Electronic Payment System Architecture

The basics of a typical electronic payment system are:

1. Secure service identification
2. Secure user identification
3. Access to a digitally stored value
4. Secure payment request transmission
5. Mediation between user, service and stored value entities

Although there are many benefits to digital cash, there are also significant disadvantages. These include:

• Fraud - hacking into bank accounts and illegal retrieval of banking records has led to a widespread invasion of privacy and has promoted identity theft.
  
• Failure of technology -
• Possible tracking of individuals - fear of use of debit cards will lead to a bank monitored global tracking system. Anonymous ecash is attempting to address this issue. However, anonymous cash could perpetuate fraud, leading to the 'perfect crime'. For this reason, 'revokable anonymity' is proposed, where a user is fully anonymous until they commit some crime, at which point authorisation is given for their identity to be revealed.
  
• Loss of human interaction

Payment System Protocols

There are two categories of protocol inherent in payment systems:

Architectural Protocols

Generally, a three layered architecural model built around:

1. Policy - includes refunds policies, and the liabilities incurred by customers, merchants and financial institutions.
2. Data flow - requirements for storage of data by and communications between the parties. This includes data flows for payments, refunds, account enquiries and settlement.
3. Mechanism - methods by which security requirements for messages and stored data are achieved.

All three abstraction levels are tightly coupled since policy makes requirements of data flow and data flow makes requirements of mechanism.

Payment Protocols

This includes protocols inherent in the type of payment

Cash - Cash consists of a token which may be authenticated independently of the issuer. This is commonly achieved through use of self authenticating tokens or tamper proof hardware.

Cheque - Cheques are payment instruments whose validity requires reference to the issuer.

Credit Card - payment schemes transacted through existing credit card payment infrastructure. Card to card schemes use a very similar structure similarities to cheque models. A key feature of card payment systems is that every transaction carries insurance.

eCash Networks

DigiCash created one of the first e-cash systems that allows issuers to sell 'electronic tokens' at some value. When tokens are purchased, they are associated with a userID, and are stored on the users computer or under his online identity.

The e-cash is, at all times, linked to the e-cash company. All transactions are routed through the eCash system, so the e-cash company secures anything that is purchased. In this way, only the eCash system company knows your information and will properly direct purchases to your location.

Directory Of Payment Systems

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