Academic journal article Journal of Theoretical and Applied Electronic Commerce Research

An Improved and Efficient Micro-Payment Scheme

Academic journal article Journal of Theoretical and Applied Electronic Commerce Research

An Improved and Efficient Micro-Payment Scheme

Article excerpt


The rapid growth of data communications networks in recent years has led to enormous development in electronic commerce. Internet banking and trading are two important applications that execute financial transaction from anywhere in the world. This enables banks and merchants to simplify their financial transaction process as well as to provide customer friendly service 24-hours a day. On one hand the cost of manpower and infrastructure comes down drastically and on the other hand the cost of transportation, third party royalty and securing customer information is increased. Electronic micro-payment is one of the most important research topics in electronic commerce, particularly, low-cost online payment scenarios and offline payments in rural areas. In this paper, we discuss some of the important micro-payment schemes, observe their merits and limitations, and then propose an improved micro-payment scheme. We discuss two basic micro-payment schemes, which use the public/private key concept and then we review another scheme that uses the concept of hash chain. We observe certain limitations in these and related schemes, which motivate us to extend one of the attractive schemes, namely, the Hwang and Sung' scheme [8], towards more efficient, retaining all other features intact without compromising the security strength of the scheme. We compare the improved scheme with others and show that the improved scheme provides better security and efficiency, which enables the scheme viable for real-world applications, in particular, in resource-constrained environments such as mobile payment through handheld devices or customer's chip card for debit/credit transaction through point of sale terminal.

Key words: Micro-payment, Hash chain, Blind signature, Double spending, Electronic commerce

1 Introduction

With the rising importance of intangible goods in global economies and their instantaneous delivery at negligible cost, conventional payment methods tend to be more expensive than the actual product. Digital contents or online service could be worth for the value smaller than the smallest denomination currency in the physical world. There are two ways of managing electronic payments: on-line payments - in which seller verifies the payment sent by buyer with a broker before serving the buyer, and off-line payments - in which double spending, overspending should be prevented, therefore, no on-line connection to the broker is required.

Electronic payment models [2], [13], [16] can further be divided into two groups in respect of their on-line requirements, consumer base stability and basic paying methods. The first one is Payments through transactions model, where individual payments does not require prior arrangements between buyer and seller. Another is payments through accounts model, where buyer and seller must have set up accounts with broker and some kind of agreement between them before execution of actual payment transactions. The payments through transactions can be divided into two subgroups: The credit card payment transactions are typically designed for large-fee payments of, say, several tenths, hundreds or even thousands of dollars. On the contrary, net money transactions are typically low-value payments with hard transaction cost and on-line requirements, thus resembling the idea of the micropayments very closely. The disadvantage with the credit card payment transaction is the cost of transactions, especially from the viewpoint of the sellers that have to pay certain bills to the clearinghouse they have made contract with. This of course, will have direct influence on the pricing policy and the interest among the potential customers. According to the transaction amount, a special kind of electronic payment system called micro-payment (Site 2) dealing with small value transactions on digital content and service is gaining increasing interests from the research community. Some important applications of micro-payment are electronic publishing, multimedia service, gamming, etc. …

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