Juha Korhonen
Department of Computer Science
Helsinki University of Technology
Tik-110.501 Seminar on Network Security
koju@cc.hut.fi
There is a growing need for consumers to purchase lower-priced and 'impulse' items on the Internet - especially digital goods and services that can be instantaneously downloaded to computer, such as software, articles, research, games and music. Purchases on the Internet are expected to exceed US$200 billion by the year 2000, and most of these will be less than $10. [3]
The markets and the customers seems to be ready for the electrical money. The surveys shows that enough customers are willing to pay the price of the electrical wallet devices up to 60 $. But large share of them requires them to be be very thin to fit in a regular wallet. The European Union is a good place for developing advanced payment systems, since development is not hampered by export restrictions for cryptologic primitives (expect for France). [6]
There are two different types of operation for electronic commerce: online and offline. In online transaction the connection to the bank is made every time when consumer hands cash to the service provider, so the authenticity of transaction is checked. In offline system the transaction is made without connection to the bank.
Mondex has been designed to allow person-to-person payments, over a telephone line or via an electronic wallet device. Mondex has been designed as a global product, with a set of language-independent symbols.
Since July 1995 Mondex has been in daily use in a public pilot project in Swindon England. In Swindon there were 8000 card holders in the first three months. In November 1995 more than 700 retailers (over 70% of all) takes the card as payment. There are also 250 Mondex-compatible payphones in streets and public places and Mondex can also be used to pay in public buses. [4]
Mondex has gained information from the pilot in Swindon. By the end of 1996
Mondex pilots will be running in parallel around the globe in Hong Kong,
Canada and The United States as well as in the UK.
Mondex is also being used as a 'campus card' at two English Universities -
Exeter and York.[3]
From October 1996 the University of Exeter [9] will be
using Mondex smart cards for a variety of purposes as an University Smart Card.
Individual members of staff and students will be able to use the card as an
electronic purse and it will also be used as a library card, access control
card for allowing access to buildings, and for student records.
The Mondex electronic wallet is a pocket-sized device with a keyboard and a screen. The wallet enables people to venture out carrying only minimum funds on their card, with a separate store of value held on the wallet, which might be held in the security of their home or in a hotel room. This gives the cardholder a degree of security as, if they lose their card, only the minimum amount of money is lost with it. Transfers between individuals can also be made - by inserting the card into the electronic wallet and moving cash from the first person's card to the recipient's card. [3]
While Mondex was primarily designed as an alternative means of payment to cash in the physical market place, in the future Mondex will also be possible to be used for purchasing goods from the Internet. The Mondex system is well-suited to the 'micro-payments' which make up the majority of transactions on the Internet. Once money is on the Mondex card, it can be spent via the Internet using computers with appropriate Mondex software and a smartcard reading device. Mondex is already conducting internal trials of existing software and it is expected that Mondex will go to public trials in 1997. [3]
The first microchip to be used for Mondex is a specially-tailored security application using the Hitachi H8/310 smartcard microprocessor, which has 8 KB of memory. [3]
On these chip cards are loaded the Value Transfer Protocol, which uses sophisticated cryptography to protect value as it passes from one Mondex card to another. An important aspect of Mondex is that value can only move between Mondex cards - and can only be stored on Mondex cards. Mondex provides consumers with the ability to protect their cash by 'locking' their cards with a personal code - so that Mondex value cannot be taken from a card. [3]
Since CAFE aims at the market of small everyday payments that is currently dominated by cash, payments are off-line, and privacy is an important issue. The project has applied modern cryptographic techniques to produce a secure but also open and flexible system for consumer payments using electronic money.
CAFE proposes an open architecture for small and high value payments, post-pay (like credit-card) or pre-pay (like stored value cards). The protocols could also be run in multi-functional devices like PDAs or mobile phones. Possible future extensions include electronic personal credentials (like passports, driver's licenses or housekeys) and medical information. [6]
The wallets have an infrared interface which makes point-and-pay transactions possible. CAFE has also a loss tolerance feature: If a user loses an electronic wallet, or the wallet breaks or is stolen, the user can be given the money back, although it is a prepaid payment system.
The double-spending problem is solved in CAFE so that in every card and wallet there is a banks trusted part which is called the guardian. It will notice if the same money are tried to spent twice. No payments are accepted unless the guardian tells that it is allowed. [12]
The CAFE system is based on recent research in public key cryptography. CAFE uses the combination of a public key and a unique private key. [5] It allows the use of a smart card or an electronic wallet for signature transporting. Electronic money, issued by a bank, can be tagged with a unique electronic signature per payment, to be compared with the unique number on printed bank notes. This signature can be downloaded into the smart card or wallet.
The public key nature of the CAFE protocols makes it also possible to create an open system. Participants don't have to trust each other and don't have to negotiate on the division of the risks involved. Once in use, multiple providers of goods and services, as well as multiple issuers of electronic money can join the system.
According to CyberCash's announcement CyberCash is the only company with world-wide export license of 1024-bit RSA encryption algorithm. [10]
CyberCash transactions move between three separate software programs:
The merchant and consumer softwares are free.
There is a limit to the amount of cash a consumer can put in his wallet. Consumer can load up to $80 over one month.
The CyberCash, the Checkfree, and Compuserve Wallets are the same and are completely compatible. Each company has added a few of its own features, but the wallets can be used with any CyberCash, Checkfree, and Compuserve merchants. [10]
The illustration below shows the six steps that occur when consumer decides to purchase goods from the merchants online server with CyberCash credit card payment system or with CyberCoin.
From Step 1 to Step 6 takes approximately 15-20 seconds. [10]
In CyberCoin transaction, the financial information is encrypted and digitally signed, but the message itseld is not. CyberCoin uses RSA encryption technology. [10]
In October 1996 CyberCash made a technology and marketing agreements with Netscape. Netscape plans to bundle CyberCoin with future versions of its LivePayment server software, and will also integrate the technology with future versions of Navigator. [8]
The application is programmed into the Sake card itself and doesn't have to operate from the card reader alone, so there is a better grip on the functionality and security aspects. [11]
The application software (or part of it) can be added to the mask of Sake. There is also an ability to add, change or delete parts of an application (or whole applications) after production, even in the field. These modifications are signed using RSA allowing the modifications to happen off-line and securely. However the 512-bit RSA keys that are used are not very adequate today.
Features of SAKE[11]:
Public Key Debit allows off-line secure payments without tamper-resistant terminals. Each of the payments uses a unique public key signature in a way that allows thousands of payments between two reloads. Public-key signatures also eliminates system-wide secret keys in the card accepting devices.
The signature transporting technique and specialized compression schemes used in Blue allows the card to generate 500 public-key signatures using only 550 bytes of EEPROM storage. Blue is designed on ordinary low-cost smart cards like the Motorola SC26 and the Thomson 601. [11]
The DyniCash smart card can also be used for a growing variety of other services where coins and bank notes are traditionally used, such as parking, vending, pay phones and point-of-sale. [11]
DyniCash has patented a data encryption technology in an ISO-compatible smart card that does not reveal tag or card identity during payment.
NetBill enables consumers and merchants to communicate directly with each other, using NetBill to confirm and ensure security for all transactions.
NetBill acts as a third party to provide the authentication, account management, transaction processing, billing and reporting services for network-based clients and users.
NetBill is designed as a "system of a systems". NetBill depends on an infrastructure of authentication, certificate management, internet access (including DNS lookup), databases, real-time customer service and dispute resolution servers, etc. NetBill uses ACID (atomic, consistent, isolated and durable) transactions. NetBill uses a combination of public-key cryptography and symmetric-key cryptography.
The World Wide Web is the marketplace of the Internet and is never closed.
Most of the smart cards (e.g. Mondex) were primarily designed as
an alternative means of payment to cash in the physical market place.
But over the past few years the electronic commerce in the Internet
has been growing rapidly and that has started the card developer's
interest to make the card suitable for the Internet usage.
Smart cards are quite easily transferable to be used in the Internet.
As the Internet grows there is an increasing need to have secure methods of paying for goods and services as easily and spontaneously as in the physical market place. A proper electronic cash payment system has been the challenge for many years. As technology has advanced and costs have fallen electronic cash has become a reality.
Currently there are many different smart cards and bit money technologies. Time will show which one will be chosen to become the global standard for electronic cash. It seems like some kind of combination and agreements has already been made.
Mondex International has recently made many agreements with some of the other
electronic commerce supplier. In September Mondex International made an
alliance with CyberCash to integrate smart cards with online electronic
commerce.
CyberCash plans to incorporate the Mondex smartcard into its CyberCash Wallet.
Users can charge purchases to their Wallet-enabled smart cards using
a smart card reader connected to their PCs. [7]
In August 1996 Mondex made a strategic alliance between Netex Communications
Corporation that will enable the delivery of global smart card applications
using Netex's Internet Transphone product. [7]
In November 1996 Mastercard International and Mondex International announced
an agreement that Mastercard will acquire 51% of Mondex International,
and for Mastercard to adopt Mondex's technology as its future
choice of strategic chip platform.
[3]
| CAFE | Conditional Access For Europe |
| PDA | Personal Digital Assistant |
| ATM | Automatic Teller Machine |
| electronic wallet | A small (pocket-size) portable computer, similar to a pocket calculator or PDA. It has its own battery, keyboard, display and its own means of communicating with other devices (e.g. infrared) |
| Public-Key Cryptography | With public-key cryptography you have two keys- a public key and a private key. The private key is protected by your password, and never shared with anyone. Anyone can access the public key. |
| Symmetric-Key Cryptography | In symmetric-key cryptography, a single key is shared by both the sender and the recipient of a message. |
This page has been updated on 16.12.1996.
Juha Korhonen