Secure Electronic Transaction (SET)

Secure Electronic Transaction (SET) is a cryptographic protocol that provides a secure and reliable method for conducting online transactions over the internet. Developed jointly by Visa and Mastercard in the mid-1990s, SET was designed to address the growing concerns regarding the security of electronic payments and to establish a standardized framework for secure online transactions.

How SET Works

SET employs a combination of encryption, digital certificates, and digital signatures to ensure the confidentiality, integrity, and authentication of online transactions. When a customer initiates a transaction, the SET protocol enables the secure transmission of sensitive payment information, such as credit card details, between the buyer, the merchant, and the payment gateway.

1. Authentication: SET verifies the identities of both the buyer and the merchant involved in a transaction. This is achieved through the use of digital certificates, which are issued by trusted certification authorities. The digital certificates contain the public key of the certificate holder and are used to authenticate the parties involved.

2. Confidentiality: SET employs encryption techniques to protect the confidentiality of the transaction data. The sensitive information, including credit card details, is encrypted using a symmetric encryption algorithm before transmission. Only the intended recipient, possessing the corresponding decryption key, can decipher the encrypted data.

3. Integrity: SET ensures the integrity of the transaction data by using digital signatures. A digital signature is created using the private key of the sender and can be verified using the corresponding public key. This ensures that the transaction data remains unchanged during transmission and provides assurance that the message originated from the legitimate sender.

Benefits of SET

SET offers several benefits to both customers and merchants:

1. Enhanced Security: By utilizing strong encryption and authentication mechanisms, SET provides a robust security framework for online transactions. This minimizes the risk of unauthorized access, data breaches, and fraud, instilling confidence in customers to engage in secure online shopping.

2. Standardization: SET establishes a standardized protocol for secure online transactions, ensuring compatibility across different platforms and systems. This simplifies the implementation process for merchants and facilitates interoperability between various payment systems.

3. Liability Protection: SET offers liability protection to customers and merchants in the event of fraudulent transactions. The protocol provides a mechanism to authenticate parties involved, reducing the risk of repudiation and ensuring fair resolution of disputes.

4. Privacy Preservation: SET protects the privacy of customers by encrypting sensitive payment information during transmission. This shields personal data from unauthorized access, enhancing customer trust and compliance with privacy regulations.

Limitations of SET

Despite its advantages, SET faced certain limitations that hindered its widespread adoption:

1. Complexity: The complexity of implementing SET posed a significant barrier to its adoption. The protocol required the integration of various components, including digital certificates, encryption algorithms, and key management systems, which increased the implementation and maintenance costs for merchants.

2. Limited Merchant Support: During its initial years, SET struggled to gain widespread support from merchants. The adoption of SET required significant infrastructure changes, making it less attractive for small and medium-sized businesses. As a result, alternative payment systems gained popularity, reducing the demand for SET.

3. Emergence of Alternative Standards: Over time, alternative standards and protocols emerged, such as Secure Sockets Layer (SSL) and Transport Layer Security (TLS), which offered simpler and more cost-effective solutions for securing online transactions. These alternatives gradually overshadowed SET and became the de facto standards for secure online payments.

In conclusion, Secure Electronic Transaction (SET) was an early cryptographic protocol that aimed to establish a secure framework for online transactions. While SET provided robust security and standardized processes, its complexity and limited merchant support hindered its widespread adoption. However, SET played a crucial role in shaping the evolution of secure online payment systems, paving the way for more streamlined and widely accepted protocols.