Data Protection and Transaction Security

Transaction security pertains to three important components and related issues, namely:

● Transaction Privacy, which means that transactions must be held private and intact, with

unauthorized users unable to understand the message content;

● Transaction Confidentiality, implying that traces of transactions must be dislodged from the

public network and that absolutely no intermediary is permitted to hold copies of the transaction

unless authorized to do so; and

● Transaction Integrity, which pertains to the importance of protecting transactions from

unlawful interference-i.e., transactions must be kept unaltered and unmodified.

In an open network like the Internet, it seems difficult to ensure these. There are, however,

technological solutions that seek to address these security concerns. These solutions usually

come in the form of authorization schemes, i.e., programs that make sure that only authorized

users can gain access to information resources such as user accounts, files, and databases.

Typical examples of authorization schemes are: password protection, encrypted smart cards,

biometrics (e.g., fingerprinting, iris-scanning), and firewalls. A firewall is a system of

cryptographic methods supported by perimeter guards to ensure the safe arrival and storage

of information and its protection from internal and external threats. The most common data and

transaction and data security scheme is encryption, which involves a set of secret codes that

defends sensitive information crossing over online public channels. It makes information

indecipherable except to those with a decryption/decoding key.

Strengthening Consumer Protection

Among the more common trust-related issues

that SMEs take note of in considering whether to engage in e-commerce are:

where and how payment takes place (whether real or virtual); when settlement

takes place (before, during or after the transaction); who settles; whether the transaction

is B2B or B2C; and whether settlement can be traced. Generally, however,

among e-commerce users in developing countries, including SMEs, there is very

low willingness to provide sensitive financial information over the Internet. On the

other hand, consumers have reservations about transacting with SMEs through the

Internet due to the lack of a clear policy on returns and use of data. To address this

concern, government can encourage companies/ SMEs to make their privacy policy

explicit in their Web sites.

Network Infrastructure and Localization of Content

A developed national information

infrastructure is a necessary, though not a sufficient, condition for e-commerce

uptake of SMEs. Without reliable and inexpensive telecommunications and

other information services, SMEs will not be able to go online. An important strategy

in this regard is the construction of “telecenters” or electronic community centers

that would serve as a community-shared access and connectivity platform especially

in the rural areas (e.g., an electronic agri-information center which provides market

information to farmers in rural areas). These telecenters can also be a venue for

capacity building, skills enhancement, training, communications and content development.

65 Government can also adopt agglomerative approaches to Internet use to

reduce costs (e.g., export aggregators, such as B2B or B2C portals/exchanges for

SMEs, which will facilitate trading with fellow SMEs and with other companies in the

international market).

E-Government

Government should be the lead-user of e-commerce if various business

and private-sector related activities are to be prompted to move online. In effect,

government becomes a positive influence. E-government can take the form of various

online transactions such as company registration, taxation, applications for a variety

of employee- and business-related requirements, and the like.

Awareness Campaign

Evidence suggests that SMEs have insufficient knowledge

of information technology and e-commerce. Many SMEs have identified their lack

of knowledge of technology as one of the main barriers to using e-commerce. Government

and private sector partnerships can engage in a campaign to disseminate information

to SMEs about e-commerce policies, best practices, success stories, and opportunities and obstacles relating to the use of ICTs and e-commerce. These awareness

campaigns could include free training courses and workshops on e-commerce,

security and privacy, awards programs, and information centers to assist SMEs.

Ultimately, this information campaign should come in the form of an overall e-commerce

development strategy for the economy, focusing on its various innovative applications

for SMEs.

E-SME Development

The market ultimately drives e-commerce development, but

it is the private sector that fuels it. Government can provide incentives to encourage

widespread e-commerce use by SMEs. An “e-SME development program” in

which various sectors can provide technical assistance to SMEs to promote ecommerce

uptake, can also be developed. Banks, financial lending and training

institutions, and corporations should be encouraged to develop “SME desks” that

will address the specific needs of SMEs. In particular, steps should be taken to:

● provide incentives to individuals to become entrepreneurs by lowering borrowing

rates;

● provide incentives to SMEs that intend to use e-commerce in their business

operations;

● broaden credit extension facilities to SMEs in order for them to use ICT and ecommerce;

and

● offer discounts on business solution software packages and software licenses.

Moreover, big businesses and corporations should be encouraged to transfer technology

to SMEs by offering them free training in ICT and e-commerce.

2. Quality and speed of distribution logistics (i.e., roads and bridges)

Roads and bridges, especially in developing countries, still form part of the e-commerce

infrastructure. Very few goods are delivered over the information infrastructure

or the Internet (the exceptions are music and software). Most of the goods

purchased over the Internet are still delivered the conventional way (i.e., physical

delivery). Hence, poor roads and bridges, inefficient transport systems, coupled

with the high cost of international parcel services and bureaucratic customs clearance

processes, are major obstacles in the uptake of e-commerce in developing

countries. Government should therefore create a policy environment that will:

● encourage investments in the national physical and transport infrastructure; and

● provide for electronic customs clearance processing to streamline the bureaucracy

and allow for more transparent, predictable and efficient customs operations.

Both of these will contribute to the reduction of distribution and logistics costs.

How can government intervene in the promotion and development of e-commerce

among SMEs?

The following are the more relevant areas for government intervention with respect

to SME uptake of e-commerce: