people. In particular, thanks are due the
`people at First Virtual, who are making Internet commerce a
`reality for anyone connected to the Internet, not just big com-
`panies. Special thanks also go to Nathaniel Borenstein of First
`Virtual for his help in getting this book finished on time, as
`well as to publisher David Pallai and production specialist
`Reuben Kantor.
`
`Finally, very special thanks to Lisa Wolfe, Ph.D., for her very
`special support, and to our genetic repository for his help in
`focusing my attention.
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`

`

`A
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`D
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`INTRODUCING FIRST _
`VIRTUAL AND
`INTERNET COMMERCE _
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` CHAPTER,
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`INTRODUCTION
`TO INTERNET
`COMMERCE
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`
`
`folkaac
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`.
`briefly)
`
`
`Sea This chapter explains what is happening
`in terms of doing business on the Internet.
`It
`
`
`describes the basic ideas, issues, and problems of
`
`
`
`BUYING AND Ne ONTHE INTERNET... ..--. +. 6|buying and selling on the Internet, and it introduces
`
`
`
`What's Different? ... 00.0.0... 7
`‘
`:
`.
`the First Virtual approach and services.
`What's the Same? .... 0.0... eee ee 7
`(
`Y)
`PP
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`
` THE INTERNET ENVIRONMENT ...2000000 00-0 eee 9
`
`
`
`Securing Financial Information......... 93 |
`The Internet Advantage ............4-. 9
`World Wide Web, Killer App of the
`Authenticating Transaction Data ....... 95
`
`
`Internet... 0.6... eee eee eee 11
`Paying for the Privilege... .........00. 26
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`
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`THE WorLD WIDE WEB... ee 13
`THE First VIRTUAL WAY... eee ee 97
`World Wide Web Standards.......... 14
`A Holistic Approach to Security....... 98
`
`
`Paying for the Service ..........0.00. 30 §
`Web Browsers and Web Servers....... 16
`
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`Selling on the World Wide Web....... 18
`OtherInternet Sales Venues .......... 19
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`
`
`First VIRTUAL OVERVIEW... eee 30
`Can't People Steal My Information
`INTERNET COMMERCE ISSUES .........-.0--0-0- 29
`Products?...... 0. cee eee ees 33 F
`
`
`Informal Procedures Aren't
`-
`Can’t VirtualPINs Be Compromised? .. .
`. 34
`
`
`Enough. ............ see eee 29
`It Seems Awfully Complicated........ 35
`
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`PART |
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`¢@
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`INTRODUCING FiRST VIRTUAL AND INTERNET COMMERCE
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`“Bi here can be no question: as we approach the end of
`the century, commercial life as we know it is changing
`rapidly. One of the most prominent vehicles of that
`changeiis the expansion of the global Internet. In 1990, after
`twenty years of research and development, onlyatiny fraction
`even of well-informed technologists knew what the Internet
`was. Five years later, Int