secure web transactions. overview electronic commerce underlying technologies –cryptography...

Secure Web Transactions

Overview

Electronic Commerce Underlying Technologies

– Cryptography– Network Security Protocols

Electronic Payment Systems– Credit card-based methods– Electronic Cheques– Anonymous payment– Micropayments– SmartCards

Commerce Commerce: Exchange of Goods / Services Contracting parties: Buyer and Seller Fundamental principles: Trust and Security Intermediaries:

• Direct (Distributors, Retailers)• Indirect (Banks, Regulators)

Money is a medium to facilitate transactions Attributes of money:

– Acceptability, Portability, Divisibility– Security, Anonymity– Durability, Interoperability

E-Commerce

Automation of commercial transactions using computer and communication technologies

Facilitated by Internet and WWW Business-to-Business: EDI Business-to-Consumer: WWW retailing Some features:

– Easy, global access, 24 hour availability– Customized products and services– Back Office integration– Additional revenue stream

E-Commerce Steps

Attract prospects to your site– Positive online experience– Value over traditional retail

Convert prospect to customer– Provide customized services– Online ordering, billing and payment

Keep them coming back– Online customer service– Offer more products and conveniences

Maximize revenue per sale

E-Commerce Participants

E-Commerce ProblemsSnooper

UnreliableMerchant

Unknowncustomer

E-Commerce risks Customer's risks

– Stolen credentials or password– Dishonest merchant– Disputes over transaction– Inappropriate use of transaction details

Merchant’s risk– Forged or copied instruments– Disputed charges– Insufficient funds in customer’s account– Unauthorized redistribution of purchased items

Main issue: Secure payment scheme

Why is the Internet insecure?

S

SS

C

C

Host security– Client– Server (multi-user)

Transmission security– Passive sniffing– Active spoofing and

masquerading– Denial of service

Active content– Java, Javascript, ActiveX,

DCOM

A B

C

Eavesdropping Denial of service

A B

C

InterceptionA BC

Replay/fabrication

A B

C

E-Commerce Security

Authorization, Access Control:– protect intranet from hordes: Firewalls

Confidentiality, Data Integrity:– protect contents against snoopers: Encryption

Authentication: – both parties prove identity before starting transaction:

Digital certificates

Non-repudiation: – proof that the document originated by you & you only:

Digital signature

Encryption (shared key)

- Sender and receiver agree on a key K- No one else knows K- K is used to derive encryption key EK & decryption key DK- Sender computes and sends EK(Message)- Receiver computes DK(EK(Message))- Example: DES: Data Encryption Standard

m: messagek: shared key

Public key encryption

· Separate public key pk and private key sk · Private key is kept secret by receiver· Dsk(Epk(mesg)) = mesg and vice versa· Knowing Ke gives no clue about Kd

m: message

sk: private secret key

pk: public key

Digital signature

Sign: sign(sk,m) = Dsk(m)Verify: Epk(sign(sk,m)) = m

Sign on small hash function to reduce cost

Signed and secret messages

sign(sk1, m)

Encrypt(pk2)

m

Decrypt(sk2)

Verify-signEncrypt(pk1)

Epk2(Dsk1(m))

pk1

pk2

First sign, then encrypt: order is important.

Digital certificates

Registerpublic key Download

public key

How to establish authenticity of public key?

Certification authority

Electronic payments: Issues

Secure transfer across internet High reliability: no single failure point Atomic transactions Anonymity of buyer Economic and computational efficiency: allow

micropayments Flexiblility: across different methods Scalability in number of servers and users

E-Payments: Secure transfer

SSL: Secure socket layer– below application layer

S-HTTP: Secure HTTP: – On top of http

SSL: Secure Socket Layer

Application protocol independent Provides connection security as:

– Connection is private: Encryption is used after an initial handshake to define secret (symmetric) key

– Peer's identity can be authenticated using public (asymmetric) key

– Connection is reliable: Message transport includes a message integrity check (hash)

SSL Handshake protocol:– Allows server and client to authenticate each other and

negotiate a encryption key

SSL Handshake Protocol

1. Client "Hello": challenge data, cipher specs

2. Server "Hello": connection ID, public key certificate, cipher specs

3. Client "session-key": encrypted with server's public key

4. Client "finish": connection ID signed with client's private key

5. Server "verify": client's challenge data signed with server's private key

6. Server "finish": session ID signed with server's private key

Session IDs and encryption options cached to avoid renegotiation for reconnection

S-HTTP: Secure HTTP

Application level security (HTTP specific) "Content-Privacy-Domain" header:

– Allows use of digital signatures &/ encryption

– Various encryption options

Server-Browser negotiate– Property: cryptographic scheme to be used

– Value: specific algorithm to be used

– Direction: One way/Two way security

Secure end to end protocols

E-Payments: Atomicity

Money atomicity: no creation/destruction of money when transferred

Goods atomicity: no payment w/o goods and viceversa.– Eg: pay on delivery of parcel

Certified delivery: the goods delivered is what was promised:– Open the parcel in front of a trusted 3rd party

Anonymity of purchaser

Copyright © 2009 Pearson Education, Inc. Publishing as

Prentice Hall

Types of Payment Systems

Cash

Checking Transfer

Credit Card

Stored Value

Accumulating Balance

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Prentice Hall

Cash Legal tender Most common form of payment in terms of

number of transactions Instantly convertible into other forms of value

without intermediation Portable, requires no authentication “Free” (no transaction fee), anonymous, low

cognitive demands Limitations: easily stolen, limited to smaller

transaction, does not provide any float

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Prentice Hall

Checking Transfer Funds transferred directly via signed draft/check from a

consumer’s checking account to merchant/ other individual

Most common form of payment in terms of amount spent

Can be used for small and large transactions

Some float

Not anonymous, requires third-party intervention (banks)

Introduces security risks for merchants (forgeries, stopped payments), so authentication typically required

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Prentice Hall

Credit Card Represents account that extends credit to

consumers; allows consumers to make payments to multiple vendors at one time

Credit card associations: – Nonprofit associations (Visa, MasterCard) that set

standards for issuing banks

Issuing banks: – Issue cards and process transactions

Processing centers (clearinghouses): – Handle verification of accounts and balances

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Prentice Hall

Stored Value

Accounts created by depositing funds into an account and from which funds are paid out or withdrawn as needed

– Examples: Debit cards, gift certificates, prepaid cards, smart cards

Peer-to-peer payment systems

– Variation on stored value systems

– e.g. PayPal

Slide 5-29

Accumulating Balance

Accounts that accumulate expenditures and to which consumers make period payments

– Examples: Utility, phone, American Express accounts

Evaluating payment systems:

– Different stakeholders (consumers, merchants, financial intermediaries, government regulators) have different priorities in payment system dimensions (refutability, risk, anonymity, etc.)

Slide 5-30

Dimensions of Payment Systems Table 5.6, Page 309

Slide 5-31

E-commerce Payment Systems

Credit cards are dominant form of online payment, accounting for around 60% of online payments in 2008

Other e-commerce payment systems:

– Digital wallets

– Digital cash

– Online stored value payment systems

– Digital accumulating balance systems

– Digital checkingSlide 5-32


Prentice Hall

How an Online Credit Transaction WorksFigure 5.18, Page 312

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Prentice Hall

Limitations of Online Credit Card Payment Systems

Security: – Neither merchant nor consumer can be fully

authenticated

Cost: – For merchants, around 3.5% of purchase price

plus transaction fee of 20 – 30 cents per transaction

Social equity: – Many people do not have access to credit cards

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Prentice Hall

Digital Wallets Seeks to emulate the functionality of

traditional wallet Most important functions:

– Authenticate consumer through use of digital certificates or other encryption methods

– Store and transfer value

– Secure payment process from consumer to merchant

Early efforts to popularize have failed Newest effort: Google Checkout

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Prentice Hall

Digital Cash

One of the first forms of alternative payment systems

Not really “cash”– Form of value storage and value exchange using

tokens that has limited convertibility into other forms of value, and requires intermediaries to convert

Most early examples have disappeared; protocols and practices too complex

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Prentice Hall

Online Stored Value Systems Permit consumers to make instant, online

payments to merchants and other individuals Based on value stored in a consumer’s bank,

checking, or credit card account PayPal most successful system Smart cards

– Contact smart cards: Require physical reader• Mondex

– Contactless smart cards: Use RFID• EZPass

• Octopus Slide 5-37


Prentice Hall

Digital Accumulating Balance Payment Systems

Allows users to make micropayments and purchases on the Web

Users accumulate a debit balance for which they are billed at the end of the month

Valista’s PaymentsPlus

Clickshare

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Prentice Hall

Digital Checking Payment Systems

Extends functionality of existing checking accounts for use as online shopping payment tool

Example: PayByCheck

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Prentice Hall

Wireless Payment Systems

Use of mobile handsets as payment devices well-established in Europe, Japan, South Korea

Japanese mobile payment systems– E-money (stored value)

– Mobile debit cards

– Mobile credit cards

Not as well established yet in U.S, but with growth in Wi-Fi and 3G cellular phone systems, this is beginning to change

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Prentice Hall

Insight on Business

Mobile Payment’s Future: Wavepayme, Textpayme

Group Discussion

What technologies make mobile payment more feasible now than in the past?

Describe some new experiments that are helping to develop mobile payment systems.

How has PayPal responded? Why haven’t mobile payment systems grown

faster? What factors will spur their growth?

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Prentice Hall

Electronic Billing Presentment and Payment (EBPP)

Online payment systems for monthly bills

50% of households in 2008 used some EBPP; expected to grow to 75% by 2012

Two competing EBPP business models:

– Biller-direct: Dominant model

– Consolidator: Third party aggregates consumer’s bills

Both models are supported by EBPP infrastructure providers

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Prentice Hall

Slide 5-43

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall

Payment system types

Credit card-based methods– Credit card over SSL - First Virtual -SET

Electronic Cheques– - NetCheque

Anonymous payments– - Digicash - CAFE

Micropayments SmartCards

Encrypted credit card payment

Set secure communication channel between buyer and seller

Send credit card number to merchant encrypted using merchant’s public key

Problems: merchant fraud, no customer signature

Ensures money but no goods atomicity Not suitable for microtransactions

First virtual

Customer assigned virtual PIN by phone Customer uses PIN to make purchases Merchant contacts First virtual First virtual send email to customer If customer confirms, payment made to merchant Not goods atomic since customer can refuse to

pay Not suitable for small transactions Flood customer’s mailbox, delay merchant

Cybercash

Customer opens account with cybercash, gives credit card number and gets a PIN

Special software on customer side sends PIN, signature, transaction amount to merchant

Merchant forwards to cybercash server that completes credit card transaction

Pros: credit card # not shown to server, fast Cons: not for microtransactions

SET:Secure Electronic Transactions

Merge of STT, SEPP, iKP Secure credit card based protocol Common structure:

– Customer digitally signs a purchase along with price and encrypts in bank’s public key

– Merchant submits a sales request with price to bank.

– Bank compares purchase and sales request. If price match, bank authorizes sales

Avoids merchant fraud, ensures money but no goods atomicity

Electronic Cheques

Leverages the check payments system, a core competency of the banking industry.

Fits within current business practices Works like a paper check does but in pure

electronic form, with fewer manual steps. Can be used by all bank customers who have

checking accounts Different from Electronic fund transfers

How does echeck work?

Exactly same way as paper Check writer "writes" the echeck using one of

many types of electronic devices ”Gives" the echeck to the payee electronically. Payee "deposits" echeck, receives credit, Payee's bank "clears" the echeck to the

paying bank. Paying bank validates the echeck and

"charges" the check writer's account for the check.

Anonymous payments

1. Withdraw money:cyrpographically encodedtokens

2. Transform so merchant can check validity but identity hidden

3. Send token after addingmerchant’s identity

4. Check validity and send goods

5. Deposit token at bank.If double spent reveal identity and notify police

customermerchant

Problems with the protocol

Not money atomic: if crash after 3, money lost– if money actually sent to merchant: returning to

bank will alert police– if money not sent: not sending will lead to loss

High cost of cryptographic transformations: not suitable for micropayments

Examples: Digicash

Micropayments on hyperlinks

HTML extended to have pricing details with each link: displayed when user around the link

On clicking, browser talks to E-Wallet that initiates payment to webserver of the source site

Payment for content providers Attempt to reduce overhead per transaction

Micropayments: NetBill

Customer & merchant have account with NetBill server Protocol:

– Customer request quote from merchant, gets quote and accepts

– Merchant sends goods encrypted by key K

– Customer prepares & signs Electronic Purchase Order having <price, crypto-checksum of goods>

– Merchant countersigns EPO, signs K and sends both to NetBill server

– NetBill verifies signatures and transfers funds, stores K and crypto-checksum and

– NetBill sends receipt to merchant and K to customer

Recent micropayment systems

Company Paymentsystem

Uniquecode

Compaq Millicent mcent

IBM IBM paymentsystem

mpay

FranceTelecom

Micrommerce microm

Smartcards

8-bit micro, < 5MHz, < 2k RAM, 20k ROM Download electronic money on a card: wallet on a

card Efficient, secure, paperless, intuitive and speedy Real and virtual stores accept them Less susceptible to net attacks since disconnected Has other uses spanning many industries, from

banking to health care

Mondex

Smart card based sales and card to card transfers

Money is secured through a password and transactions are logged on the card

Other operation and features similar to traditional debit cards

Card signs transaction: so no anonymity Need card reader everywhere Available only in prototypes

Summary

Various protocols and software infrastructure for ecommerce

Today: credit card over SSL or S-HTTP Getting there:

– smart cards,– digital certificates

Need:– legal base for the entire ecommerce business– global market place for ecommerce

References

State of the art in electronic payment systems, IEEE COMPUTER 30/9 (1997) 28-35

Internet privacy - The quest for anonymity, Communications of

the ACM 42/2 (1999) 28-60. Hyper links:

– http://www.javasoft.com/products/commerce/

– http://www.semper.org/

– http://www.echeck.org/

– http://nii-server.isi.edu/info/NetCheque/

– http://www.ec-europe.org/Welcome.html/– http://www.zdnet.com/icom/e-business/

secure web transactions. overview electronic commerce underlying technologies –cryptography...

Documents

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authenticity of public

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private secret keypk

sale5ecommerce participants

secret messagessignsk1

data encryption standardm

receiver dskepkmesg