Electronic Payment Systems (ECOM 6016)
COURSE DESCRIPTION AND SYLLABUS
January 26 - February 7, 2005
Course Description
This course covers a wide variety of electronic payment mechanisms, with
specific reference to the Hong Kong and Mainland China banking systems and payment mechanisms that
are used to make more than 10^16 HKD in payments worldwide each year. It is
designed to stimulate creative thinking about the future of money, foreign
exchange, Internet implications, mobile payments, stored-value cards,
micropayments, peer-to-peer payments and large-scale B2B payments. Upon completion, the student should understand
different forms of electronic money, how money moves through the world's banking systems,
how security is achieved in payment systems and how electronic banking works.
Instructor
Michael I. Shamos is Distinguished
Career Professor in the School of Computer Science at CMU, Visiting Professor at
the University of Hong Kong, Director of the Universal Library and Co-Director of the
Master of Science in eBusiness
Technologies degree
program at Carnegie Mellon University in Pittsburgh, Pennsylvania. He is a member of
the Pennsylvania Bar and the Bar of the United States Patent and Trademark Office.
Email: shamos@cs.cmu.edu
Textbook (Required)
Protocols for Secure Electronic Commerce, by M. H. Sherif, Second
Edition, ISBN 0849315093.
Readings
Assigned readings for a particular lecture are to be completed before the
lecture. Some of the readings are quite long and detailed. In such cases you
should familiarize yourself with the material generally and delve deeply only into the
topics listed in the syllabus.
Course Format
10 three-hour lectures, readings, one homework assignment and a final exam. The basis
for the course is the lectures. The reading assignments provide important background
information. Because no textbook exists that presents all the necessary course material,
you should make frequent reference to the list of links.
The homework assignment counts for 1/3 of the grade; the final exam counts for
2/3 of the grade.
Course Syllabus
Lecture 1 - INTRODUCTION
TO MONEY (Wednesday,
January 26, 2005) The nature of money,
desirable properties of money and electronic payment systems. Fiduciary v.
scriptural money. Token v. notational money. Cash and "real
money." The role of central and commercial banks. Mechanisms of
money transfer: giro, cheques, electronic funds transfer. Foreign
exchange.
Readings
: Sherif Ch. 1. Sherif
Ch. 2.1 - 2.4. Article by Camp, Sirbu and Tygar,
Token
and Notational Money in Electronic Commerce.
Lecture 2 - AUTOMATED
CLEARING AND SETTLEMENT SYSTEMS (Friday, January 28, 2005) The Hong Kong banking
system, U.S. dollar and Euro settlement. Cheque
clearing. ATM networks. CHIPS, SWIFT. Real-time gross settlement.
Readings
: Sherif Ch. 12,
Payment Systems in Hong Kong,
Hong Kong Financial Infrastructure,
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 3 - EPAYMENT
SECURITY (Sunday,
January 30, 2005
a.m.) Cryptographic
methods, hash functions, trapdoor functions, DES and AES (Rijndael),
Diffie-Hellman Key exchange, RSA.
Readings
: Sherif Ch. 3.1 - 3.6.
Lecture 4 - DIGITAL
CERTIFICATES (Sunday, January 30, 2005
p.m.) Digital
signatures and certificates, certification chains. The public-key
infrastructure.
Hong Kong
e-Cert.
Digital identity documents, remote authentication, SiteCertain.
Readings
: Sherif Ch. 3.7 - 3.10.
Lecture 5 - CREDIT
CARD PROTOCOLS (Monday,
January 31, 2005) The SSL/TLS Protocol.
Cipher suites. Transport-Level Security (TLS), Secure Electronic
Transactions (SET), Server Gated Cryptography (SGC), Visa 3D-Secure.
Readings
: Sherif Ch. 6, Everything
You Always Wanted to Know About CC's (Joe Ziegler), Sherif Ch. 7.
Lecture 6 - STORED-VALUE
CARDS (Wednesday, February
2, 2005) Smart card architecture
and security, contactless cards, PIN verification.
Octopus, Mondex, Geldkarte.
Readings
: Sherif Chs. 13, 8, Geldkarte
section of Ch. 9.
Lecture 7 - MICROPAYMENTS
(Friday, February
4, 2005) Characteristics of micropayment systems: Payword, Micromint. The role of brokers and scrip.
Readings
: Sherif remainder of Ch. 9.
Lecture 8
MOBILE
PAYMENTS,
VIRTUAL MONEY (Sunday, February
6, 2005 a.m.) Wireless payments, Mobipay, Paybox. Digital wallets.
Peer-to-peer payments: PayPal. Foundations
of electronic cash: anonymity, untraceability, double-spending prevention.
Readings
: Sherif Ch. 11,
Mobile
Payments: Alternative Platforms and Players (Gιrard Carat), Tanaka,
Possible
Economic Consequences of Digital Cash.
Lecture 9 -
BANKING IN MAINLAND CHINA (Sunday, February
6, 2005 p.m.) Electronic Interchange System
(EIS), China National Automated Payment System (CNAPS), Modern Payment System
(MPS), Shenzhen RTGS, electronic banking generally.
Readings
:
Payment Systems of China,
Digital
Payment Systems (Siemens)
Lecture 10 - ELECTRONIC
INVOICE PRESENTMENT AND PAYMENT (Monday, February
7, 2005) B2B payments and
documentation requirements, electronic statement delivery. Biller service
providers, customer service providers. Thick vs. thin consolidation.
Reconciliation. Future directions for ePayment systems.
Readings
:
Business-to-Business
EIPP (NACHA),
EBPP
Business Practices