SET

Secure Electronic Transaction

Secure Electronic Transaction (SET) is an open specification for protecting payment card purchases on any type of network. The SET specification incorporates the use of public key cryptography to protect privacy of personal and financial information over any open network. The specification calls for software to reside in card holders’ personal computer and in the merchant’s network computer. This is a technology residing at acquirer’s location to decrypt the financial information as well as at the certificate authorities’ location to issue digital certificates.

SET Requirements

There are seven requirements for SET:

1. Provide confidentiality of payment information and enable confidentiality of order information that is transmitted along with the payment information.

2. Ensure the integrity of all transmitted data.

3. Provide authentication that a cardholder is a legitimate user of a branded payment card account.

4. Provide authentication that a merchant can accept branded payment card transactions through its relationship with an acquiring financial institution.

5. Ensure the use of the best security practices and system design techniques to protect all legitimate parties in electronic commerce transactions.

6. Create a protocol that neither depends on transport security mechanisms nor prevents their use.

7. Facilitate and encourage interoperability among software and network providers.

Credit card business basics

A few credit card processing definitions are in order. These terms are used throughout the SET document: Card holder, issuer, merchant, acquirer, payment gateway and brand.

Cardholder : the consumer

Issuer : the bank who issued you a credit card

Merchant : the party from whom you are buying goods and services

Acquirer : the financial institution/bank who establishes an account with the merchant and processes payment authorizations and transactions for the merchant.

Payment Gateway : a device operated by an acquirer (financial institutions) that processes the merchant payment messages.

Brand : Visa, MasterCard, discover, etc.