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Electronic Payment Systems


Check, credit card, money order. eCash - characteristics ... Enables payment options as credit card, micro payment and check payment ... – PowerPoint PPT presentation

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Title: Electronic Payment Systems

Electronic Payment Systems
  • Money deposited and managed electronically by
    online brokerage managing assets firms worth more
    that 900 billions this number will be more than
    3 trillion by 2003
  • Dell computer sells over 10 millions of goods
    per day Americans are spending over 42 billion
    in 2002 and 183 millions people are expected to
    shop online by 2003
  • The cost of billing one person by conventional
    methods varies between 1 and 1.50 billing
    through the Internet is estimated to cost 50
    cents per bill
  • Online merchant might accept a credit or charge
    card, debit card, ATM card, certified check,
    money order, or COD as payment for purchases

Using Scrip for Online Purchase
  • Scrip, also known as server scrip, is a form of
    electronic cash stored on a computer and that was
    obtained by depositing money at a scrip vendors
    server it is the equivalent of a paper gift
  • Flooz is a scrip server that allows payment of
    purchases either by the purchaser or another
    person can use the scrip
  • Beenz is a brand of scrip that is marketed as a
    loyalty reward program for Internet consumers
  • Both programs ceased operation during 2001
  • The demise of alternative currency plays like
    Beenz and Flooz comes as the big credit card
    companies like Visa and American Express continue
    to tinker with their security platforms to offer
    payment methods to online shoppers.

Using Electronic Checks for Online Purchases
  • An electronic check is the digital equivalent of
    a conventional check
  • Electronic checks fulfill the same function as
    paper checks, but they are used on the Internet
  • Automated Clearing House (ACH) Network is where
    checks are credited to merchant accounts and
    deducted from the checking accounts
  • Micropayment is a payment of less that one dollar
    that can be used to purchase a single track of
    music on an album, a newspaper, or a complicated
    literature search

Using Credit Cards for Online Purchases
  • A consumer is protected by an automatic 30-day
    period in which the consumer can dispute an
    online credit card purchase
  • A credit card has a present spending limit based
    on the users credit limit
  • A charge card carries no present spending limit,
    and the entire amount charged to the card is due
    at the end of the month

Advantages and Disadvantages of Credit Cards
  • Advantages
  • Merchants obtain fraud protection
  • Consumers obtain limits on liability from fraud
    (50 limit given by the Consumer Credit
    Protection Act)
  • Consumers get worldwide acceptance
  • Disadvantages
  • Merchants are charged fees per transactions and
    monthly processing
  • Consumers pay interest on balance due and year
    processing fee

Requirements of digital encryption
  • Value of the payment
  • Distribution
  • Confidence
  • Anonymity
  • Security
  • Scalability
  • Recovery
  • Availability
  • Avoidance of the Double-Spending problem
  • Exchange rates
  • Integration
  • System independence

Concepts of digital encryption
  • Digital encryption
  • Digital signatures
  • Digital certificates

Digital encryption
  • Symmetric encryption
  • AES
  • DES
  • 3DES

Asymmetric (public key) encryption
  • RSA

Hybrid cryptosystems
  • PGP

Digital signatures
  • Authentication of messages
  • Use public key encryption (eg. RSA)
  • Hash-output (MD5, SHA) encryption

Digital Certificates
  • Cipher key management
  • A certificate consists of
  • a public key
  • Certificate info
  • One or more digital signatures
  • Certificate Authorities
  • Kerberos

Secure Transmission protocols (I)
  • SSL and TLS
  • Client-server negotiation of algorithmsand
    validity checks
  • Verification of servers identity
  • Hash functions at the end of the key exchange
  • Integrity check of each packet

Secure Transmission protocols (II)
  • S-HTTP
  • Encryption, digital certificate or both
  • Both the server and the client authenticated

First Virtual
  • Glenn Fleishman 1994, First Virtual Holdings
  • An infohouse with information sold, with a
    fragment of it presented to the customer before
  • Customers account established offline
  • 29 c per transaction 2 of total transaction

First Virtual - security
  • No credit card no. passed through internet
  • Requires only PIN of First Virtual Account
  • Customers and merchants wouldnt have to worry
    about Pretty Good Privacy keys, secure http,
    Secure Sockets Layer, or any other cryptographic
  • No usage of encryption actions (no transfer of
    personal data)
  • Customer must confirm willingness to complete the
    transaction via e-mail

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First Virtual - conditions
  • E-mail account
  • First Virtual Account
  • Valid Visa or MasterCard credit card

  • DigiCash - early 90s
  • One of most commonly used systems nowadays
  • Check, credit card, money order

eCash - characteristics
  • used by banks - partners with DigiCash ,provide a
    special eCash-account for their clients
  • payment via eCash with electronic coins obtained
    by transferring a certain amount of money from
    their real bank accounts
  • user of eCash system needs to have special
    software (eCash- Wallet) installed on his/her PC,
    - reminds whenever the account is empty or needs
    to be refilled with change

eCash - chracteristics
  • Blind Signatures to provide personal privacy and
    security of the electronic payment
  • Blind Signatures are a cryptographic invention of
    David Chaum which - used to validate the
    electronic cash without revealing the payers

eCash - encryptions
  • asymmetric encryption 768 Bit RSA and TripleDES
  • Hash- function SHA -1

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  • Scheme combining features of cash and checks
  • Enables payment options as credit card, micro
    payment and check payment
  • 1994 Melton, Lynch, Crocker, Yessl, Wilson
  • Purchased lately by VeriSign Co.
  • Requires CyberCash Client Software

CyberCash - payment
  • 4 parties customer, bank/credit card
    institution, retailer, CyberCash
  • Customer electronic Wallet
  • 1st usage following data
  • name of the Wallet
  • postal address
  • e-mail address
  • barcode
  • credit card/bank account data
  • password

CyberCash - Security
  • Account secured with password, barcode
  • CyberCash Payment Gateway Server (core of the
    transaction process)

CyberCash - encryption
  • DES ( Data Encryption Standard) with a 56 bit key
    ( in this case - the session key)
  • Session key is unique for each transaction
  • Session key is encrypted with RSA (asymmetric
    encryption) with usage of 1024 bit key
  • The MD5 hash total is marked with RSA private

CyberCash - encryption
  • The CyberCash Gateway decodes the data of the
    client with RSA public key and verifies them
  • there is no exchange of keys between the Wallet
    and CyberCash Gateway during the session
  • the sensitive data exchange between customer and
    retailer is protected with transaction key (DES -
    key). The data can not be decoded by the retailer
    gets the order data WESTLB.

  • Micro payment system
  • Sums ranging from 0.1 cent to 5
  • Broker bank, internet provider etc
  • Scrip credit item used for regulating payments

Millicent - transaction
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