Electronic Payment Systems (20-763)


Mini 4, 2004

Administrative Information

The course meets Monday 5:30-7:20 p.m. in Newell Simon 1305 and Friday 8:30 - 10:20 a.m. in Wean 5409.  For course policies and information about how to contact the instructor, please see the Administrative Page.


The textbook (required) is the Second Edition of Sherif, Protocols for Secure Electronic Commerce, published by CRC Press, ISBN 0849315093.  This book was published in November 2003.  We previously used the First Edition which is now obsolete.  (Order from bn.com, which will ship in 24 hours.)  

Course Syllabus

Lecture 1 - INTRODUCTION TO MONEY (Monday, March 15, 2004)  The nature of money, desirable properties of money and electronic payment systems.  Fiduciary v. scriptural money.  Token v. notational money.  Cash and "real money."  View SLIDES.

Readings: Sherif Ch. 1, 2.1 - 2.2.  Article by Camp, Sirbu and Tygar, Token and Notational Money in Electronic Commerce.

Lecture 2 - BANKING SYSTEMS AND FOREIGN EXCHANGE (Friday, March 19, 2002)  What banks do. The role of central banks.  The money supply.  Mechanisms of money transfer: checks, giro, electronic funds transfer.  The U.S. banking system.  Foreign exchange.  View SLIDES.

Readings: Sherif Ch. 2.3 - 2.9.  

Lecture 3 - AUTOMATED CLEARING AND SETTLEMENT SYSTEMS (Monday, March 22, 2004) – Payment graphs.  Real-time gross settlement: Fedwire.  Check clearing.  ATM networks. CHIPS, SWIFT.  View SLIDES.  Homework 1 available.

Readings: Sherif Ch. 12, Payment, Clearance and Settlement: A Guide to the Systems, Risks and Issues (General Accounting Office) LONG DOCUMENT, not necessary to read all of it.

Lecture 4 - EPAYMENT SECURITY I (Friday, March 26, 2004.  NOTE: 2:00-4:00 POSNER 146).  – Hash functions, symmetric encryption, DES and AES (Rijndael).  View SLIDES.

Readings: Sherif Ch. 3.1 - 3.9, 3.25.

Lecture 5 - EPAYMENT SECURITY II (Monday, March 29, 2004) – Trapdoor functions, RSA, Diffie-Hellman Key exchange, El Gamal encryption, elliptic curve cryptography.  View SLIDES.

Readings: Sherif Ch. 3.17 - 3.21, 3.26, 3.27.


Lecture 6 - DIGITAL CERTIFICATES (Monday, April 5, 2004) –  Digital certificates, certificate chains.  Exchanging security information: abstract syntax notation (ASN.1) and X.509 certificates.  Public-key infrastructure.  View SLIDES.

Readings: Sherif Ch. 3.14 - 3.15, 3.22 - 3.24.

Lecture 7 - CREDIT CARD SECURITY: SSL/TLS, SET (NOTE: THURSDAY, APRIL 8, 2004, 5:30 - 7:30 p.m., Wean Hall 4615A) – The SSL/TLS Protocol.  Cipher suites.  Transport-Layer Security (TLS), Secure Electronic Transactions (SET), Visa 3D-Secure.  View SLIDES.

Readings: Sherif Chs. 5 and 7, Everything You Always Wanted to Know About CC's (Joe Ziegler)


Lecture 8 - STORED-VALUE CARDS (Monday, April 12, 2004) – Smart card architecture and security, contactless cards, PIN security.  Homework 1 returned.  View SLIDES.

Readings: Sherif Chs. 9 & 13.

Lecture 9 - MICROPAYMENTS I (NOTE: WEDNESDAY, APRIL 14, 2004 5:30-7:20 WEAN 4615A) – Characteristics of micropayment systems.  Face-to-face payments.   GeldKarte. Remote micropayments: Payword.  Homework 2 available.  View SLIDES.

Readings: Sherif Ch. 9.

Lecture 10 - MICROPAYMENTS II (Friday, April 16, 2004.  NOTE: 8:30-10:00 POSNER 153) – Remote micropayments: Micromint, statistical schemes, Millicent.  View SLIDES.

Readings: Sherif Ch. 10.5-10.9.

Lecture 11 - ELECTRONIC CASH (Monday, April 19, 2004) – Security foundations for electronic cash: anonymity, untraceability, digital denominations, Chaum's double-spending protocol. View SLIDES


Readings: Sherif Ch. 11, Tanaka, Possible Economic Consequences of Digital Cash.


Lecture 12 - PEER-TO-PEER PAYMENT SYSTEMS, ELECTRONIC BANKING (Monday, April 26, 2004) – PayPal, Electronic banking.  B2B payments  View SLIDES.

Readings: Digital Payment Systems (Siemens),  Online Payment Systems (SmartComputing), You've Got Money! (Katie Robert)

Lecture 13 - MOBILE PAYMENTS, VIRTUAL MONEY  (NOTE: WEDNESDAY, APRIL 28, 2004 5:30-7:20 WEAN 4615A) – Wireless payments, Mobipay, Paybox.  Digital wallets.  View SLIDES.

Readings: Mobile Payments: Alternative Platforms and Players (Gérard Carat).

Lecture 14 - ELECTRONIC INVOICE PRESENTMENT AND PAYMENT (Friday, April 30, 2004.  NOTE: 2:00-4:00 POSNER 146) – Electronic statement delivery.  Biller service providers, customer service providers.  Thick vs. thin consolidation.  Reconciliation.  Future directions for ePayment systems.  Homework 2 returned.  View SLIDES.

Readings : Business-to-Business EIPP (NACHA), EBPP Business Practices.

FINAL EXAM: SATURDAY, MAY 1, 2004.  NEWELL SIMON HALL 3002, 9:00 a.m. - 12:00 noon.  The final exam is open book, open notes, open Internet.  But you may not communicate with anyone during the exam, including by email, phone or instant messaging.  The exam consists of 8 short questions, each worth 40 points.  You can answer each question in a few paragraphs.