The first requirement of a secure e-commerce operation is data transfer in a secure environment. The second is protection of credit card numbers. The third, of course, is building customer confidence. Each is a different operation, but goes a great way in ensuring secure financial transactions on the net.
All merchants who conduct financial transactions on the net must ensure that all sensitive data is encrypted. This encryption must be carried out with the help of SSL (Security Sockets Layer) protocol. When this happens the customer information - that is credit card information - becomes encrypted and can be decrypted only by those who have the decryption code.
Generally, the payment gateways become the intermediaries between the merchant and the credit card companies. These gateways stop the credit card number from being routed to the merchant. The merchant is only provided information about the product name, product code and the amount that has been debited from the customer's credit card.
The credit card numbers stay with the payment gateways.
These gateways are required to follow higher security requirements as compared to the merchants. Their servers are hosted in a secure environment; they have multiple firewalls and password protection; and conduct transactions on dedicated lines.
The merchants, who are unable to embed SSL protocol in their shopping cart, redirect customers on the SSL protected servers of payment gateways. This two-step process ensures that the data is transferred in a secure environment and the credit card numbers do not move beyond a responsible authority. Such a system benefits all 3 parties: the merchant is able to sell a product; the customer is satisfied that there is no breach of security; and the payment gateway gets a transaction fee for providing this extra layer of security.
It is now left to the merchant to build customer confidence that he runs a secure e-commerce operation. The merchant does so by informing customers that their information is safe because the SSL protocol is in location. This can also be noted by the customer who finds the letter 's' added to 'http' in the address bar.
The merchant also uses a shopping cart that has been designed professionally and is aimed at making shopping an enjoyable experience. A familiar, shopping interface, which is easy to navigate, can further convince shoppers of your reliability.