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Electronic Payment Mechanisms

This section of the OII Standards and Specifications List provides information on specifications and applications that can be used for financial transactions over the Internet. It is restricted to those methods that can be employed in a multinational context, so does not cover mechanisms that cannot be exported from their country of origin.

Note: This preliminary list is not exhaustive. If you are aware of a mechanism that we have not listed that is being used in a multinational context, we would appreciate receiving information relating to it for adding to this list.

Two main categories of electronic settlement are covered:

More data Entry updated this month

It should be noted that some of these mechanisms include additional security refinements and facilities, such as authentication, message integrity and choice of key management. Other mechanisms for supporting these techniques can be found in the section onInformation Security Standards.

Unlike other parts of the OII Standards and Specifications List, this section does not restrict itself to proven standards. Because the electronic payment marketplace is so new, the protocols discussed in this section are mainly at prototype stage, and have yet to achieve formal status. Only where the specifications are publicly available are they formally cited under theSponsoring bodies and standards details heading. In all other cases references to relevant Internet sites will be found under the Further details available from heading.

The dynamic nature of the marketplace may lead to some of these mechanisms becoming obsolete. It is felt, however, that this area of development is of such significance that timely information will be valuable to users.

The Payments group of the World Wide Web Consortium (W3C) maintains a roadmap that lists most of the mechanisms for electronic payment over the Internet that are currently available, including many proprietary solutions for which no publicly available specifications have been prepared. This roadmap can be contacted athttp://www.w3.org/pub/WWW/Payments/roadmap.html.

A report about the fact-finding mission for the Financial Issues Working Group (FIWG) of the European Commission which took place between August 25th and September 5th 1996 can be found in Electronic Money in the United States: Current Status, Prospects and Major Issues.

Standards for electronic banking within Europe are developed by the European Committee for Banking Standards, whose TC4 Security group have prepared a report of Secure Banking over the Internet.

The ISO committee responsible for this area is ISO TC68, Banking, securities and other financial services.



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Digital Money Transfer Methods

Methods for making electronic payments whereby the receiver obtains a signal that can be used for further transactions. This section is restricted to applications that are being used in more than one country, with at least one of the countries being within Europe, and to those applications where transfer can take place over the Internet.

Note: Applications that rely on bank-operated telecommunications networks are specifically excluded.

The methods currently listed in this section are:



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ecash

Expanded name
Electronic Cash

Area covered
Digital coinage for on-line transactions

Sponsoring body and standard details
Proprietary specification developed by Digicash bv

Characteristics/description
Ecash is designed for secure payments from any personal computer to any other workstation, over email or Internet. Ecash has the privacy of paper cash, while achieving the high security required for electronic network environments exclusively through innovations in public key cryptography.

Using the ecash client software a customer withdraws ecash (a form of digital money) from a bank and stores it on his local computer. The user can spend the digital money at any shop accepting ecash, without the trouble of having to open an account there first, or having to transmit credit card numbers.

Ecash provides the highest security possible by applying public key digital signature techniques. Additional security features of ecash include the protection of ecash withdrawals from your account with a password that is only known to you; not even to your bank.

One of the features of ecash is payer anonymity. When paying with ecash the identity of the payer is not revealed.

Usage (Market segment and penetration)
Cyberbucks trial was started by Digicash in October 1994. This introduced cash in cyberspace and provoked interest from users, shops and banks. Cyberbucks cannot be exchanged for real money, but goods and services can be obtained with them.

At the end of 1995 a number of banks became ecash issuers. These banks issue ecash denominated in real currencies. Unfortunately there are currently no facilities for exchanging ecash tokens of different denominations.

Further details available from:
DigiCash bv, Kruislaan 419, 1098 VA Amsterdam, The Netherlands (Phone: +31 20-665 2611 Fax: +31 20-668 5486 Email info@digicash.nl)

For more information on ecash contact http://www.digicash.nl/



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EMV 96

Expanded name
Integrated Circuit Card (ICC) Specifications for Payments

Area covered
Electrinic payment using cards with embedded integrated circuits

Sponsoring body and standard details

Characteristics/description
The Integrated Circuit Card Application Specification for Payment Systems defines the terminal and integrated circuit card (ICC) procedures necessary to effect a payment system transaction in an international interchange environment. In particular it covers:

  • Mapping of data elements to files
  • Transaction flow (the sequence of events and the commands issued to the card)
  • Exception processing
  • Coding of specific data objects described generally in the Integrated Circuit Card Specification for Payment Systems.

An Application File Locator (AFL) determines the files and records to be used for processing a transaction. Descriptions of the file structure and commands for accessing the files can be found in the card specification, as can the definition of each of the data objects. Files may contain multiple records. Each record is limited to 254 bytes, including tag and length data. Each record is coded as a constructed data object.

Either static or dynamic data authentication may be performed, but not both. Static data authentication authenticates static data put into the card by the issuer. Dynamic data authentication authenticates ICC-resident data, data from the terminal, and the card itself.

Proprietary functions may be added to the terminal and the ICC application as long as they do not interfere with processing of terminals and ICCs not implementing the function.

Usage (Market segment and penetration)
Version 3.0 of the specification was issued on 30th June 1996. As VISA members issue new cards they are expected to implement the extended specifications.

Further details available from:
The Visa Chip Card Specifications page (http://www.visa.com/cgi-bin/vee/nt/chip/circuit.html) maintained by VISA International.

For details of bank- or network-specific forms of 'electronic purse' refer to Leo Van Hove's Selected bibliography on Electonic Purses.



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GlobeID

Expanded name
Globe ID Payment System

Area covered
Electronic payment for Internet services

Sponsoring body and standard details
Propietary system developed by GCTech S.A.

Characteristics/description
In order to benefit from the GlobeID system, customers and merchants have to be members of the Globe Online organisation. Customers own one or more "Globe ID Wallets". Merchants own one or more "Globe ID Merchant Wallets".

The Globe ID Wallet concept is very close to the traditional wallet. A customer may own several Globe ID Wallets. If the customer wants to be able to do transactions using different currencies, he will have to open a wallet for each currency. Each wallet is associated to a credit card number. Using the "Globe ID Wallet consultation service" users can retrieve cash from their credit card account and deposit it on their wallet.

Only payment transactions (debit) and refill from account operations are allowed with a Globe ID Wallet. For credit transactions (selling), a Globe ID Merchant Wallet must be used.

A Transaction Confirmation form is dispayed on the screen for each transaction. This provides an overview of the relevant parameters for the transaction (product reference, price, wallet used, etc.). If the customer agrees with what is displayed he should enter his "Wallet PIN" and confirm the transaction. If he disagrees, the Cancel button should be used.

Usage (Market segment and penetration)
Under trial in France and a number of other European countries using information provided by 16 French companies. Only French Francs and US Dollars are available for the trial.

Further details available from:
GC Tech S.A., 42, rue Emeriau, 75015 Paris, France

Information on GlobeID can be obtained via the World Wide Web from http://globeid.gctech.fr/.



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Millicent

Area covered
Small-scale commercial transactions over the Web

Sponsoring body and standard details

Characteristics/description

A vendor-specific piece of "scrip" represents an account the customer has established with a vendor. At any given time, a vendor has outstanding scrip (open accounts) with the recently active customers. The balance of the account is kept as the value of the scrip. When the customer makes a purchase with scrip, the cost of the purchase is deducted from the scrip's value and new scrip (with the new value/account balance) is returned as change. When the customer has completed a series of transactions, he can "cash in" the remaining value of the scrip (close the account).

The text of the scrip gives its value and identifies the vendor. The scrip has a serial number to prevent double spending. There is a digital signature to prevent tampering and counterfeiting. The customer signs each use of scrip with a "secret" that is associated with the scrip. The signatures can be efficiently created and checked using a fast one-way hash function (like MD5 or SHA).

There are three "secrets" involved in producing, validating, and spending scrip. The customer is sent one secret, the "customer_secret", to prove ownership of the scrip. The vendor uses one secret, the "master_customer_secret", to derive the customer_secret from customer information in the scrip. The third secret, the "master_scrip_secret", is used by the vendor to prevent tampering and counterfeiting.

Note: The protocol calls for invalid elements to be added to the header of HTML files using Millicent. It is unclear how such files will be treated by web browsers that are not Millicent-enabled.

Usage (Market segment and penetration)
Specification released at end of 1995. A private trial with the 45,000+ Digital employees that are Web enabled is in progress. Potential users wishing to take part in the public trials due to start during the summer of 1997 should contact http://www.millicent.digital.com/html/trial.html.

Further details available from:
Digital's Millicent Web Site (http://www.millicent.digital.com)



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Mondex

Area covered
Electronic cash on a smart card

Sponsoring body and standard details
Proprietary application developed by a consortium of banks and telecommunication service providers led, in Europe, by National Westmister Bank, Midland Bank and British Telecom

Characteristics/description
Mondex uses a smart card to store electronic cash, which can be used to pay for goods and services in the same way as cash, but with some key benefits over traditional cash. Mondex has an electronic locking system, which makes it more secure than cash. Because it is electronic, Mondex value can be sent and received instantly across phone and computer lines, making it a vehicle for paying for goods and services on the Internet.

As with cash, Mondex payment transactions do not need authorisations or signature and, just like cash, Mondex value can be moved directly between individuals.

Because Mondex security resides in the chip on the card - not the network - it allows money to be moved safely over any 'unsecured' network, including the Internet.

Each time a Mondex card is used the chip on the card generates a unique 'digital signature', which can be recognised by the other Mondex card involved in the transaction. This 'digital signature' is the guarantee that the cards involved are genuine Mondex cards and that they are dealing with untampered Mondex signals. This recognition process also identifies the card for which the cash is intended - so funds cannot be intercepted by a third party.

Usage (Market segment and penetration)
A trial project was set up in Swindon, UK, in July 1995. Further experiments are planned in Canada and Hong Kong.

Mondex has recently (1997) announced alliances with CyberCash, VeriFone and Sun Microsystems.

Further details available from:
Bona fide manufacturers may obtain detailed technical specifications for Mondex by applying in writing to: The Mondex Information Centre, 1st Floor Podium, Drapers Gardens, 12 Throgmorton Avenue, London EC2N 2DL, U.K. (Fax: +44 171 920 5505 Email: news@int.mondex.com)

Information on Mondex can be obtained via the World Wide Web from http://www.mondex.com/index.html.



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WorldPay

Area covered
Secure multicurrency electronic payment for use over the Internet

Sponsoring body and standard details
Proprietary application developed for National Westminster Bank by The Supernet Group Ltd.

Characteristics/description
Provides smart card controlled micropayment services and standard credit card payment methods for electronic commerce. Can be used anywhere in the world, with supplier's prices being converted into local payment price at the time of purchase.

Note: Technical details about the services are not available to the public.

Usage (Market segment and penetration)
Unknown. System only announced in August 1997.

Note: There is a £1000 fee for connecting a web site to the WorldPay server.

Further details available from:
WorldPlay have their own website at http://www.worldpay.com/.



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Secure Electronic Transaction Protocols

Protocols for recording payments to be made through a third-party (e.g. bank, credit card company, etc). These protocols cover the forms of the transmitted message, rather than the methods used to ensure the privacy of the message.

The protocols currently listed in this section are:



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CyberCash

Expanded name
CyberCash Credit Card Protocol

Area covered
A protocol for transfer of credit card payments

Sponsoring body and standard details
Developed by CyberCash Inc and published, in memo form, as an Internet RFC.

Characteristics/description
CyberCash can be used for credit card transactions and, within the US, for micropayments and electronic cheque transfers. Once a price has been negotiated and the consumer is ready to purchase using a credit card authorization mechanism, the consumer simply clicks on the CyberCash "PAY" button displayed on the merchant interface. The merchant sends the consumer an on-line invoice that includes relevant purchase information. The consumer adds his credit card number and other information by simply selecting from a list of credit cards he has registered with CyberCash. All this information is digitally signed by the customer's CyberCash software, encrypted, and passed, along with a hash code of the invoice as seen by the customer, to the merchant.

Upon receipt, the merchant adds additional authorization information which is then encrypted, electronically signed by the merchant, and sent to the CyberCash Server. The CyberCash Server can authenticate all the signatures and be sure that the customer and merchant agree on the invoice and charge amount. The CyberCash Server then forwards the relevant information to the acquiring bank along with a request on behalf of the merchant for a specific banking operation such as charge authorization. The bank decrypts and then processes the received data as it would normally process a credit card transaction. The bank's response is returned to the CyberCash Server which returns an electronic receipt to the merchant, part of which the merchant is expected to forward to the customer to complete the transaction.

For small payments on the Internet, ranging from $0.25 to $10.00, the CyberCoin system can be used in the US. Consumers use an existing bank account to transfer money to an Electronic Wallet. Money is never moved onto or stored on the consumer's PC. CyberCoin is a notational system. When the consumer transfers money into his/her wallet, it is legal record of the money, but not the money itself. When money is moved with CyberCoin, it is "noted" by existing banking networks and deducted or added to the proper account. Until delivery of the goods has reached the consumer's computer through the transfer of the encrypted key, the funds will not be moved. When it is confirmed that the message digest has reached the consumer's hard disk, the money is instantaneously moved to the merchant's "CashRegister." At the close of each business day, the true funds are reconciled within the existing banking networks, similar to the ways bank accounts are managed today. In a CyberCoin transaction, the financial information is encrypted and digitally signed, but the message itself is not.

The CyberCoin system is completely private, but it is not "anonymous" - the consumer always has a record of his/her transactions and can prove them but the merchant will not know the consumer's identity unless the consumer reveals it. As a consumer is not asked to show an ID when purchasing an item with cash in the real world, it is the same when making a purchase with CyberCoin on the Internet. The consumer's Electronic Wallet keeps a transaction log or "receipt" of every transaction ever made. These receipts are claimed to "act the same as any receipt in the physical world".

CyberCash protects the consumer through the use of 768-bit RSA encryption with the password-protected wallet. CyberCash is also working with VeriSign to incorporate Digital IDs for instantaneous validation of an individual and merchants identity.

Usage (Market segment and penetration)
CyberCash protocol specificaion only released February 1996, so usage is limited at present. No formal specifications for CyberCoin have been published.

Merchant CyberCoin software is available for free from CyberCash on the Solaris and BSDI platforms. Windows NT merchant software will be available by the end of 1996.

There is a limit on CyberCoin transactions of $80 a month which is likely to limit the practicability of its use. In the US funds in the CyberCoin system are FDIC insured. For the consumer this guarantees that if the CyberCoin issuing bank goes out of business, the consumer's money is insured by the Federal government. It is unclear at present what restrictions would be place on the use of this service outside of the US, but the use of a 768-bit RSA encryption algorithm would seem to make export of CyberCoin problematical. CyberCash says that it "is working towards a solution to support global currency transactions".

CyberCash's electronic cheque exchange service will not be available until at least 1997.

In August 1997 CyberCash announced the setting up of a Yen-based service in Japan, including a CyberCoin service for transactions as small as 25 Yen.

Further details available from:
CyberCash Inc., 2100 Reston Parkway, Suite 430, Reston, VA 22091, USA.

Version 0.8 of the CyberCash protocol, which was issued in February 1996, can be obtained fromftp://ds.internic.net/rfc/rfc1898.txt.

CyberCash to use SET
Multimedia and Hypermedia Standards Activity, July 1997
CyberCash use in Microsoft Wallets
Multimedia and Hypermedia Standards Activity, September 1997


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HBCI

Expanded name
Homebanking Computer Interface

Area covered
Messaging format for exchanging information between banks and their customers

Sponsoring body and standard details

Characteristics/description
HBCI is a new standard for the communication between intelligent customer systems and the corresponding computing centers for the exchange of homebanking transactions. The transmission of data is done by a net data interface, which is based on a flexible delimiter syntax (similar to UN/EDIFACT).

HBCI uses the ISO 8859 character set. The EDIFACT-like syntax is based on the use of 5 delimiters:

  • + Data item end
  • : Group data item end
  • ` Segment end
  • ? Cancellation character (to skip control characters in the text)
  • @ Switching code for binary data

An HBCI message consists of a message header, a signature header, one or more business message segments, a signature trailer and a message trailer. An optional ciphering header allows tailored security facilities to be added to the message. Processing of messages can be done synchronously or asynchronously

Banks are identified using Bank Parameter Data (BPD). Users are identified using User Parameter Data (UPD). Data can be encrypted using symetrical Data Encryption Algorithm (DEA) keys, defined using the Data Encryption Standard (DES) and stored in a ZKA chipcard, or by using software-generated assymetrical RSA keypairs,

Usage (Market segment and penetration)
Version 1.1 of the specification was introduced in April 1997, but this version has already been extended. It is planned to bring in HBCI into international committees for standardization.

Further details available from:
IZ Computer Science Center of the German Savings Banks, Königswintererstr. 552, D-53227 Bonn, Germany

A (German) website has been set up at http://members.aol.com/sxsigma/hbci.htm.



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JEPI

Expanded name
Joint Electronic Payments Initiative

Area covered
Negotiation of acceptable payment methods

Sponsoring body and standard details

Characteristics/description
A Protocol-Query header for the Universal Payment Preamble (UPP) protocol is used to determine if the other party has UPP available and what payment systems are installed. UPP information is exchanged using PEPheaders. Each payment system installed at a customer or vendor site must register itself with the UPP module at that site. The UPP module registers with the PEP level to handle the umbrella UPP protocol and also registers to handle any payment protocol that registers with it. UPP headers can be exchanged before or during shopping to narrow the field of payment methods.

Usage (Market segment and penetration)
UPP as based on August 1996 version of PEP was released on October 31st 1996. The PEP standard was revised on 27th April 1997, but at present there is no date for when UPP will be realigned with PEP. W3C is currently assessing member input regarding next phase of JEPI, which will be discussed in the next Interest Group meeting in September 1997.

Further details available from:
World Wide Web Consortium Joint Electronic Payment Initiative



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MPTP

Expanded name
Micro Payment Transfer Protocol

Area covered
A protocol for transfer of payments through the services of a common broker

Sponsoring body and standard details
Draft proposal to IETF developed by Payments group of the World Wide Web Consortium

Characteristics/description
MPTP implements a variation of the Pay-Word proposal of Rivest and Shamir. In the Pay-Word scheme a payment order consists of two parts, a digitally signed payment authority and a separate payment token which determines the amount. A chained hash function is used to authenticate the token.

MPTP involves three parties, a customer C who makes the payment, a vendor V who receives the payment and a broker B who keeps accounts for the parties concerned. At present only a single broker model is considered: this means that both customer and vendor must share the same broker.

MPTP permits use of double payment chains. This allows implementation of a broker mediated satisfaction guarantee scheme. The pair of payment chains represent the high and low watermarks for the payment order. The low watermark chain represents the amount that the customer has fully committed to pay. The high watermark chain represents partial commitments. The vendor exposure is the difference between the counter values. MPTP provides protection against double spending through vendor and broker checking of authority identifiers.

MPTP supports use of multiple payment counters denoting different units of currency. MPTP permits use of both shared secret and public key based signature schemes.

Usage (Market segment and penetration)
Draft to be discussed on the Internet until at least May 1996.

Further details available from:
The World Wide Web Consortium's Payments group.

The current draft for this protocol can be obtained from http://www.w3.org/pub/WWW/TR/WD-mptp.



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OFX

Expanded name
Open Financial Exchange

Area covered
Exchange of financial data and instructions between financial institutions and their customers.

Sponsoring body and standard details

Characteristics/description
Open Financial Exchange (OFX) is a broad-based framework for exchanging financial data and instructions between customers and their financial institutions. It allows institutions to connect directly to their customers without requiring an intermediary.

Open Financial Exchange uses widely accepted open standards for data formatting (such as SGML), connectivity (such as TCP/IP and HTTP) and security (such as SSL).

Open Financial Exchange defines the request and response messages used by each financial service as well as the common framework and infrastructure to support the communication of those messages.

Open Financial Exchange 1.0.2 specifies the following services:

  • Bank statement download
  • Credit card statement download
  • Funds transfers including recurring transfers
  • Consumer payments, including recurring payments
  • Business payments, including recurring payments
  • Brokerage and mutual fund statement download, including transaction history, current holdings, and balances.

Usage (Market segment and penetration)
Unknown

Further details available from:
Any of the developers.

Certification service for OFX
OII Standards and Specifications Activity Report, November 1997


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SET

Expanded name
Secure Electronic Transaction

Area covered
A protocol for secure transfer of credit card transactions over the Internet

Sponsoring body and standard details
Specification developed jointly by MasterCard and the Visa International Service Association

Characteristics/description
Visa and MasterCard have jointly developed the Secure Electronic Transaction (SET) protocol as a method to secure bankcard transactions over open networks.

In an SET transaction, the electronic processing of the transaction begins with the cardholder. Cardholders can visit Web pages, selecting items for inclusion on an order. Once the cardholder finishes shopping, the merchant's Web server can send a completed order form for the cardholder to review and approve. Once the cardholder approves the order and chooses to use a bankcard for payment, the SET protocol provides the mechanisms for the cardholder to securely transmit payment instructions as well as for the merchant to obtain authorization and receive payment for the order.

In SET, message data will initially be encrypted using a randomly generated symmetric encryption key. This key, in turn, will be encrypted using the message recipient's public key. This is referred to as the "digital envelope" of the message and is sent to the recipient along with the encrypted message itself. After receiving the digital envelope, the recipient decrypts it using his or her private key to obtain the randomly generated symmetric key and then uses the symmetric key to unlock the original message. SET uses a distinct public/private key pair to create a "digital signature". Authentication is further strengthened by the use of certificates issued by a trusted third party "Certificate Authority". Within SET, dual signatures are used to link an order message sent to the merchant with the payment instructions containing purchaser account information sent to the Acquirer.

Cardholders must register with a Certificate Authority (CA) before they can send SET messages to merchants. In order to send SET messages to the CA, the cardholder must have a copy of the CA public key-exchange key, which is provided in the CA key-exchange certificate.

Usage (Market segment and penetration)
Visa and Microsoft hope to establish Secure Electronic Technology as a new standard for electronic commerce during 1996.

Further details available from:
Version 1.0 of the SET protocol, as published on 31st May 1997, can be obtained from VISA by contactinghttp://www.visa.com/cgi-bin/vee/nt/ecomm/set/intro.html (these are very large files!)

An informative overview of the role of SET can be found in the January 1997 issue of The Information Interchange Report.

Development of Draft Reference Implementation (DRI)
OII Multimedia and Hypermedia Standards Activity Report, January/February 1997
Publication of Version 1.0 specification
Start of first trial in North America
OII Multimedia and Hypermedia Standards Activity Report, June 1997
Reduction of credit-card charges when using SET
OII Multimedia and Hypermedia Standards Activity Report, August 1997


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This information set on OII standards is maintained by Martin Bryan of The SGML Centre and Man-Sze Li of IC Focus on behalf of European Commission DGXIII/E.

File last updated: January 1998

 

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