Secure Electronic Transaction (SET)can be described as a communication protocol standard to secure credit card transactions over the Internet. It is an application layer security mechanism. SET is not just a payment system, but rather is considered as a set of security protocols and formats that enable users to employ the existing credit card payment infrastructure on an open network in a secure trend. SET is a something to ensure the security of financial transactions on the Internet. Initially it discovered by mastercard and visa.
It has very complex and detailed technical specification.
Some key features of the SET are:
• Confidentiality of information
• Integrity of data
• Cardholder account authentication
• Merchant authentication
How it does what is said it does:
Both cardholders and merchants must have their registeration done with CA (certificate authority) first, before they buy or sell on the Internet. Once registration is done, the former can start to do transactions, which consists of 9 basic steps in this protocol, which is simplified.
1. Customer opens the website to see what should be purchased as per his needs.
2. Customer sends order and payment based information, which has 2 parts in one message:
a. Purchase Order – this part is for merchant
b. Card Information – this part is for merchant’s bank only.
3. Merchant sends the card information to their bank
4. Merchant’s bank checks with Issuer for payment authorization
5. Issuer send authorization to Merchant’s bank
6. Merchant’s bank send authorization to merchant
7. Merchant completes the order and sends confirmation to the customer
8. Merchant captures the transaction from their bank
9. Issuer prints credit card bill (invoice) to customer