Electronic Payment Systems

Electronic Payments and Protocols

The emergence of electronic shopping on the Internet has necessitated new payment methods. Cash cannot be a medium of payment between remote buyers and sellers in cyberspace. Therefore, credit card has become the most popular payment method for consumer-initiated cyber shopping. The computers are asks the customer to input the credit card number, holder’s name, and expiration date. The customer may send the card information online or by making a toll-free telephone call.

Secure Electronic Transaction Protocol for Credit Card Payment

Is the encryption secure enough to protect confidentiality and authentication? The same is true in Internet commerce. Here the risk is even greater, since the hackers may read the card’s information while it travels on the Internet. The risk that the faked use of the other persons credit card is inherent unless a protocol can confirm the truthfulness of the cardholder on the other side of the cyber space. Even sending the card information by fax, telephone, e-mail, or sealed envelope cannot avoid risk. Even a password cannot completely eliminate risk. So consumers need to show an authentication certificate that may be stored in a smart card so the counterfeiters cannot abuse the card information even though the information is exposed. Is what is SET protocol is trying to achieve.

Electronic Fund Transfer and Debit Card on the Internet

Electronic Fund Transfer (EFT), a popular electronic payment method, transfers a money value from one bank account to another in the same or different bank. It is being used from 1970s; today it can be used as an Internet-based EFT, which implies that the connection between cyber-banks and security protection during the transmission is a must.

Stored-Value Cards and E-Cash

The stored-value cards are used to pay for buses, and public phones. This allows adapting and integrating the non-Internet-based e-cash available on smart cards with the Internet-based cyber banking system.

Electronic Check systems

Paper checks are the most popular payment method for remote payees in several countries. The high paper costs of checks are a problem. There are no strong evidences of the customers to use the e-checks. The e-check system is expected to become a major payment medium, especially for B2B EC environment, in which payment amounts are large.

Security Schemes in Electronic Payment Systems

Four essential security requirements for safe electronic payments are:

Authentication: a method to verify the buyer’s identity before payment is authorized.

Encryption: a process of making messages indecipherable except by those who have an unauthorized decryption key.

Integrity: ensuring that information will not be accidentally or maliciously altered or destroyed during transmission.

Non-repudiation: protection against customers’ denial of orders placed and against merchants’ denial of payments made.

.