ISSN (Print) : 0974-6846

Indian Journal of Science and Technology, Vol 10(20), DOI: 10.17485/ijst/2017/v10i20/113930, May 2017 ISSN (Online) : 0974-5645

A Survey on E-Payment Systems: Elements,

Adoption, Architecture, Challenges
and Security Concepts
Muddassir Masihuddin1, Burhan Ul Islam Khan2*, M. Mueen Ul Islam Mattoo2 and
Rashidah F. Olanrewaju2
1
PomelloPay E-Wallet Solutions, Faculty of Technology and Innovation, Segi University, Malaysia;
muddassir.masihuddin@gmail.com
2
Department of ECE, Kulliyyah of Engineering, IIUM, Gombak, Malaysia;
burhan.iium@gmail.com, mueenmattoo@gmail.com, frashidah@iium.edu.my

Abstract
Objectives: This paper is aimed at investigating and increasing awareness about various concepts related to Electronic
Payment Systems (EPS) including its advantages, challenges and security considerations. The proposed study also evaluates
the adoption of e-payment systems and the resulting impact on economy of a nation. Methods/Statistical Analysis:
In this paper, a comprehensive survey on all the aspects of electronic payment was conducted after analysis of several
research studies on online payment systems. The most recent references and information have been explored in order to
gain significant information about electronic payments systems. Findings: From the study conducted, it can be elucidated
that despite various issues that usage of electronic payment systems pose, these are identified as a positive step towards
the economic development of a nation. Nevertheless, its full potential can be realized only by raising its awareness among
people. Applications/Improvements: With the advancement in technology and popularity of Internet, the perception of
making online transactions is bound to gain momentum. In the future, the payment modes currently used and supported
shall see a declining trend owing to the numerous benefits offered by electronic payment systems.

Keywords: E-commerce, Electronic Payment System, Payment Gateway, Payment Gateway Security

1.  Introduction this, appropriately planned electronic system of payment

can really give ideal security over conventional meth-
In person trading of products and services between two ods of payments, with the added advantage of pliability
parties goes back to before the start of written history. in usage1,2. The ease of making monetary exchanges and
With time, as exchange turned out to be more muddled additionally a more secure and faster access to capital
and difficult, people represented values in an abstract resources, among different other components, has put
manner, advancing from barter system through certified e-payment system on a celebrated stride than the cash
notes of money, cheques, payment orders, debit and credit currency based system3–5. With intangible transactions
cards, and nowadays electronic payment (or E-payment) becoming more impactful in overall economies and their
systems. Some well-known issues or defects are found in prompt transference at little cost, conventional systems of
the customary methods of payment: cash can be falsified, payment have a tendency to be more expensive than the
cheques bounced, and signatures forged. Contrary to present-day strategies. Furthermore, processing on the

*Author for correspondence

 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

internet can be of less worth than the smallest estimation environment and the technology. The exclusive attri-
of cash in the manual world6. butes of EPS/IOS also separate it from the conventional
With the immense participation of the web in our internal based systems of information; technologically,
everyday life, individuals feel accustomed to online relationally and organizationally, it is more intricate and
exchange in E-Commerce for selling and purchasing of complicated11–13, highlighting the significance of coopera-
products and ventures. People are paying cash electroni- tion and the need to unite all aspects together14.
cally over the Internet7. Moreover, the rise of web-based Notably, the global annual non-cash transactions
business has led to new money-related necessities that facilitated by e-payment and mobile payment (m-pay-
by and large can’t be viably satisfied by the customary ment) had been on the upsurge over the years, except for
methods of payment. Following to this growing trend, 2012 where it decelerates from an annual growth rate of
related individuals are investigating different electronic 8.6% in 2011 down to 7.7% in 201215. Furthermore, in
systems of payment including issues encompassing 2014, volumes of worldwide non-paper exchange went
electronic system of payment and digitized currency2. upto 8.9% reaching 387.3 billion, the most noteworthy
Every single transaction that takes place online is made development rate since the first publication of World
via payment gateways which act as points at which the Payments Report. The growth was chiefly determined by
financial organizations can be accessed. Payment gate- quickened development in newly forming markets. The
ways authorize and validate details of payment between higher worldwide development is anticipated to have
different parties and the various financial organizations7. kept up in 2015, with assessments of a development rate
This paper gives a detailed description aimed to increase of 10.1% which will make the non-paper exchange vol-
awareness about the electronic payment system. The orga- ume reach 426,300,000,00016. E-payment systems are
nization of the paper is as follows: The various definitions important mechanisms used by individual and orga-
of an E-payment system and its related aspects have been nizations as a secure and convenient way of making
provided in Section II. Section III discusses the adoption of payments over the internet and at the same time a gate-
E-payment systems followed by important security consid- way to technological advancement in the field of world
erations of E-payment in Section IV. E-payment gateway economy17. In addition, it has also become the major
model and the elucidation of its various security require- facilitating engine in e-commerce through which elec-
ments and mechanisms have been given in Section VI. tronic business success relied upon. Electronic systems
Finally, the paper is concluded in Section VII. of payment had likewise realized proficiency, reduced
rate of frauds and resourcefulness in the systems of
2.  E-Payment System world payment10,18.

As exchanges among different partners of business keep

2.1 Various Definitions of E-Payment
on proffering on the e-commerce platform, the previ-
ous cash-based system of payment was slowly replaced System
by the electronic payment systems8. The appearance of The electronic payment system is a comprehensive term,
this advancement in the worldwide business platform portraying various scopes of delivery through electronic
prompted most business establishments to naturally multichannel. Its use for various purposes offers an ampli-
change from the customary paper-based cash exchanges fied imprecision of characterizing e-payment in literature.
to an electronic system of payment which is generally E-payment can be seen from its capacities as e-banking,
known as the e-payment system. By and large, these m-payment, e-cash, internet banking, online banking,
electronic systems can be seen as a method of making e-broking, e-finance and so on. All things considered,
payments for merchandise or services which have been recent researchers have demonstrated a few endeavors to
established online using the internet9,10. come up with a definition of e-payment5.
An Electronic Payment System can be defined as a The system of e-payment is characterized by8 as a type
type of inter-organizational information system (IOS) of financial commitment that includes the purchaser and
for money related transactions, connecting numerous the vendor enabled by the utilization of electronic infra-
associations and individual clients. A need of complex structures. Additionally, e-payment is viewed by14 as a
interactions may be required among the partners, the type of inter-relation amongst associations and people

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 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

helped by banks and inter-switch houses that empowers telegraph. However, that technology had not been widely
financial transaction electronically. used in the US until the time when their Automated
Another point of view is put forward by19 who see Clearing House (ACH) was incorporated in 1972. Since
e-payment system as any type of money exchange through that time, the electronic money turned out to be quite
the internet. On a similar note, as indicated by20, a system popular. This enabled U.S. commercial banks and its
of electronic payment alludes to an electronic method for central treasury came out with an alternative to cheque
making payments for merchandise obtained on the web payment10.
or in markets and shopping centers. Another definition Credit card industry can also be traced back to 1914
suggests that e-payment systems are payments made in when department stores, oil companies, Western Union
electronic exchange conditions as exchange of money via and hotels started issuing cards to their customers to
electronic means21. enable them to pay for goods and services. After about 40
Besides, view electronic payment is viewed by22 as years of credit card evolution, there have been increasing
an exchange of money that happens online between the numbers of credit card usage as they have become more
merchant and the purchaser. In addition, as per23, elec- acceptable by people as a medium of payment, especially
tronic payments allude to money and related exchanges in transportation. Initially, credit cards were all paper-
actualized utilizing means of electronics. E-payment is based payments, until in the 1990s when such cards were
also defined as payment by means of electronic exchange transformed to electronic completely. Due to the increas-
of details of credit cards, direct credit or some other ing number of credit card usage, the industry has grown
electronic means other than payment with money and rapidly which led to the introduction of a debit card too.
cheque24. Debit and credit cards are now used in transaction pay-
E-payment was characterized by25 as an exchange ments for all types of purchases or services rendered all
of a fiscal claim by a payer on a party worthy to be use- over the world10,32.
ful. E-payment is defined by26 as payments made via the
automated clearing house, commercial card systems and 2.3  Types of E-Payment Systems
electronic transfers. According to27, e-payment is char-
There are quite a number of e-payment services that have
acterized as any trade of money started by means of an
been developed within the payment system around the
electronic correspondence channel. E-payment is defined
globe. These include electronic cheques, e-cash, credit
by28 as payments made by the use of electronic signals
cards and electronic fund transfers10,33.
connected debit or credit accounts. As per29, e-payment
In general, online payment can be divided into two
is observed as any sort of non-money payment that does
types: one in view of the Internet Banking Payment
not include a paper cheque.
Gateway (IBPG) and one in light of the outsider pay-
Likewise, e-payment was seen by30 as any exchange
ment platform. The first one is a sort of a direct mode of
of an electronic worth of payment from the buyer to the
payment, and the client understands the online payment
seller by means of an e-payment channel that permits
via an e-business framework which is connected to the
clients to remotely access and deal with their financial
banking framework. On the other hand, the second one
accounts and exchanges over an electronic system.
involves money exchange from the account of purchaser
In general, an electronic payment system is an
to merchant’s account by means of an outsider or third
arrangement of monetary exchange amongst purchasers
party payment platform. The IBPG lies amongst the bank-
and vendors on online conditions that is helped by a digi-
ing process system and the Internet; it is a system which
tal financial instrument, (for example, electronic cheques,
has been especially made for managing payment and pay-
encoded credit card numbers, or cash in digital form)
ment authorization. The IBPG is the link which links the
supported by a bank, a mediator, or by a lawful associate31.
purchaser, vender and the bank. The online mode of pay-
ment which is based on IBPG cannot come into existence
2.2  History of E-Payment Systems without the payment gateway34.
The history of e-payment can be traced back to 1918 According to the study of35, there are four
the time when currency was first moved in the United classifications of electronic payment systems worth men-
States (U.S.) by the Federal Reserve Bank with the aid of tioning: electronic cash, online credit card payment, small

Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology 3
 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

payments and electronic cheques. They further stressed 2.3.1.4 E-Cash

that every one of these systems has its own merits and This technique was produced as a contrasting option to
demerits. It was emphasized that each type could be the utilization of credit cards for buys over the Internet37.
assessed through these four distinct qualities viz.: It is a type of an electronic payment arrangement in
Technological aspect, Economic aspect, Social aspect and which certain measure of cash is put away on a customer
Institutional and law aspects. gadget and made open for transactions over the inter-
In reality, we encounter two uniquely varied kinds of net. Electronic money can further be alluded to as cash
payment systems2,36: in digital form and it utilizes an e-cash software which
is installed on the client PC or electronic gadgets38. The
2.3.1  Internet-Based Payment System standout feature of electronic cash is its low cost and
The Internet-Based payment system comes in the follow- hence is amongst the most encouraging strategies for
ing four modes: smaller scale payments37,40.

2.3.1.1  Debit Card 2.3.2 Electronic Transaction-Based Payment

One of the most generally utilized frameworks for System
e-payment is the debit card. The debit card technique con- Internet-Based payment system has four modes:
solidates the elements of the Automatic Teller Machine
(ATM) card with Internet banking37. A Debit card holder 2.3.2.1  Secure Electronic Transaction (SET)
pays for his buys directly through the bank replacing The system of secure electronic transaction is an arrange-
cheque and physical money. In this system of debit cards, ment for online payments for guaranteeing the security
clients store money ahead of time into the bank and draw of money related exchanges on the web. The SET deter-
out the same at the time of buying. In the real world, there mination is an open, technical standard for business,
are two sorts of debit cards36: i) Online debit card, and ii) created by Master Card and VISA41. SET enables secure
Offline debit card. transactions by payment card over the web. A trust
change throughout the system is created by means of
2.3.1.2  Credit Card a digital certificate, confirming vendor legitimacy and
This is other type of e-payment system in which there is cardholders36.
utilization of the card issued by a monetary organization
to the cardholder for making payments on the web or by 2.3.2.2  Cyber Cash
means of an electronic gadget without the utilization of Cyber Cash is an online service that of its own pro-
paper money38. The most popularly utilized type of e-pay- cesses and confirms client’s credit card information
ment is the credit card. Contrasted with different EPS, it is and then charging the client’s account and depositing
not proper to use credit cards for exchanges of small value the money in the dealer’s account electronically. The
i.e., exchanges which involve not as much as a dollar37. servers of cyber cash act as a gateway between the
trader on the web and bank’s protected monetary sys-
2.3.1.3  Smart Card tem. Digital signatures are used by this system in order
This makes use of a plastic card installed with the micro- to maintain the security in electronic payment36. While
chip on which funds can be loaded in order to make money in electronic form (‘e-money’) is a more exten-
instant payment of bills and transactions. Another name sive idea which refers to all PC based transfer of fund
for the smart card is a chip card38. Smart cards are able to systems (for example ACHs, debit or credit cards) and
store individual/related data about the business of client. the hardware involved with them (for instance, point
In the same way, a chip card is used for storing cash which of sale terminals, ATMs), cyber cash specially empha-
is lessened as per its usage. Smart card can be authorized sizes on all money exchange systems which are being
with the help of a PIN provided to the client. These cards steered through the web. It is difficult to distinguish
are secure because of the provision to store data in an ‘electronic money’ from ‘cyber cash’, since the latter has
encoded form and higher processing speeds. Some exam- been derived from the former and is currently bit by bit
ples of smart cards are Mondex and Visa Cash cards39. converging into it42.

4 Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology
 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

2.3.2.3  Net Bill ment in the year 2014. These statistics allude to the fact
Net bill payment system utilizes the internet for obtain- that the security and convenience provided by the cards
ing merchandise and various services and is able to make in comparison to other instruments of payment and the
secure and economical payments for them. It is a micro- compatibility with the newcomers to build innovative
payment system where the net bill server is responsible series because of their easy payment infrastructure16.
for maintaining accounts for both buyers and sellers, Furthermore, the electronic mode of payment can be
which enables clients to pay vendors for products to be accomplished in a mobile environment as well. Various
conveyed. The exchange of information goods comprises Android applications in smart-phones like Ngpay, Paytm
of conveying bits to the customer. This arrangement of provide an online service of payment. In case of the elec-
bits may assume any internal structure, for instance, the tronic payment system, these mobile applications work
search results of a database inquiry, a software program, equally well on a Desktop computer. There are other ways
or a page of text. Customers might be charged based on in which clients employ their mobile phones for paying
the number of items they use, or by a membership per- their transactions. By making use of the mobile internet,
mitting an unlimited access, or by various other valuing customers may transmit a PIN number, send an SMS mes-
models43. There is a software with money tool which sage or utilize WAP to pay electronically over the internet.
checks the products’ receipts. Along these lines, net bill For E-payment, the vendors can authenticate a particular
arrangement of electronic payment makes the money tool client’s debit or credit card transaction by assigning an
communicate with the dealers’ server and net bill server36. instrument to their mobile phones. In the United States,
a conglomerate of late publicized Power Swipe, which is
2.3.2.4  First Virtual Holdings physically connected to a Nextel telephone, has a weight
of 3.1 ounces, and involves a reader for magnetic stripe,
It is one of the primary web payment frameworks that
goes through connector for charging the battery of the
offered an outsider confirmation technique to make pay-
handset, and an infrared port for printing45.
ment possible over the web. The first virtual system of
payment is interesting as it doesn’t utilize encryption. It
is to be utilized solely for selling data over the Internet, 2.4  Advantages of E-Payment System
as opposed to goods and services. It utilizes an auto- For the first time in history, a review by the Federal
mated telephone system to gather participant’s payment Reserve Financial Services Policy Committee shows that
information, the first virtual shuns digital signatures or electronic payment exchanges in the United States have
cryptographic techniques of encryption and more likely surpassed cheque payments. In 2003, the total number
depends on careful observation of purchases and sales so of electronic exchanges were equivalent to 44.5 billion
as to decrease fraud and misrepresentation44. A principal dollars, while the quantity of cheques paid were equal to
viewpoint of the payment system is that some data is not 36.7 billion dollars. Evidently, a pattern among buyers can
supposed to go over the web since it is an open system. be recognized; purchasers are seen to be more willing to
This data is essentially related to the credit card informa- work with electronic transactions and employing an auto-
tion. Rather than utilizing the numbers of credit cards, the mated medium to do their businesses.
exchanges are done by utilizing a first virtual PIN, issued As indicated in a review by46, the ingress of the
by a first virtual organization. Since these PIN numbers web has put electronic payments and exchanges on an
work like ID they can be sent over the web and no seller exponential development rate. Customers could buy mer-
can charge the client’s account without getting an affirma- chandise from the web and send credit card numbers in
tion email from the client36. an unencrypted form over the system, which made the
Since 2010, the cards as instruments of payment have transactions quite vulnerable to threats and frauds. With
shown fastest growth, which is evident from the fact development in e-payment systems, a wide assortment
that the use of cheques has declined in the last 13 years. of new secure systems of payments have come up as cus-
Debit cards standout among the other types of payment tomers turned out to be more mindful of their protection
instruments and accounts for the highest share (45.7%) of and security. As argued by47, Electronic Payments have
worldwide non-cash money exchanges and have proved remarkable number of financial benefits in addition to
to be the fastest growing (12.8%) instruments of pay- their safety and ease of operation. These advantages when

Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology 5
 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

expanded can go far in contributing hugely to financial intermediation and improve financial transparency”.
improvement of a country. She additionally states, “Governments play a critically
Computerized electronic payments help develop important role in creating an environment in which these
deposits in banks and in this manner, increase reserves benefits can be achieved in a way consistent with their
accessible for business credits – which is considered as own economic development plans”.
a driver of financial achievement. As per47, advanta- Likewise, the study by49 bolster the reality that utiliza-
geous and secure electronic payments convey with them tion of electronic payment systems holds the guarantee
a noteworthy scope of full scale financial advantages. of tremendous advantage to both vendors and buyers as
“The impact of introducing electronic payments is akin costs are reduced, more ease of use and higher security,
to using the gears on a bicycle. Add an efficient electronic dependable means of payment and settlement for a pos-
payments system to an economy, and you kick it into a sibly immeasurable scope of products and enterprises
higher gear. Add better-controlled consumer and busi- offered worldwide over the web or other electronic sys-
ness credit, and you notch up economic velocity even tems. One such advantage is that electronic payment
further”. systems empower bank clients to deal with their everyday
EPS can be helpful in uprooting shadow economies, money related transactions without visiting their nearby
bringing masked exchanges into the banking system and bank office. Electronic payments could save dealer’s time
help in bringing straightforwardness, cooperation, and and cost in taking care of money50.
confidence in the economic system. In addition to this, As signified by51, the asset cost of the payment frame-
as specified by47, there is a relationship between the rise in work of a country can represent 3% of its GDP. Since most
demand deposits and increase in point of sales volumes. electronic payment systems cost just around 33% to 50%
“Automated electronic payments act as a gateway into the of the paper-based non-money payment, clearly the social
banking sector and as a powerful engine for growth. Such cost of a payment framework could be impressively less-
payments draw cash out of circulation and into the bank ened if it is computerized50. Mechanizing and reshuffling
accounts, providing low cost funds that can be used to electronic payments produced using self-serve channels,
support bank lending for investment – a driver of overall for example, ATMs, point-of-sale (POS) systems, and
economic activity. The process creates greater transpar- branch office terminals can lessen paper-based mistakes
ency and accountability, leading to greater efficiency and and expenses.
better economic performance”. An examination work completed by Visa Canada
In a comparative account by48, electronic payment Association as a team with Global Insight (A main mon-
is extremely helpful for the buyer. Most of the time, the etary and budgetary counseling firm) discovered that
user is required to enter his account related information electronic payment systems give proficiency in transac-
- for example, credit card number and delivering address tions to purchasers, traders, banks and on the whole the
- once. The data is then kept on the retailer’s web server’s economy. Electronic payments have contributed $C 107
database. When the client returns to the webpage, he sim- billion to the Canadian economy since 1983 and comprise
ply signs in with his username and password. “Completing of about 25% of the $C 437 billion aggregate development
a transaction is as simple as clicking your mouse: All you in the Canadian economy over the said period. Over
have to do is confirm your purchase and you’re done”. the same two decades, $C 60 billion of the expansion
Additionally, electronic payments are observed by48 in Personal Consumption Expenditures was specifically
to bring down expenses of organizations. Less cash is inferable from electronic payments, with credit card hav-
spent on paper and postage with increasing number of ing a major share in this development ($C 49.4 billion) in
electronic payments. Presenting the option of electronic comparison to debit cards ($C 10.4 billion)52.
payments can likewise help organizations enhance client
preservation. “A customer is more likely to return to the
same e-commerce site where his or her information has 2.5  Issues of E-Payment System
already been entered and stored”. In spite of the numerous advantages of the electronic
As indicated by47, “Electronic payments can thus payment systems, they have their own difficulties and
lower transaction costs stimulate higher consumption challenges even in today’s technologically advanced world.
and GDP, increase government efficiency, boost financial The challenges which have been identified by previous

6 Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology
 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

researchers are Infrastructure, Regulatory, Legal issues until clients are sure that their privacy is ensured and sat-
and Socio-Cultural issues. isfactory confirmation of security is safeguarded53. New
advances likewise need to stand the test of time so as to
2.5.1 Infrastructure secure people’s confidence, regardless of the fact that it is
Infrastructure is fundamental for the effective execution simpler to use and less expensive than the more estab-
of electronic payments. Appropriate infrastructure for lished techniques52.
electronic payments is an issue53. For electronic payments
to be fruitful, it is necessarily required to have a finan- 2.6  Popularly Used E-Payment Systems
cially savvy and reliable infrastructure that can be availed One of the best apparatus that the Internet offers in today’s
by dominant part of the populace. In developing nations, world is the ability to shift one’s business wherever they
large portions of the country don’t have banks and have want by means of a website. This is the reason it became
no access to basic infrastructure that drives electronic noticeably vital to buy by means of the Internet through
payments. In connection to this, a research work by54 numerous payment service providers. Payment Service
reveals that in Nepal, Electricity and Telecommunication Provider is an organization that offers online services
are not accessible all through the nation, which contrarily related to marketing; it recognizes electronic payments by
influences the advancement of e-payments. overseeing exchanges amongst vender and purchaser. The
most well-known payment techniques that are typically
2.5.2  Regulatory and Legal Issues provided are by bank transfer, real time orders and credit
National, provincial or global arrangement of laws, card.
standards and different other directions are imperative Some popular systems of Online payments are55:
prerequisites for the effective execution of e-payment 1. Braintree, 2.Stripe, 3. PayPal, 4. Authorize.Net, 5.
plans. A significant portion of components incorporate 2CheckOut, 6. Dwolla, 7. Worldpay, 8. Eway, 9. Samurai,
guidelines on tax evasion, supervision of e-money organi- by Feefighters, 10. Serve, from American Express, 11.
zations and commercial banks by supervisory specialists; Intuit GoPayment, 12. Icepay, 13. Amazon Payments, 14.
central banks should keep an oversight on payment sys- Skrill (before Moneybookers), 15. WePay, 16. V.me by
tems, buyer and information protection, participation Visa, 17. Square, 18. Google Wallet/ Google Checkout
and rivalry issues. As indicated by53, the worldwide and
virtual nature of e-payment additionally brings up legal 3.  Adoption/Economic Growth of
issues, for example, which laws are relevant in debated
cases and which jurisdiction will be competent, legiti-
E-Payment System
macy of digital signatures and electronic contracts. A Globalization in today’s world is the result of inno-
legitimate and administrative structure that builds confi- vative technological endeavors. The advancement in
dence and trust helping technical endeavors is a vital issue technology has changed the skyline of payment sys-
to be tended to in executing e-payments. tems, moving towards e-World56. Decisively, current
innovation has changed customary systems of payment
2.5.3  Socio-Cultural Challenges into a more proficient and viable system, which is free
Social and cultural dissimilarities in outlooks and the uti- from the cash-and-carry disorder. The effectiveness of
lization of various types of cash (e.g. utilization of credit executing financial transactions and also a more secure
cards in North America and utilization of debit cards in and faster access to funds, among different other
Europe) muddle with the job of building an electronic components, has put e-payment system on a more cele-
payment system that is relevant at a global level53. As indi- brated pace than the paper money based framework3,4.
cated by53, discrepancy in the level of the security required Interestingly, in Nigeria, e-payment framework is pick-
and productivity among individuals of various societies ing up eminence to the degree that clients have now
and the degree of advancement worsens the issue. wanted to do financial transactions without going to
Buyer’s trust and confidence in the customary meth- the banks. Thus, time of money based payment frame-
ods of payment make clients more averse to embrace work is slowly blurring out as the cashless economy
new innovations. New innovations won’t rule the market dominates present day financial systems57,58. Lately,

Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology 7
 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

e-payment system has turned into a standard through the administration when settling on financial adoptions.
which fiscal element moves advantageously, particu- EPS likewise can diminish the cost on money handling
larly in a developing country like Nigeria where it is and costs on printing. As per (Moody’s Analytics, 2010),
habitual to carry cash. In such a country, the e-payment genuine worldwide GDP on an average increased by an
system has shaped into an important starting point of additional 0.2% per year considered to what it would
her present-day economy; a well-working system of have been without the utilization of cards. Basically,
e-payment has been perceived to have much perti- the use of cards develops a nation’s GDP by 0.2% every
nence to budgetary strength, overall financial activity, year62.
and monetary policy5. In the meantime, the initiative In a society where 90% of money is held outside of
for an economy that is not based on cash will be pre- the banks to migrate to a cashless economy is a major
ferred in the new era only when it is supported with transformation. It is subsequently a gigantic test for the
age advantage, good education, ownership of impor- government, money related establishments, people and
tant innovative foundations, among different other different other partners in charge of making this frame-
components, appropriately set up by every concerned work accomplish its financial advantages. There are
individual of the economic system and proficiently probably going to be economic, operational, financial and
managed before forcing the citizens to comply. advertising changes that should be overseen in a proper
A number of researches were done on the systems manner52.
of e-payment and development of economy in the cur- Conventional techniques of payment incorporate
rent time. The study of59 inspected cashless systems bank exchanges, debit cards, and credit cards. In 2014, the
of payment and monetary development and found a quantity of cards with a function of payment improved
connection between cashless payment and the pace up to 766 million in the EU. The measure of exchanges
of financial development. The review discovered by means of cards was 47.5 billion, with an aggregate
that cashless payment volumes are developing twice estimation of 2.4 trillion dollars. However, individuals
as quick in the developing countries as they are over incline towards other choices or local solutions of pay-
the world. Likewise, World Payments Reports (2012) ment. The scene of optional payments has advanced and
investigated the state and advancement of worldwide is believed to assert 55% of e-Commerce revenue by 2019
non-paper money systems and discovered non-cash as described in Figure 138.
payments make it less demanding and speedier for
individuals and organizations to purchase products
and enterprises, thrusting cash into the framework
quicker and adding to the GDP60. The conclusion of
the review was like that of5,61 who investigated princi-
pal connection between electronic retail payment and
general financial development utilizing information
from over 27 European nations from 1995 to 2009 and
came to know that relocation to proficient electronic
retail payment empowers general financial develop-
ment, utilization and exchange.
Apart from the safety and convenience, Electronic
Payment Systems additionally have a significant number
of financial advantages62. The chief financial advantage
of EPS involves mobilizing investment funds and guar-
anteeing a large portion of the cash accessible to the
nation and with the banks, making funds accessible to
borrowers (organizations and people). Moreover, an
electronic system of payment can track spending of a Figure 1.  Future trends of payment methods[Source:
particular individual; to simplify the framework of ser- Global payments report preview, Worldpay, November
vices offered by the banks. This data is likewise helpful to 201538].

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 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

4.  Security of E-Payment Systems 4.1.3  Availability and Reliability

Availability is guaranteeing that data frameworks and
In all information systems, the security of data and information are prepared for utilization when they are
information is of significant importance. Data Security required; regularly communicated as the rate of time that
involves methodology, technology and practices which a framework can be utilized for profitable work. All fac-
guarantee that data is secured from tions need to have the capacity to make or get payments
i. alteration or unintentional change (integrity), whenever the need arises64.
ii. unauthorized access (confidentiality), while
iii. promptly accessible (availability) to approved clients 4.2  Enhancing E-payments Security
on demand. As per53, the most widely recognized strategy for securing
The electronic payment systems need to have all the e-payments is utilizing cryptographic-based innovations,
above security features; an e-payment system which is for example, digital signatures and encryption. On appli-
not secured will not be trusted by its clients. And, trust cation, these innovations lessen speed and proficiency
is extremely important to guarantee acceptance from the and thus trade off must be made amongst effectiveness
clients. As indicated by63, e-banking and e-payment appli- and security. The following are a few means to secure
cations have security issues as they rely upon basic ICT e-payments:
frameworks that make vulnerabilities in economic orga-
nizations, businesses and can possibly hurt clients. 4.2.1  Secure Electronic Transaction (SET)
This is an open standard created by Visa and Master Card
4.1 Security Requirements in E-Payment to give an answer for security related issues for online pay-
Systems ment system involving credit cards. This is accomplished
A safe economic exchange electronically needs to meet by giving both client and dealer a digital certificate. As
some prerequisites. They may be stated as follows: indicated by53, this was not welcomed by people since it
was complex and both client and dealer needed to down-
4.1.1  Integrity and Authorization load a software of 5MB.

Integrity may be characterized as the validity, accuracy 4.2.2  3D Secure

and completeness of data as per business qualities and
desires. In payment systems, integrity implies that no cash It is an alternative to SET created by Visa SET and does
is taken from a client lest a payment is approved by the not oblige to have a certificate for verification53.
client. Additionally, merchants need not accept any pay-
ment without the absolute permission of the clients; this 4.2.3  Smart Card Security
is alluring when clients need to keep away from unwanted Information put on a smart card is encoded in nature and
bribery64. can’t be availed without a PIN/password and hence good
security is ensured. It is contended by53 that smart cards
4.1.2 Confidentiality are ousting cards involving magnetic strips i.e. credit
Confidentiality may be defined as the safety of private or cards, debit cards and so on. Legitimate arrangements,
sensitive data from unapproved divulgence. A few orga- methodology and proper Government laws should like-
nizations included may want to have confidentiality in wise be set up to guarantee advancements, giving best
their exchanges. Confidentiality in this setting implies possible security52.
the confinement of knowledge about different snippets of
data which are related to the exchange; the verification of 5.  E-Payment Gateway Model
payer/payee, buy content, sum and so forth. Commonly,
members included want to guarantee that transactions are In today’s world, online shopping has become popular;
secret64. Where untraceabilty or anonymity is sought, the the utilization of e-payment provides a large number
prerequisite might be to make available this information of advantages to vendors as well as clients. For process-
to only certain specific subsets among the participants. ing, the transactions that take place over the web must

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 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

go through a payment gateway. In practice, the payment 5.2  The Process

gateways act as a link amongst financial organizations
A Payment Gateway Transaction is performed in the fol-
responsible for conducting the money exchange and the
lowing stepwise manner65,66:
vendor’s website65.
In business over the Internet, different factions are 1. Customer goes to a website meant for shopping and
included in E-Payment for selling and purchasing prod- chooses the products/services and taps the “Buy” but-
ucts. An electronic Payment Gateway is a fundamental ton. A message goes to the site with respect to the
part for online transactions and supposed to ensure the customer’s interest to purchase a product and make
client that exchange is reliable and safe in every aspect of payment.
security7. 2. The server of the Web store, in the wake of accepting
An E-Commerce Payment Gateway is a basic part the request from purchaser, appends its own digital
of infrastructure to guarantee that such exchanges certificate to recognize the shopping center. At this
happen with no problems and the overall security over stage, this message is referred to as a “Digital Order”
electronic systems is maintained. A Payment Gateway and furthermore incorporates the IP address of the
acts as an access point to the national banking sys- customer plus the sum he is supposed to pay. The
tem. Every single online exchange must go through a Digital Order is then directed towards the Payment
Payment Gateway to be handled. A Payment Gateway Gateway over a safe channel. Security is guaranteed by
routes and confirms details of payment in amazingly information encryption.
secure conditions between related banks and differ- 3. Based on the Digital Certificate, the e-Payment
ent factions. The Payment Gateway works basically as Gateway sends confirmation to the web store.
an “encoded” channel, which safely routes details of 4. The Electronic Payment Gateway displays different
transactions from the purchaser’s Personal Computer payment choices to the purchaser on a screen.
(PC) to banks for authentication and countersignature. 5. Buyer picks the payment option he wants to use,
Upon approval, the Payment Gateway sends back the which is transmitted through a safe connection to the
data to the vendor consequently finishing the “order”, e-Payment Gateway.
and giving confirmation66. 6. Electronic Payment Gateway transmits the details
input by customer to the attaining bank (if it involves
5.1 Basics card exchanges) or merchant’s bank (in case of other
instruments).
An electronic exchange involves the following compo-
7. The attaining bank transmits the data to the purchas-
nents67:
er’s bank (if it involves card exchanges) or purchaser’s
1. Online client: A client is a person who will purchase bank (in case of other instruments) by means of a safe
items by making payments in a prompt way. connection.
2. Merchants: A merchant is a vendor who will take the 8. Depending upon the credit limit and validity of the
payments made by client. instrument used for payment, the issuing bank either
3. Banks: It include two banks acknowledges or turns down the exchange. The
affirmation/dismissal message is sent to e-Payment
i. Client bank: It is responsible for holding custom-
Gateway by the attaining bank.
er’s bank account and approving the client while
9. Electronic Payment Gateway sends the digital receipts
registering for the account.
back to shopping website and additionally to the pur-
ii. Merchant bank: It is responsible for holding mer-
chaser.
chant’s bank account. It also manages the exchange
10. The shopping web store can now transport the ser-
and controls frauds.
vices/merchandise to the purchaser.
4. Payment Gateway: It is associated with all clients,
vendors and banks by means of the Internet and is in
charge of security, reliability and speed of all exchanges 5.3  Architecture of Payment Gateway
that occur. Five participants are involved as shown in Figure 2.

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 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

1. Server (Electronic Payment Gateway) 2. Customer or some flat rate is fixed for each exchange. Sometimes,
3. Merchant 4. Client Bank 5. Merchant Bank a combination of both is used to calculate the charged
Online Shopper will be connected to the e-payment amount.
gateway by means of the Internet. The gateway will make a
connection to the bank and check whether the customer’s 5.4.2  Card Types
financial balances are sufficient to purchase the said item. It is critical to recognize what sorts of debit or credit cards
The online client can likewise visit Merchant’s site by means are acknowledged by the online payment gateway chosen.
of the Gateway. The payment gateway has frameworks set Moreover, a few processors oblige clients to connect their
up to interface with different banks, credit card organiza- bank accounts instead of entering details of the card.
tions, clearing houses, and other economic establishments.
In case of online credit card system, the company does the 5.4.3  On-Form Payments
processing of credit cards for the vendors. For such com-
panies, the payment processors process credit cards for In the event that a pre-fabricated form incorporated with
the vendors and enable them to connect to its site. These a payment gateway is utilized to gather money, this vari-
kinds of organizations host the webpage for payments able must be taken into account. Some gateways gather
that asks the client to enter the information of their credit the right of payment on the form, while some others
cards. After the client gives all his details and finishes the guide clients to another page to finish the buying process.
exchange, the payment processor checks these details and
later directs the client back to the shipper’s page67. 5.4.4  Recurring Billing
It gives the capability to create a payment that repeatedly
occurs in a given timeframe. In the event that the clients
Connection and are to be charged on a monthly basis, then an online pay-
transaction Send data
ment gateway that supports recurring billing is required.
Client Bank
Cases of organizations that may require this element are
Send
payment organizations which are based on subscriptions or NGO’s
Online Customer Merchant
Website with repeated benefactors.
By making a comparative investigation of payment
Merchant Send data
Website and received gateways, different services and criteria are described
E-Payment payment
Gateway below. Each one of these payment gateways concentrate
Transaction
and
Account on various elements such as currencies, cost, security,
updates
confirmation support, features and tools. These appear underneath in a
tabulated form as given in Table 1 and Table 2.
Merchant Merchant Bank

Figure 2.  Payment gateway model. 5.5  Major Advantages of Payment Gateway
In the entire e-commerce activity, payment gateways
5.4  Comparison of Payment Gateways have a key role to pay, from one perspective, it allows
secure online exchanges of goods and services via the
While making a choice for a payment gateway, the main
Internet. However, it guarantees security of the bank’s
considerations that should be considered are as follows: card
financial systems via a security channel and it also
types, transaction fees, recurring bills and form payments.
acts as a link for both communications and commer-
These elements will fluctuate accordingly with the processor,
cial dealings of goods and services and the economic
so it must be guaranteed that payment gateway selected has
system, hence, it has joined together each member of
to be in accordance with the needs and budget of the client68.
e-business in one body69.
A Payment Gateway is tremendously reasonable by
5.4.1  Transaction Fees
virtue of the numerous advantages it has to offer which
Some payment gateways keep some part of the money include:
charged for using their application when a payment is
processed. Either a percentage of exchange is charged • The evident 365 x 24x7 availability

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 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

Table 1.  Different factors of comparison for payment gateways

Bundled
Payment Setup Card
Merchant Cost Chargeback fee Currencies Countries
Gateway Cost Types
Account
PayPal Standard $0 monthly
Yes 2.9%+$0.30 per $0 25 203 9
transaction
PayPal Pro $30 monthly
Yes 2.9%+$0.30 per $0 $20 23 3 9
transaction
Authorize.net $25 monthly
No 2.9%+$0.30 per $49 $25 11 5 6
transaction
2CheckOut $0 monthly $20-$25 (for US-
2.9%+$0.30 per based sellers)
Yes $0 87 200+ 8
transaction $25-$65 (for
others)
Stripe $0 monthly
Yes 2.9%+$0.30 per $0 $15 100+ 25 6
transaction
Brain Tree $0 monthly
Yes/No
2.9%+$0.30 per $0 $15 130+ 44 6
options
transaction
WePay $0 monthly
No 2.9%+$0.30 per $0 $15 1 USA 4
transaction
Amazon $0 monthly
Payments Yes 2.9%+$0.30 per $0 $20 11 3 6
transaction
Dwolla $0 monthly
$0.30 per
Limited
transaction
No $0 $15 1 USA Bank
(free from
Account
purchases
under $10)
Bean Stream $0 monthly
2.8%+$0.30 per $0 $25 2 3 3
transaction
Chargify $149+ monthly Based
Based on
on your
$0 23 your Payment
Payment
Gateway
Gateway
First Data $0.75 monthly $0 $15 140 50+ 5

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 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

Table 2.  Provision of user-friendly features by various payment gateways

Payment Gateway Mobile On-form Recurring Requires Phone E-mail
Payments Payments Billing SSL Support Support
PayPal Standard

PayPal Pro
Authorize.net
2CheckOut

Stripe

Brain Tree

WePay
Amazon Payments

Dwolla

Bean Stream
Chargify

First Data

• Real-time authentication of debit/credit cards 5.5.1  Benefits for the Economy

• Proficient and rapid transaction handling • A homogenous and efficient payment system in a
• Various payment alternatives country having a variety as well as a large number of
• Safe transference of details of transaction between customers and banks
purchasers, dealers and banking organizations • Capability to stay at par with international payments
• Effective and flexible real time generation of reports mechanisms i.e. undertaking global level transactions
• Support for multi-currency settlements, if required in the split of a second
• Refund to customer is possible • Easing up on resources like money and human capital
• Vendors can dispose-off huge databases, complicated so as to invest in other crucial areas
software and extensive processing • Lesser frauds and security lapses
• CA (Certifying Authority) verified servers that are • Evolution of novel payment instruments
secure • Tracking transactions and their maintenance that is
• Cost-efficient collection of voluminous data plus beneficial to detect any irregularities in finance
added advantage of being verified for card validity • Support for a range of payment instruments, infra-
• Card hot-list access for filtering out fraudulent trans- structures and needs through a single platform
actions • Instant decision making owing to rapid flow of infor-
• Provision of value added services to issuing banks, mation
acquiring banks and merchants • Reduction in costs due to fewer intermediaries
• Multi-host interfaces provision • Easy processing of exports
• Simple and comprehensive administrative control • Rapid settlement and authorization leading to zero
• Strict security measures for gaining merchant as well risks of bounced cheques and defaults
as customer trust • Evolution of entirely new service providers for website
Besides these, the payment gateways are beneficial development, maintenance, integration services, etc.
to common man as well as the economy of a country as • Payments for government based services through a
elaborated below66: highly streamlined approach

Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology 13
 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

• A payment infrastructure scalable for a variety of pay- avenues and reliability among the users plus reservations
ment instruments and future applications about service providers. At macro level, the concerns
• No need to maintain costly infrastructure for shops/ regarding usage of payment gateways require interna-
offices leading to business and government savings tional intervention and cooperation among the agencies.
Some of those issues have been enlisted below69:
5.5.2  Benefits for the Common Man • Conflicts in regulation
• Access to numerous counters simultaneously from a • High costs
single location • Covert fee structure
• Highly secure transactions • Insufficient support for various types of international
• Easily accessible payment system in which customers currencies
make transactions directly from their homes • Statutory hassles
• Ability to make transactions in reduced time • Exigency of standards
• Comparatively reachable to the interior regions and • Interoperability tribulations
rural areas of a large country like India • Maintenance and ownership concerns
• Fewer intermediaries and savings from merchants for • Bigoted conduct of merchants on charge backs and
zero maintenance of shop infrastructure result in price disputes
reduction of services and goods • Acquiring agreement for a payment infrastructure on
• Infrastructure availability and cost benefits make ser- national level
vice providers willing to provide services or products • Expenses of international deals
in rural areas
• Increased Internet-savvy population in India as a
result of reduction in prices that attract new users 6.  Security Considerations in
unwilling to shun traditional payment modes Payment Gateways
5.6  Payment Gateway Issues As more and more people are connected to the Internet,
the popularity of online commercial activities is growing
Not being a new concept, payment gateways are now
as well70. The usage of payment gateways comes to the fore
being offered by service providers and few banks although
when people make online transactions. When online trans-
in a restricted manner. Majority of them provide sup-
actions are taken into account, payment gateway plays an
port for credit card transactions only, without taking
important role since it intermediates between the bank and
into consideration other emerging payments instruments
the merchant65. This is because customers are required to
such as E-cheques, Electronic Funds Transfer (EFT), etc.
input sensitive information while using payment gateway as
However, in order to exploit the full potential of online
the mode of payment. However, as online transactions are
electronic commerce, users should be given provision
growing rapidly, security threats are also on the rise. Security
to adopt various payment options including ATM cards,
is the main challenge in online transactions because it is the
EFT, E-cheque besides others. One more issue with the
responsibility of the payment gateway to safeguard all sen-
current payment gateways is the facility to make only
sitive information from fraudsters and hackers. This makes
Business-to-Business (B2B) or Business-to-Customer
the provision of payment gateway security a must. Gateways,
(B2C) transactions and thus neglecting worthwhile gov-
therefore, employ several protocols, encryption techniques
ernment businesses. Additionally, a single service is not
and standards for providing safe and reliable service to the
able to suffice the variety of transactions and multiple
users. In this paper, few technologies and mechanisms have
banks. Many issues, therefore, debilitate the propaga-
been discussed that are used by payment gateways to further
tion of payment gateways. At the outset, payment shall
enhance security features of online transactions.
fail straightaway if a user does not possess account with
the bank that supports a particular payment gateway.
Moreover, payments gateways at present have a few num- 6.1  Features of a Secure Payment Gateway
ber of banks only. Besides these, other issues include A payment gateway forms an integral part of e-busi-
problems with delivery, lack of trust, limited payment ness. The users are prompted to input their personal

14 Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology
 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

information while making transactions online. With forwarded by payment gateways between customers and
the growing popularity of online payments, security merchants in a secure way with the help of this method.
threats in the form of malware, theft, hacking, spyware, The algorithm employed for data encryption and key
data security breaches and phishing are also increasing. value determines the transformation of data. This pay-
Thus, payment gateways should be such that they cater ment information when received by payment gateway is
to the needs and requirements of the users besides pro- encrypted using public key of the payment gateway. The
viding privacy and security. A secure payment gateway is decryption is possible only with the private key of pay-
characterized by the following four properties viz. confi- ment gateway. So, the encryption process is secure only as
dentiality, integrity, authentication and non-repudiation. long as the keys are kept secret and this keeps the unau-
Confidentiality refers to the prevention of disclosing thorized parties from decrypting the data in encrypted
data to unauthorized people71. This is important since form71. In this way, the data integrity is enhanced between
the card details of customer are transmitted through the payment gateway and merchant as well as the pay-
payment gateway and thus secrecy of such details ought ment gateway and customer since no one can perform
to be assured. Integrity implies the prevention of data modification of data during its transmission through the
modification present in the communication chan- network. Thus, this method safeguards the customer’s
nel by unauthorized means71. Therefore, data integrity details from getting misused or stolen72.
should be maintained between the payment gateway
and merchant besides payment gateway and customer. 6.2.1.1  Data Field Encryption
The verification of identities of the participating enti-
Also known as end-to-end encryption, this method
ties is called Authentication71. Mutual authentication
makes use of industry standard encryption for preventing
between the participants and payment gateway is a
sensitive information to be read at the entry point only.
must. Furthermore, non-repudiation ensures that no
Since the decryption key is accessible to authorized par-
entity participating in a transaction claims not to have
ties only, the card details encrypted by payment gateway
participated in the same71.
can be read by just those who acquire the decryption key.
It can be concluded that security is the biggest issue
Therefore, the access of the customer’s details by unau-
for a customer. Customers will not be able to put their
thorized parties is reduced during the data transmission
trust on payment gateways if authenticity and security are
from payment gateway to bank72.
not ensured. So, security in payment gateways is consid-
ered as the principal feature responsible for enhancing
their usage thereby promoting e-commerce. Various pro- 6.2.1.2 Cryptography
tocols and techniques are utilized for enhancing payment Cryptographic techniques can be categorized as: i)
gateway security. Symmetric cryptography and ii) Asymmetric crypto-
graphy72.
6.2 Security Mechanisms in Payment In symmetric cryptography, the same key is employed
Gateways for encryption as well as decryption. This security mecha-
nism resembles a traditional lock and key in which the
The research work carried on the security aspects of pay- encryption algorithm works as a lock and the card details
ment gateways include various security mechanisms for can be locked or unlocked with a cryptographic key.
enhancing the security of information details transmitted In asymmetric cryptography, encryption and
online. Such mechanisms incorporate protocols, security decryption are done using two separate keys viz. the pri-
standards, encryption techniques and hashing. vate key and the public key. This mechanism resembles
an electronic lock on a safe where encryption is done
6.2.1  Data Encryption using public key and decryption through private key.
It is one of the chief security mechanisms employed in The customer’s sensitive information is encrypted by
payment gateways. It is the responsibility of payment the payment gateway with a public key that is known to
gateway to ensure the protection of information (credit/ everyone. It can however be decrypted by the acquiring
debit card details) supplied by the customer from various bank using the private key of gateway that is kept secret.
types of network attackers. This sensitive information is Asymmetric cryptography has some disadvantages like

Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology 15
 A Survey on E-Payment Systems: Elements, Adoption, Architecture, Challenges and Security Concepts

the keys shared between participating entities have to ii. Restricting sensitive information to authorized parties
be updated at regular intervals for providing a secure only thereby providing privacy.
service and that it is slower as compared to symmetric iii. A provision of trust by employing digital signatures
cryptography.
SET employs encryption techniques such as public key
encryption and symmetric/asymmetric encryption for
6.2.1.3  Secure Socket Layer
transferring data securely among the participating enti-
A secure network protocol - Secure Socket Layer (or SSL) ties. SET makes use of digital signature for sending credit
is used in servers and web browsers. It employs certificate card number of the customer that is kept secret from mer-
authentication to transfer private data by creating a chan- chant. The resulting data item is referred to as PANSecret
nel that is encrypted uniquely. This protocol is employed and is known only to the gateway and customer. Thus,
by payment gateways for providing better service for SET ensures the secrecy of customer payment informa-
customers as well as merchants in terms of security. tion from the merchant. This is because payment gateway
Fundamentally, point-to-point links are secured by SSL encrypts the hidden data received with the help of a public
at session layer using two core encryption mechanisms key. Then, the hash values are compared in order to check
– symmetric and asymmetric encryption. For symmet- if the purchase amount is valid. Furthermore, it performs
ric encryption, Triple-DES, RC4 (Rivest Cipher 4), RC2 verification of PANSecret and PAN for authenticating
(Rivest Cipher 2), DES (Data Encryption Standard), the account of cardholder. In this way, the basic security
IDEA (International Data Encryption Algorithm), AES requirements i.e. confidentiality, integrity and authentica-
(dAvanced Encryption Standard) and Camellia are tion are satisfied using such a security mechanism. SET,
employed. And for asymmetric encryption, DSA (Digital therefore, provides a higher level of privacy and security
Signature Algorithm), Diffie-Hellman key exchange and to the participating entities by making use of digital sig-
RSA (Rivest-Shamir-Adelman) algorithms are employed. natures, verified messages and public key certificates.
In order to maintain a highly secure communication, SSL
encodes the entire session. Other protocols employed in 6.2.1.5  Certification Authority
SSL include72:
A novel approach for enhancing the payment gateway
• SSL Record Protocol: It is used for data encapsulation security was presented by Stephen Kent that authenticates
using high-level protocols. the authorities using certification in order to make online
• SSL Handshake Protocol: It is used for authentication transactions more secure. In this security mechanism, the
of server and client. first step involves the generation of Certificate Signing
Request (CSR) that is passed to Certification Authority.
One of the great advantages of SSL is its indepen-
The unsigned certificate is hashed by the Certification
dence from application layer so that it can be used to
Authority followed by its encryption with the help of
build higher level protocols transparently. As a conse-
asymmetric algorithm. Subsequently, a signed certificate
quence, this protocol is employed by majority of payment
is issued by the Certification Authority to the customer.
gateways for transferring data securely between the par-
Therefore, as per this model, certification authority sup-
ticipating entities.
plies digital certificates to users generating certificate
signing request after verification of the same71,72.
6.2.1.4  Secure Electronic Transaction
Another standard protocol which is used as a security 6.2.1.6  Public Key Infrastructure
mechanism is Secure Electronic Transaction (SET) that
A security mechanism is essential for safeguarding the
was developed by MasterCard and Visa in collabora-
sensitive information that is transmitted through pay-
tion with companies namely VeriSign, Netscape and
ment gateways (like credit/debit card numbers) from
Microsoft. Any transaction through SET involves three
unauthorized parties. Public Key Infrastructure (PKI) is
entities – merchant, payment gateway and customer71.
another security mechanism that is employed for enhanc-
The security features provided by SET include:
ing the security of e-commerce systems by taking the
i. A secure channel of communication between the par- services of certification authorities, digital certificates and
ticipating entities. various other registration authorities. Based on public

16 Vol 10 (20) | May 2017 | www.indjst.org Indian Journal of Science and Technology
 Muddassir Masihuddin, Burhan Ul Islam Khan, M. Mueen Ul Islam Mattoo and Rashidah F. Olanrewaju

key cryptographic technique, PKI makes use of two keys of Scientific Engineering and Technology (IJSET). 2013;
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is employed for signature verification and the hidden pri- 5. Oyewole OS, El-Maude JG, Abba M, Onuh ME. Electronic
vate key is employed for signature generation. The use of payment system and economic growth: a review of transi-
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6. Singh A, Singh K, Shahazad, Khan MH, Chandra M. A
review: secure payment system for electronic transaction.
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trade and commerce is quite evident from the chang- 7. Shilpa, Sharma P. Advance technique for online payment
ing modern trends. Their scope ranges from one dollar security in e-commerce: Double Verification. International
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8. Abrazhevich D. Electronic payment systems: A user-
systems, payment gateways and their security consider-
centered perspective and interaction design. Dennis
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Abrazhevich; Eindhoven, Netherland: Technische. 2004;
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