Shar’ah Standard of e-Wallet in Practice

By:
Prof. Dr. Mohd. Ma’sum Billah
masum@applied-islamicfinance.com
masum2001@yahoo.com
+6019-3699542

Internet has shifting almost all about the way we live and work today. Every organizations, institutions, societies and individuals are effected by the power of Internet. Now, the Internet has so drastically changed business. The development of Internet has occurred in most companies to perform e-commerce. eWallet method has emerged replacing the traditional transaction method, which is less effective comparing to the online transaction. eWallet brings many benefits to the consumers. Along with benefits, however, come harms. In this project paper, we will discuss about eWallet, its advantages, issues faced by companies and other related subtopic. eWallet is the paperless business transaction. The concept of eWallet is all about using the Internet in order to conduct business in more effective way.Consumers that perform online business sell goods and services through online instead of physical storefront. It allows customers to serve themselves by browsing to the companies’ web site. To get more information and better understanding regarding to this topic, we has choose one company in Malaysia that conducting the eWallet transaction. The company is name as Koridor Intelek (M) Sdn Bhd. This paper mainly discuss on the topic of eWallet. This paper aims to answer the following questions: What is data eWallet? Who are the target user and executor of eWallet? What are the mechanisms used and how it is being applied? Through this paper, we will be able to analyze how individual data is being protected in the cyberspace with the existence of cyber law and its relation to the Islamic Ethics.

2) INTRODUCTION

eWallet or a digital wallet is an application or service that assists consumers in conducting online transactions by allowing them to store billing, shipping, and payment information. Consumers then can use all those information to automatically complete a transaction’s sign-out page. This greatly simplifies the check-out process and minimizes the need for a consumer to manually complete a transaction’s form every time.

When using an electronic wallet, consumers do not need to fill out order forms on each site when they purchase an item because the information has already been stored and is automatically updated and entered into the order fields across merchant sites. Consumers also benefit when using electronic wallets because their information is encrypted or protected by a private software code. Merchants benefit by receiving protection against fraud.

It needs to be recognized that electronic wallet refers to multiple concepts and involves multiple features and functionality on which there does not appear to be an industry consensus at present. What is the key is that an electronic wallet holds user information for the purposes of e-commerce transactions.

Electronic wallets have been implemented in a variety of manners. Among those are as a built-in component of browsers, as helper applications to browsers, as stand-alone client applications, and as server-based application.

2.1) Objectives of eWallet

The common objective of all eWallet products is to provide a frame of reference in which critical personal information used for individual authentication or payment is stored, managed and made available to third-parties.

3) How eWallet Works

eWallet is a small browser extension that users "carry" as they move from one Web site to another on their shopping spree. It contains all the usual credit information that users otherwise must type into e-commerce sites over and over.

After browsing a site and making selections, users just need to click the eWallet icon in the Windows task bar, enter the PIN number, and drag their plastic of choice onto the site's order form. eWallet then automatically fills in the necessary data and the site will prompt users to complete any blanks. Users also are free to over ride any field eWallet has completed wherever they fill necessary.

Compatible with existing credit and debit cards, users can enter billing and shipping information in eWallet which is then encrypted and permanently stored. eWallet works on every online shopping site and is free to both shoppers and retailers.

In addition, eWallet enables users to perform queries through several shopping search engines located on the eWallet task bar. Direct links to popular shopping sites are also provided.

Encryption

eWallet really does offer powerful protection for all your data. The program uses the strongest encryption which the US government permits which means using the RC4 encryption algorithm with a 56 bit key. There is even stronger encryption on offer for users in the US and Canada, and there are some countries where the US government won't allow the program to be exported.

Installation

Installation from the PC calls up the familiar Add/Remove Software which works through ActiveSync to automatically add software to your connected mobile device. This is the easiest way to install software, as the correct version is selected and installed to your mobile machine automatically.

eWallet in action

Once the program is installed you can launch it and take a look around at just what is on offer. The first thoughtful touch is to offer a Sample Wallet and a Quick Tour of the program. If you are using the 30-day trail version of the program then you will not be able to encrypt your data, so it is a good idea to play around with the sample wallet without entering any real data. This way you can learn how the program works and also decide whether you want to buy the full version. You can create as many actual Wallets as you like. At each level you can configure your wallet, and here at the 'top' level you can set the wallet password and the basics

Categories and cards

Within your wallet you can create as many categories as you want there are 17 pre-defined one offer, which cover most of the usual things anyone might need. They range from 'passwords', 'insurance', 'health' and 'government' through to 'personal', 'pictures', 'travel' and 'most important'. But of course you can rename or customize them all. Our example here is called 'CE passwords' which is where we can keep track of all the registration codes and information about the programs for CE machines. We selected a category type, and then a default card type from the 29 pre-defined ones on offer selected a visual icon for it, and we were ready to start!

As you enter information you have yet more choices you can make, and more ways that you can customize the program. 

On the PC

One thing we really enjoy is being able to have a desktop PC version of our important CE software. It can make entering data so much easier on the big screen, and it also means that if my CE device is lost or damaged we can still access all data it is an invaluable insurance policy. If you use ActiveSync to keep your desktop and mobile machine in step then eWallet mostly takes care of things for you. On installing the program to a mobile machine eWallet chooses the My Documents folder as the default to place the sample wallet and any wallets you then create. On the smaller PPC and PocketPC devices this is the folder which automatically synchronizes with the desktop.

If you are using an HPC Pro machine then you need to move your wallets into the Synchronized Files folder on your mobile device. You only need to do this once, and thereafter synching is automatic. From the PC version of the program all you need to do is to look for the wallets in the right synchronized files folder (usually created within My Docs on the C drive) and open up the wallet you need. Then when you save the changes you have made on the desktop those changes will be automatically ported across to the mobile device next time you sync.

3.1) eWallet Function

3.2) Authentication and transaction support - the role of eWallet

4) Benefits of eWallet

We can divide the benefits of eWallet into two parts; customers and organization.

i) Customers

ii) Organization

4.1) Advantages of eWallet against other ePayments

The key advantages that eWallets bring to the ePayments environment are that they encourage online shopping through a combination of the convenience, portability and high security that they offer. Initially, the take-up of eWallets was hindered by problems on all these fronts. Things are, however, changing.

With enhanced portability, security and convenience, the future prospects for eWallets appear brighter. However, in order to gain critical mass both in terms of customers and merchants, the buy-in of merchants, financial services institution / Internet services providers remains crucial. This is where interoperability problems and the lack of a common security protocol continue to hinder the development of eWallets as a viable payment facilitating mechanism.

The development of interoperable eWallets should put card schemes in a powerful position as they can enforce consistency among issuers. This tactic should be put to use in the future. Until there are clear benefits evident for customers in using eWallets for payment facilitation, they will continue to remain at best a marginal payment method.

eWallets do, however, have the further advantage in that they are not a totally alternative payment method to the dominant credit and debit cards, but rather facilitate payments by these means. With an anticipated huge increase in e-commerce, there should be a place for a service that can offer a far higher degree of convenience and security than simply paying online with debit or credit card. However, a caveat should be added here that eWallet solutions have to be very simple to understand and convenient to use, and, perhaps most importantly of all, function effectively.

4.2) SWOT Analysis for eWallet

Strengths

Opportunities

Weaknesses

Threats

5) The development of eWallets

There are two main types of eWallet:

5.1) The slow progress of eWallet

There are a number of reasons for the poor uptake of eWallet. The bottom line is that, in both the United States and in most of continental Europe, payment cards, such as credit card and debit card, which are not facilitated by eWallet, remain the most popular way to pay online. Credit cards in particular are widely recognized, accepted and trusted. In countries where debit is favored, such as in much of continental Europe, the need for a particularly secure and trusted solution to encourage spending online is evident.

6) Issues related to eWallet

i) Regulatory issues

There are a number of areas where eWallets touch on important regulatory concerns.

Consumer and data protection:

Some companies unethically keep customer information for several purposes. That information can be exploited and even sold to other parties for instant profits. This activity actually invades the privacy of consumer which is protected by law.

Use by children:

Additional regulatory issues arise. Does transaction made by children through eWallet can be considered valid or not?

ii) Standardization and Interoperability issues

From a merchant perspective, interfacing to each new eWallet provider can be an expensive task. Each occasion may require the implementation/integration of a PKI-based authentication structure, with a non-trivial level of resource involved.

From a subscriber perspective, having to use too many eWallets is counter-productive. For each wallet, much of the same information must be re-entered. (Data protection legislation would obviously preclude a new wallet being loaded from an existing one.)

These standardization and interoperability issues need to be resolved. There can be little doubt that the lack of standardization and interoperability has hindered the adoption of eWallets by both financial services institutions and merchants. The lack of interoperability between wallets means that consumers cannot currently incorporate a number of different cards in a single eWallet.

eWallets were developed as a convenience tool and consumers are not going to want to hold different wallets with different providers, such as financial services providers and Internet services providers. A potential solution, of course, to the issue of interoperability would be the introduction of an aggregation type wallet, which could hold a number of different eWallets, or indeed the linking up of a eWallet to an existing account aggregation service.

The lack of standardization with regard to security protocols is also an issue that is likely to continue to hinder the more widespread adoption of eWallets. This makes it hard for banks and merchants to commit to one solution. Visa and MasterCard, for example, initially mutually developed the Secure Electronic Standard (SET) but have now parted ways and brought out differing protocols.

The SET protocol enabled both merchants and consumers to identify each other through the exchange of digital certificates. SET has now evolved into 3-D SET, which also brings the issuing and acquiring banks into the transaction process. While the SET protocol is undoubtedly one of the more sophisticated fraud prevention measures available, take-up of the solution has been low. The main reason for the low take-up rates is that the SET infrastructure is both expensive and technologically complex for merchants to implement. However, given the unpopularity of the SET solution the card schemes have now abandoned the protocol in Europe.

6.2) W3C Proposed Standard for Electronic Wallets

7) Consumer perspective

7.1) eWallet and the consumer

7.2) eWallet Competitors

A number of different types of company are competing in the eWallet space from technology vendors, to Internet services providers, card schemes and financial services institutions.

The key strengths that banks and card issuers have with regard to the evolution of eWallets are the relative level of trust that consumers have in them and their experience at managing payments. The significance of this 'trust' factor that banks and card issuers offer online consumers is highlighted by the findings of a couple of recent consumer surveys focusing on ePayments.

Research from Taylor Nelson Sofres, for example, found that 57 per cent of online consumers would prefer banks to continue to be the party that handles their credit card details. However, the technology will have to be reliable and the customer interest present to make the costs of development a justifiable expense for financial services institutions. It is these aspects that have failed companies in the past.

American Express, Wells Fargo, Citibank, Barclaycard and Egg are all financial services institutions that have withdrawn their eWallet or their plans to develop an eWallet . ISPs In contrast to a number of recent bank eWallet withdrawals, ISPs such as Yahoo, AOL and Microsoft are now turning their immense online presence towards eWallets, through incorporating them into their online shopping portals.

8) eWallet products

1. Agile Wallets

2. eWallets

3. Microsoft Wallets

9) CONCLUSION

In simple terms, an electronic wallet (eWallet) is an application or service that assists consumers in conducting online transactions by allowing them to store billing, shipping, payment, preference and other similar information; and to use this information to automatically complete a merchant’s check-out page. Currently, many users find the manual filling out of these forms typically specific to merchants confusing, tedious and error-prone. According to industry figures, more that 60 percent of online purchasing is abandoned by the consumer prior to completion.

eWallet is one of those programs which it is a real pleasure to use and it has been so well thought out. There are a host of features and the program remains so very simple to use. Consumer can ignore all the customization and use it just as effectively with the default settings and selections. Although eWallet still have some disadvantages in term of interoperability and standardization of security and formats but still eWallet is the best in transaction application compare to others.

In Islamic point of view the best way to make transaction is by face to face. Body language, tone of voice, and facial expressions all help us understand what the other person is trying to say. As pursue to the situation face today, we must use diverse means to communicate like internet, telephone, fax machine, Federal Express, the U.S. Postal Service, or maybe even a messenger service.

Thanks for the development of eWallet people nowadays can make transaction via online. Therefore it will save time and cost of the consumers. Initiative taken by Koridor Intelek (M) Sdn Bhd should be praise in order to make Malaysia one of the finest countries that practice IT in this world.