Secure, Internet-Based Financial Transactions Development, Prototyping and Test of Components of a Distributed Payment System Based on the SET Protocol

1 Introduction With the expanding World Wide Web, an important new channel for commercial marketing, purchasing and distribution of goods has evolved. Suppliers can set up 'virtual storefronts'. Online catalogues can be used to display and describe products. These systems can support the process of ordering by means of interactive forms. In case of soft goods, i.e., digital information such as electronic magazines, computer software etc., the chosen items can be delivered over the same channel that was used for ordering them. In response to the ongoing efforts to set up electronic storefronts, a number of systems have been proposed to integrate payment activities in the process of online shopping. Once such a system is globally accepted, Internet shopping may become a viable alternative to traditional mail or telephone orders. A number of obstacles have to be overcome in order to enter the brave new world of online shopping .. Contrary to well-known electronic transaction schemes such as home banking or clearance processes between financial institutions, Internet shopping is performed over insecure open networks which do not technically exclude message tapping, interception and tampering. Many customers would welcome technically advanced ordering and payment schemes in principle, but will refuse to use them unless they are convinced of the payment's security. Although a number of providers offer methods for internet based financial transactions which include enhanced security features , none of these transaction schemes proposed has become a widely accepted standard so far. The SET protocol is a recent proposal for a standard on financial transactions over the Internet. It was designed by major credit card companies, which have been operating in the field of international financial transactions for years. Not surprisingly, the proposed payment scheme is based on credit cards and closely modelled on mail and telephone order procedures which employ them for financial clearance. Due to a number of marketing advantages, the prospects for SET to become a globally accepted standard are quite good: credit card brands have established relationships with millions of customers , who can use their existing accounts and cards for online shopping. The acceptability of SET is further enhanced by the fact that it does not come as a pre-defined product, but as an open draft standard which is subject to public discussion. The design of the first SET version will be completed soon, and the publication of this version can be expected in early …