The Present and Future of Electronic Payment Systems

Vivek Reddy

Vjreddy@scu.edu

Information Assurance 5/19/04

BackgroundElectronic Commerce and BusinessCharacteristics of Current SystemsAdvantages and DisadvantagesWhat the Future may hold

Classifying Payment SystemsThe way money is transfer and

organizedElectronic Cash vs. Credit SystemsToken-based vs. Account Based

Further classificationElectronic Money: Online Cash and

Smart CardsAccount based: Credit cards and E-mail

based systems

Account Based Systems: The Credit Card

First step in the evolution to electronic payment systems

Authentication ProtocolPINSecurity Features

Account Based Systems: Email Based Systems

Inherently insecureE-mail for notification and traditional

banking to transfer fundsTransaction-level Security: SSLAuthentication

Account Based Systems: PayPal

Generic account based systemWorks off of existing financial

infrastructureMiddle man for Credit transactionsUses SSLNot secure enough for large business

transactions

Account Based Systems: General

SSLSecure Electronic Transaction(SET)SET is a better version of SSL

Account Based Systems: The Good and Bad

Ease of Use and ScalabilityWorks on existing networks and

terminalsNo need for creating new hardwareNo Anonymity like physical cash

provides

Electronic Currencies: Smart Cards

Credit card with a “brain”Embedded computer chip that can

store 100 to 200 times more informationUsed extensively in Japan and EuropeCard has a number representing money

stored on itCompatible with electronic devices such

as phones, PDAs, and Pcs

Electronic Currencies: E-CashEuropean Central Bank DefinitionNew sub-category of money

Electronic Currencies: The Good and Bad

Smart Cards are a large advancement over the system of credit cards

E-Cash provides anonymity Large Database of past transactions need to

be kept(double spending) Lack of scalability New learning curve for consumer Identifiable vs. Anonymous(blind signature)

Future of Electronic Payment Systems: RFIds

Radio barcodes embedded in goodsAlready used in retail outlets to know

what is going in and out of storesPurchase items simply by walking

through a terminalSecurity lackingCan they make it scalable?

ConclusionAccount Systems provide ease of use

and scalabilityElectronic currencies provide anonymity

but have a lot of overheadSystems that are successful have a low

learning curve