Electronic Check Payment Protocols and Systems
Speaker: Jerry Gao Ph.D.
San Jose State University
email: jerrygao@email.sjsu.edu
URL: http://www.engr.sjsu.edu/gaojerry
May, 2000
Topic: Electronic Cash Payment Protocols and Systems
Presentation Outline
- Overview of electronic cash system
- Ecash (Digital Cash)
- NetCash
- Comparisons and summary
Jerry Gao Ph.D. 5/20000
All Rights Reserved
Topic: Electronic Cash Payment Protocols and Systems
Overview of Electronic Cash Payment Protocols and Systems
What is an electronic cash payment system?
E-commerce application systems must provide payment processing and
transaction service to buyers and sellers.
A payment system, as a part of E-commerce application system, is a
such system which support secured payment processes by providing
reliable, secured, and efficient transaction services between sellers and
buyers.
The basic requirements of a payment system:
- Provide secured and confidential transaction processes.
- Conduct authentication and authorization for all involved parties.
- Ensure the integrity of payment instructions for goods and services.
- Simple, availability, cost-effective, efficient, and reliable.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Cash Payment Protocols and Systems
Actors Involved in Electronic Cash Payment Systems
- Customers: Customers use the digital cash payment systems to make purchases.
- Dealers:
Dealers have to bear the costs of payment transactions.
- Providers for digital payment systems:
Providers are intermediaries between dealers and financial institutions.
They provide services and training.
- Development vendors for digital payment systems:
- Financial institutions:
Banking systems or organizations who use electronic payment systems.
- Trust Centers:
They control digital signature keys, and help to secure customer
confidence in certain payment systems. They are responsible for the
integrity of transmitted data and authenticity of contractors.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Cash Payment Protocols and Systems
Basic Requirements for Electronic Cash Payment Systems
- Digital money:
Payment systems must provide customers and private households with acceptable
digital money.
Security:
Ensure the security of transactions and information privacy of users.
- Scalability:
A large number of customers and concurrent transactions should be handled in a
scalable manner.
- Efficient and effective:
Payment systems must support efficient and effective payment processing and
accounting services for small payment transactions.
- Simple:
Payment systems must provide customers with simple transparent transactions.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Cash Payment Protocols and Systems
Basic Requirements for Electronic Cash Payment Systems
- Anonymous:
Usually, customers wish to stay anonymous for all involved transactions..
- Double spending:
Digital coins consists of a number of bits. Payment systems must be able to recognize
and/or prevent repeated payments with the same digital coin.
- Exchange:
Digital money should be convertible into “real” money whenever necessary.
- Store:
Digital money must be stored locally on hard disks or other media.
- Value:
Digital cash payment systems must provide a large number of digital coins for
circulation and perform authentication checking.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Cash Payment Protocols and Systems
Advantages of Electronic Cash Payment Systems
- Saved time:
- Reduce transaction process time
- Speed up transaction processes
- Reduced costs:
- Reduce transaction costs
- Reduce cash distribution costs
- Flexibility:
- Digital cash can take many forms, including prepaid cards
- Digital cash can be converted into different currencies
- Reduce cash distribution risk:
- Reduce the regular cash distribution risk
- Error free and efficient:
- Reduce transaction errors
Jerry Gao Ph.D. 5/2000
Topic: Online Payment Protocols and Systems
Special Features of Electronic Payment Protocols
Important features of electronic cash payment protocols and systems:
- Anonymity: This ensure that no detailed cash transactions for customer
are traceable. Even sellers do not know the identity of
customers involved in the purchases.
- Liquidity: Digital cash have to be accepted by all concerned economic
agents as a payment method.
- Prepaid cards:
Buyers can buy prepaid cards that are accepted by special sellers.
- Electronic payment processing:
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Special Features of Electronic Check Protocols
and Payment Systems
Important features of electronic cash payment protocols and systems:
- Anonymity: This ensure that no detailed cash transactions for customer
are traceable. Even sellers do not know the identity of
customers involved in the purchases.
- Liquidity: Digital cash have to be accepted by all concerned economic
agents as a payment method.
- Prepaid cards:
Buyers can buy prepaid cards that are accepted by special sellers.
- Electronic payment processing:
Jerry Gao Ph.D. 5/2000
Topic:Elect ronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Overview of NetBill:
- ECash is a payment protocol for anonymous digital money on the Internet.
- It is developed by DigiCash Co, of Amsterdam, The Netherlands.
- It is currently implemented and offered by Mark Twain Bank,
St. Louis since 1995.
- DeutscheBank Ag, Frankfurt (Main) offers Ecash as a pilot project to its
customers since October 1997.
A public trial of the Millicent system was scheduled for the summer of 1997.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocols: NetBill
NetBill model:
MilliCent protocols use a form of electronic currency called Scrip to connect three
involved parties:
- vendors, customers, and brokers.
Scrip is vendor specific.
A Millicent broker:
--> medicate between vendors and customers to simplify the tasks they perform.
--> aggregate micro-payments
--> sell vendor Scrip to customers
--> handle the real money in the Millicent system.
--> maintain customer accounts and vendors (subScripion services)
--> buy and produce large chunks of vendor Scrips (for licensed vendors)
Vendors: --> are merchants selling low-value services or information to customers
Customers: --> buy broker Scrip with real money from selected brokers.
--> use the vendor Scrips to make purchases.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
NetBill Archecture: (Source: NetBill 1994 Prototype)
Consumer
Application
Merchant
Application
Checkbook
Till
Security
Server
Transaction
Server
User Admin.
Server
Payment &
Collection Server
System Admin.
Server
DB
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Consumer
Merchant
NetBill Server
1. Credit card # (macropayment protocol)
2. $5.00 Broker
scrip(Millicent protocol)
1. $0.19 Vendor scrp + request
Start of week
Transaction Sequence
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Customer
Broker
Vendor
1.0 Broker scrip
2. $0.20 Vendor scrip
$4.80 Broker scrip
Purchasing
from a vendor
3. $0.20 Vendor scrp + request
4. $0.19 Vendor scrip change + purchased ino/service
Transaction Sequence
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Customer make purchases
with vendor Scrips
Vendor
Customer
Vendor sell low-value
information and services
Broker sell vendor Scrip
Broker
Jerry Gao Ph.D. 5/2000
Brokers buy/produce large
chunks of “vendor Scrip”
for licensed vendors
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
About Scrip:
---> a piece of data used to represent microcurrency within the Millicent systems.
Scrip has the following properties:
- Scrip is vendor specific, thus has value at one specific vendor only.
- Scrip can be spent only once by its owner.
- Scrip can be represented any denomination of currency.
- Scrip represents a prepaid value.
- Scrip make no use of public-key cryptography.
- Scrip cannot provide full anonymity. It can be traced and recorded.
Scrip like cash has a defined value and can be used to purchase merchandise.
Major differences between Scrip and cash:
- Scrip can only spent once, and cash can be spent many times.
- Scrip is vendor specific, and cash is not.
- Scrip can only spent by the customer who obtained it from the broker.
- Scrip has an expiration date and a digital signature.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Scrip Message Structure
Vendor
Jerry Gao Ph.D. 5/2000
Value
Scrip-id
customer-id expiration-date
info
certificate
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Millicent Security Checking: ---> Provide three different security levels.
All transactions should be protected, and fraud must be detectable and traceable.
----------------------------------------------------------------------------------------------Millicent Protocol
Efficiency Ranking
Secure
Private
Scrip in the clear
1
No
No
Encrypted connection
3
Yes
Yes
Request signatures
2
Yes
No
________________________________________________________________
.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Authentication and signature: Millicent protocol uses one-way has functions
- such as 128-bit MD5 and HMAC-MD5.
- The message is sent in clear, but is protected by the customer_secret in hash function.
- Upon receiving the request, the vendor calculates the hash function using
a pre-selected message digest function.
- The vendor returns, upon receiving this information, the customer can compute the
message digest to ensure authenticity.
- Signature: a request signature is generated based on the customer_secret by hashing
Encryption: No encryption,
but maintains a level of security that prevents Scrip being stolen.
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
1. Scrip, Request, Request signature
Customer
Vendor
2. Change, Reply, Reply signature
Purchase using a request signature
Customer Secret
Scrip
Hash
Request
Request Signature
Compare
Request Signature
Vendor verifies the request signature
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Vendor secret keys
Master Scrip secret 5
Master Scrip secret 6
Master Scrip secret 7
Vendor Value
“certificate”
To customer
Jerry Gao Ph.D. 5/2000
Scrip-id
customer-id expiration-date info
Master Scrip secret 6
Hash eg. MD5
Scrip certificate generation
Topic: Electronic Check Payment Protocols and Systems
Electronic Check Payment Protocol: NetBill
Vendor secret keys
Master Scrip secret 5
Master Scrip secret 6
Master Scrip secret 7
Vendor Value
Scrip-id
customer-id expiration-date info
Master Scrip secret 6
certificate
From
customer
compare
certificate
Jerry Gao Ph.D. 5/2000
Scrip validation
Topic: Electronic Check Payment Protocols and Systems
Comparisons of Electronic Check Payment Protocols
Jerry Gao Ph.D. 5/2000
Topic: Electronic Check Payment Protocols and Systems
Analysis of Electronic Check Payment Protocols
Jerry Gao Ph.D. 5/2000