Secure Electronic Transactions (SET)
Customer fears of their credit card information being intercepted are one of the biggest obstacles to growth in e-business and e-commerce. The issue has been recognized as a threat to e-business for some time. The Secure Electronic Transaction (SET) protocol was developed jointly by Visa and Mastercard in 1996. By using cryptography, the SET protocol provides confidentiality of information, ensures payment integrity, and verifies the authenticity of the seller and cardholder. A trusted certification authority (CA) issues both the buyer and the seller with a digital certificate (or key). Several certificate authorities operate in the United Kingdom, including the Post Office (ViaCode) and BT (Trust Wise).
The most common commercial certificate authority is Verisign (www.verisign.com). Certificate authorities are essentially trusted third parties. At the machine, each certificate is stored in a ‘wallet’ which contains the credit card details which can only be decrypted by the issuing credit card company. Digital certificates confirm the legitimacy of the seller, and digital signatures confirm the legitimacy of the buyer. The combination of these features provides a level of trust and security that underpins secure transactions. It has been hampered by a number of problems associated with SET. E-commerce transactions may include SET as an additional operational process.
The SET protocol requires the installation of additional software. Client machines will also need to install digital certificates. This limits the number of machines that can transact online to one. E-commerce will be enabled by the development of Smartcards. A Smartcard is a physical rather than a virtual card that can be inserted into a Smartcard reader anywhere there is an internet connection. However, the lack of portability has limited the use of SET. Most transactions are conducted using the SSL encryption protocol. Secure systems are in competition with SET and SSL for dominance. Servers must install the SET software. Firms may absorb the cost of this or pass it on to their customers in the form of higher prices. This may be regarded as a barrier to competitive advantage. Also, it is known that SET takes longer to verify transactions than SSL.
The SET also requires a large number of certificates to be issued, which can be difficult. SET has the advantage that credit card data is not stored on the seller’s server, reducing the risk of fraud. The allocation of risk in the transaction process is one of the major differences between SET and SSL. The buyer is responsible for verifying credentials with SET, whereas with SSL, the seller is responsible for authenticating the buyer’s identity and ability to pay. Sellers find SET attractive because they do not have to worry about users simply denying they conducted a transaction.
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