Electronic Payment Systems

1
Electronic Payment Systems
2
Outline

• Intro
• Online shopping vs MOTO
• Credit card payments vs PayPal
• E-cash?

3
Intro.

• Many forms of electronic payment systems exist
  today
• Examples credit cards, debit cards, pre-paid
  cash cards
• The most popular payment methods for online
  transactions are still credit cards (or PayPal).
• What has happened to e-cash?

4
MOTO

• Mail orders / Telephone orders
• Payment info are transferred on order forms or
  over the phone
• Entities involved in the process?
• Purchaser/customer/payer
• Merchant/payee
• Banks issuer (interacting with the customer),
  acquirer (interacting with the merchant)
• Others e.g., payment clearing house
• Q How would the customers identity be verified?
• Q Could the order be made by someone who is not
  authorized?

5
Online shopping

• To better support online shopping, electronic
  payment systems are preferred.
• Q Is electronic delivery of credit card info
  over the Internet more vulnerable than in MOTO
  (order forms or over the phone)?
• Q How would the customers identity be verified?
• Q How would the merchants identity be verified?
• HTTPS
• A trusted third party, e.g., PayPal

6
How does PayPals electronic payment work?

• A subsidiary of eBay
• Initially created to facilitate online
  transactions between parties who do not know each
  other (e.g., online auctions)
• Reduce the risk of credit info being stolen by
  rogue merchants
• Supports multiple payment methods (bank
  accounts, credit cards, etc.)

7
How does PayPals electronic payment work?

• Evolved into the PayPal Merchant Services
• A full line of electronic payment services
• https//www.paypal.com/cybercash
• Solutions for various applications
• Acquired Verisign Payment Services in 11/2005
  (FAQ)
• http//sceweb.uhcl.edu/yang/teaching/csci5234WebSe
  curityFall2011/buildEcommerce20veriSign.pdf
• In 10/2010, Facebook and FT.com adopted PayPal
  Micropayments for Digital Content
  (http//www.businesswire.com/news/home/20101026006
  381/en)
• http//www.allfacebook.com/facebook-paypal-micropa
  yment-2010-10

8
Other Payment Gateways

• A review site http//www.bestpaymentgateways.com

9
E-cash

• Requirements of a real cash system?
• Anonymity
• Untraceability / unlinkability
• Divisibility
• Anything else?
• Related articles
• Boom then Bust How Electronic Cash Faltered, ENT
  News Online. 3/1999.
• http//web.archive.org/web/20080430181438/http//e
  ntmag.com/archives/article.asp?EditorialsID6094
• Secure Electronic Transaction (SET) an
  unsuccessful attempt
• http//en.wikipedia.org/wiki/Secure_Electronic_Tra
  nsaction
• Chaum, D., Fiat, A., and Naor, M. 1990.
  Untraceable electronic cash. In Proceedings on
  Advances in Cryptology (Santa Barbara,
  California, United States). S. Goldwasser, Ed.
  Springer-Verlag. New York, NY, 319-327.
• Chaum, David (1983). "Blind signatures for
  untraceable payments". Advances in Cryptology
  Proceedings of Crypto 82 (3) 199203.
• http//en.wikipedia.org/wiki/Financial_cryptograph
  y

10
Blind Signatures

• http//en.wikipedia.org/wiki/Blind_signature
• "
• As an analogy, consider that Alice has a letter
  which should be signed by an authority (say Bob),
  but Alice does not want to reveal the content of
  the letter to Bob. She can place the letter in an
  envelope lined with carbon paper and send it to
  Bob. Bob will sign the outside of the carbon
  envelope without opening it and then send it back
  to Alice. Alice can then open it to find the
  letter signed by Bob, but without Bob having seen
  its contents.

11
Why hasnt E-cash become popular?

• Possible reasons?
• Technical requirements of e-cash systems
• Viable alternatives one-time credit card
  numbers, PayPal
• Guaranteed maximum loss in case of stolen
  credit card info.
• Anything else?