# Patent

## Title
Stand-alone secure PIN entry device for enabling EMV card transactions with separate card reader

## Abstract

A method of conducting secure electronic payments to a payment acquirer using a credit card payment unit, comprising of a smart card, a portable card reader device, a mobile phone, a stand-alone PIN entry device and a payment server. The method is based on eliminating the unsecure keyboard in a mobile phone used for entering personal identification information, and instead use a separate secure PIN entry device which fulfills the EMV Level specification. Since all sensitive payment information, communicated to the payment server from the card reader and the PIN entry device, is encrypted using unique encryption keys an unsecure mobile phone may be used for relaying the communication between the card reader device and the PIN entry device to and from the payment server.

## Background
TECHNICAL FIELD
The invention relates in general to the field of secure electronic credit transactions, and more particularly, to a method and a system for secure credit card payments via the Internet using a portable card reader device, a mobile device, and a secure personal identification number (PIN) entry device.
BACKGROUND
Every day an incredible number of credit card payments are made around the world, and the number of payments are steadily increasing. The majority of credit card payments are either made in stores using a point-of-sale (POS) terminal where you insert or swipe your credit card and identify yourself with a PIN code, or on the Internet using a computer where you enter your credit card details and in some cases also a security code. However, using your credit card to make payments in a POS terminal or on the Internet comes with a risk of having your credit card information hijacked and abused. In recent years there have been several reports of false or tampered with POS terminals used in restaurants and in shops where the customer's credit card information has been hijacked. Credit card information theft on the Internet is often accomplished using everything from advanced eavesdropping programs to fake websites designed to look legit, but with the sole purpose of hijacking your credit card information. Another drawback with the today's credit card payment systems is that it is almost impossible to make a direct person-to-person payment.
A much safer and easier way to make payments would be to own your own POS terminal which you could make all your transactions with. Unfortunately, a POS terminal is very expensive to purchase and to use since you have to pay a fee for each transaction, it is also too bulky to carry around with you, so in reality only a place of business can afford owning one.
A more practical solution would be if a credit card payment could be conducted using a well-known, non-bulky and commonly used device such as a mobile phone. However, an ordinary mobile phone does not have a built-in card reader where you could swipe your credit card, and even if that particular problem could be overcome, there is still an issue regarding the level of security a mobile phone provides. It is well known that for instance a spy program could infiltrate the mobile phone and hijack credit card information and identification information, such as the PIN code entered into the mobile phone via the mobile phone's keyboard when conducting a credit card payment, without the user even knowing about it.
In light of the above, a standard mobile phone is generally not considered to be a secure device, and thus not suitable for making credit card payments with. Thus, finding a way to make secure credit card payments with a mobile phone is highly sought after.
SUMMARY OF THE INVENTION
With the above description in mind, then, an aspect of the present invention is to provide a way for any person or any company to easily and perform secure credit card payments which seek to mitigate, alleviate, or eliminate one or more of the above-identified deficiencies in the art and disadvantages singly or in any combination.
As will be described in more detail by the aspects of the present invention below, one way for a private person or a company to easily and securely perform secure credit card payments is to use a portable card reader device, a mobile phone communicating with a payment server, and a stand-alone secure PIN entry device, according to the aspects of the present invention below.
A first aspect of the present invention relates to a method of conducting electronic payments to a payment acquirer using a credit payment unit, comprising a smart card, card reader device, a mobile phone and a personal identification number (PIN) entry device, and a payment server, wherein said method comprising the steps of initializing said credit payment unit by establishing communication between said smart card and said card reader device, establishing communication between said card reader device and said mobile phone, and establishing communication between said mobile phone and said PIN entry device, establishing communication between said credit payment unit and said payment server using said mobile phone, communicating a reader serial number stored in said card reader device via said mobile phone to said payment server, communicating a PIN serial number stored in said PIN entry device to said payment server, deriving a reader key, used in said card reader device for encrypting information, in said payment server based on said communicated reader serial number and a master reader key stored in said payment server, deriving a PIN key, used in said PIN entry device for encrypting PIN information, in said payment server based on said communicated PIN serial number and a PIN master key stored in said payment server, reading, in said card reader device, smart card information from said smart card, and encrypting said smart card information using said reader key, receiving user inputted payment details and a user inputted signature in said mobile phone, receiving user inputted PIN information in said PIN entry device, encrypting said PIN information using said PIN key and communicating said encrypted PIN information to said payment server, communicating, using said mobile phone, said encrypted smart card information from said card reader device, said payment details, and said signature to said payment server, decrypting and verifying said encrypted smart card information and said encrypted PIN information in said payment server, and communicating said payment details and said signature from said payment server to said payment acquirer server, and thereby completing an electronic payment.
The method may further comprise that the encrypted PIN information is communicated to said payment server via the mobile phone.
The method may further comprise that the encrypted PIN information is communicated wirelessly to said payment server.
The method may further comprise that the encrypted PIN information is communicated wirelessly to said payment acquirer server.
The method may further comprise that the decrypted encrypted PIN information is communicated from said payment server to said payment acquirer server for verification.
The method may further comprise that the communication between said credit payment unit and said payment server, using said mobile phone, is encrypted using the Transport Layer Security protocol or the Secure Sockets Layer protocol, and wherein said communication between said smart card and said card reader device is encrypted using said reader key in said card reader device.
The method may further comprise that the communicating of said payment details from said payment server to said payment acquirer server is encrypted.
The method may further comprise the steps of receiving, in said payment server, an acknowledgement from said payment acquirer server that said electronic credit payment has been completed, generating a receipt of said electronic credit payment in said payment server, communicating said receipt to said credit payment unit, displaying said receipt in said mobile phone, and storing said receipt and said signature in a log.
The method may further comprise that the electronic credit payment complies with an EMV payment system specification.
A second aspect of the present invention relates to a payment unit adapted to communicate with a payment server for making electronic payments, comprising, a smart card containing smart card information, a card reader device containing a unique reader serial number and a unique reader key, wherein said card reader device is adapted to read said smart card information and to encrypt said smart card information using said reader key, a PIN entry device containing a unique PIN serial number and a unique PIN key, wherein said PIN entry device is adapted to receive user inputted PIN information and encrypt said PIN information using said PIN key, and communicate said encrypted PIN information to said payment server, a mobile phone adapted to communicate with said payment server, wherein said mobile phone is further adapted to receive said reader serial number and said encrypted smart card information from said card reader device, wherein said mobile phone is further adapted to receive user inputted payment details and a user inputted signature, and wherein said mobile phone is further adapted to communicate said reader serial number, encrypted smart card information, payment details and signature to said payment server for completing a secure credit payment.
The payment unit may further comprise that said mobile phone is adapted to receive a receipt from said payment server and to display said receipt on a display in said mobile phone.
The payment unit may further comprise that said mobile phone is adapted to receive said inputted payment details via a touch sensitive display.
The payment unit may further comprise that said mobile phone is further adapted to receive said PIN serial number and said encrypted PIN information from said PIN entry device, and communicate said received PIN serial number and said encrypted PIN information to said payment server.
The payment unit may further comprise that said PIN entry device is adapted to communicate said PIN serial number and said encrypted PIN information to either said payment server or to a payment acquirer server.
A third aspect of the present invention relates to a system for conducting electronic credit payments to a payment acquirer using a credit payment unit according to claims 10 to 14, and wherein the system adapted to perform the method according to claims 1 to 9.



BRIEF DESCRIPTION OF THE DRAWINGS
Further objects, features, and advantages of the present invention will appear from the following detailed description of some embodiments of the invention, wherein some embodiments of the invention will be described in more detail with reference to the accompanying drawings, in which:
FIG. 1a shows a smart card, a card reader device, a mobile phone and a stand-alone PIN entry device, constituting a secure payment unit, capable of making secure credit card payments; and
FIG. 1b shows a secure payment unit, comprising a mobile phone, a card reader and a smart card, assembled and in communication with (paired with) a stand-alone PIN entry device, and ready to conduct secure credit card payments, according to an embodiment of the present invention; and
FIG. 1c shows a secure payment unit, comprising a mobile phone, a card reader, a smart card and a PIN entry device, wherein the card reader, the smart card and the PIN entry device have been assembled together and is communicating with a mobile phone, according to an embodiment of the present invention; and
FIG. 2 shows a schematic of a secure payment system, according to an embodiment of the present invention; and
FIG. 3 shows a flowchart of the setup process of the hardware and software of the credit payment system, according to an embodiment of the present invention; and
FIG. 4 shows a flowchart of the secure payments process, according to an embodiment of the present invention.



DETAILED DESCRIPTION
Embodiments of the present invention will be described more fully hereinafter with reference to the accompanying drawings, in which embodiments of the invention are shown. This invention may, however, be embodied in many different forms and should not be construed as limited to the embodiments set forth herein. Rather, these embodiments are provided so that this disclosure will be thorough and complete, and will fully convey the scope of the invention to those skilled in the art. Like reference signs refer to like elements throughout.
Embodiments of the present invention will be exemplified using a mobile communication device such as a mobile phone. However, it should be appreciated that the invention is as such equally applicable to electronic devices which have wired- and/or wireless radio communication capabilities. Examples of such devices may for instance be any type of mobile phone, laptops (such as standard, ultra portables, netbooks, micro laptops, and pads), handheld computers, PDAs, gaming devices, accessories to mobile phones, etc. However, for the sake of clarity and simplicity, the embodiments outlined in this specification are exemplified with and related to mobile phones only.
FIG. 1a shows the individual parts that, in an embodiment of the present invention, together form a secure credit card payment unit 100. The secure payment unit 100 is typically comprised of a mobile phone 101, a card reader device 106, a smart card 108, and a stand-alone PIN entry device 110. The secure payment unit 100 makes up a small and user-friendly portable payment terminal that can be used for making secure smart card credit payments over a wireless communication network. Now will the different parts of the secure payment unit 100 be described in more detail.
The first part of the secure payment unit 100 is a regular mobile phone 101 comprising a casing, a display area 102, and means 103 for navigating among items displayed in the display area 102 and entering text and numbers into the mobile phone. The display area 102, which preferably is touch sensitive, may comprise one or more status indication areas and/or softkey bars. The display area 102, and the items displayed on it, may be operable using the navigation means 103 or by tapping the on it with a pen-like object or a finger. The mobile phone 101 may also comprise other elements normally present in such devices such as; a speaker, a microphone, a camera, a photo sensor (e.g. ambient light), a infrared light (IR) sensor, infrared light emitting diode (IR LED), processing means, memory means, one or more accelerometers, a vibration device, an AM/FM radio transmitter and receiver, a digital audio broadcast transmitter and receiver, a GPS device, a Bluetooth device, a WiFi device, a near field communication device, an antenna module, and a communication interface 104 for external units. External units connected to the mobile phone 101 via the communication interface 104 may either be controlled by applications running in the mobile phone and/or use resources in the mobile phone (such as the transceiver) at its own discretion without the need or involvement of any mediatory applications in the mobile phone. The mobile phone as a stand-alone device is from a secure payment point of view classified as unsecure and not fit for conducting secure payments with. Thus, a mobile phone in it self can not be used for making payments with.
The second part of the secure credit card payment unit 100 is a card reader device 106. The card reader device 106 may be equipped with an interface 105 for connecting to another device such as a mobile phone 101. The interface may be a typical communication interface (e.g. connector for iPhone, USB connector, etc.) used in the mobile communication and computer industry, or it may be a special interface used in conjunction with embodiments of the present invention. The card reader device 106 may be connected to the mobile phone 101 wirelessly or directly, using its communication interface 105, by being physically plugged into the mobile phone corresponding communication interface 104, or it could be connected via an adapter between the mobile phone's 101 communication interface 104 and the communication interface 105 of the card reader device 106. The card reader device may also in some variants of the embodiment be connected to the mobile phone 101 using a wire.
The card reader device may comprise a smart card reader slot 107 where a smart card may fully (completely), or in part (only a part of), be inserted into. The smart card reader slot 107 may or may not be fitted with a protective hatch.
The card reader device 106 may in a variant of the embodiment also comprise a common magnetic stripe reader with a reader slit, through which a credit card may be slided to be read.
The card reader device 106 may in a variant of the embodiment also comprise a near field communication (NFC) device capable of reading all type of equipment having NFC capabilities or fitted with a NFC tag.
The card reader device 106 may comprise all or some of; a card reader for reading and/or writing information on a microchip embedded on a smart card and/or reading and/or writing information on a magnetic stripe on a credit card, special hardware units for decryption/encryption of the information read and written to and from the microchip and the magnetic stripe, hardware and software for communicating with external devices such as a mobile phone, and/or hardware and software performing decryption and encryption of all incoming and outgoing communication with external units. The encryption/decryption performed by the card reader device 106 is designed to fulfill all the requirements of world-wide standards of security of online transfer of credit card details.
The card reader device 106 may also be made tamper proof so that the circuits and the software inside the card reader device is destroyed beyond recovery if the card reader device is disassembled in any way with or without force.
Depending on how the card reader device 106 is implemented, with all or some of the security features mentioned above or only with a simple card reader, the card reader can be from a secure payment point of view classified as both as a highly secure device (meaning fulfilling all criteria in the EMV standard) or as an unsecure device. An unsecure card reader device is much cheaper to manufacture than a secure card reader device.
The third part of the secure payment unit 100 is a smart card 108. A smart card, a chip card, or an integrated circuit card is defined to be any type of pocket-sized or credit card-sized card with an embedded integrated circuit or an embedded microchip 109. Smart cards 108 often comprise microprocessor components and a volatile or non-volatile memory or both, and can hold information (such as credit card information, card number, PIN number, personal details regarding the card holder, account number or numbers, payment server addresses, etc.) and are programmed to perform certain specific operations and/or to execute applications stored in its memory. A smart card 108 may also provide strong security authentication for single sign-on and may include specialized cryptographic hardware that uses algorithms such as triple DES, RSA and DSA. A smart card is generally capable of containing more information than a magnetic stripe card and it may be prepared and programmed for different tasks. Some cards may contain programming and data to support multiple applications and some may be updated to add new applications after they are issued. Smart cards may be designed to be inserted into a smart card slot 107 and read by a card reader device 106, or to be read at a distance using near field communication techniques. We will not go into any further detail regarding the construction or functionality of smart cards since it is not crucial for understanding the different embodiments, and their variants, of the present invention. However, in-depth information may for instance be obtained from the smart card standard ISO 7816. The smart card is regarded from a secure payment point of view as a highly secure device.
The forth part of the secure credit card payment unit 100 is a stand-alone PIN entry device 110. The PIN entry device 110 is basically a secure user input device capable of wireless (or by wire) communication with other communication devices which in this case is the mobile phone 101 and the card reader device 106. The user input interface 111 is illustrated in FIG. 1a as physical keys placed and named in a traditional keyboard fashion, however the user input interface may also be realized as a numerical keyboard, a touch sensitive screen (where a user may enter information such as his or hers signature, PIN code, writing gestures, and/or other personal identification information) or any combination thereof. The PIN entry device 110 may also be fitted with other input devices or sensors capable of registering biometric data such as reading fingerprints, scanning a retina, recording and analyzing a person's voice, recording and analyzing a person's facial features, detecting movement patterns in 3-dimensions, detecting a person's writing rhythm, and detecting a person's dynamic signature. Example of such sensor may for instance be a camera unit, a microphone, a speaker, a touch sensitive display, etc. When a user inputs his or hers personal identification information such as a PIN code into the PIN entry device using the user input interface, the PIN code is encrypted using strong industrial standard encryption. The encrypted information may then be communicated to external units such as the mobile phone 101, the card reader device 106, or an external server in a secure fashion to. In a variant, information from external units may be communicated to the PIN entry device 110, which may or may not display the information on a display on the PIN entry device. The encryption/decryption performed by the PIN entry device 110 fulfills all the requirements of world-wide standards of security of online transfer of credit card details, and the device is considered to be highly secure.
The PIN entry device 110 may also be made tamper proof so that the circuits and the software inside the card reader device is destroyed beyond recovery if the card reader device is disassembled in any way with or without force.
The PIN entry device 110 can be made quite small and flexible since only the user input interface, a power source (such as a battery) and a few electronic parts (for encryption/decryption, and communication) needs to be fitted into the device.
The four parts, the mobile phone 101, the card reader device 106, the smart card 108 and the PIN entry device 110 in FIG. 1a, may be partially put together to form a secure payment unit as shown in FIG. 1b. The communication interface of the card reader device 113 may be physically pushed into the mobile phone 101 and the smart card 114 may then be inserted into the card slot on the card reader device 113, thus forming a single unit 110. In the embodiment shown in FIG. 1b the PIN entry device is not physically connected to the other devices, however in a variant the PIN entry device 118 could be placed between the card reader device 115 and the mobile phone 114. In another variant the PIN entry device 118 could be physically integrated with the card reader device 115 but not necessarily being electronically connected to each other, and still communicate with the mobile phone 114 (and/or the card reader device) wirelessly. In yet another variant the PIN entry device 118 may be physically attached to the mobile phone 114 so as to form a single unit but without being electronically connected to each other and still communicate with the mobile phone 114 wirelessly. The main idea is to separate the PIN entry device from at least the mobile phone 114, and to make it a secure device for entering personal identification information in conjunction with a payment transaction. An example of personal identification information that may be obtained can for instance be personal PIN code, the user's signature (if a touch sensitive display is present), username and password (via a keyboard), address, place of birth, social security number or similar information. Biometric information (such as appearance, voice, fingerprint, etc.) may in an embodiment also be inputted via a for instance a built-in sensor, microphone and camera.
In an embodiment of the present invention, the mobile phone 114 only acts as a transceiver and does not contain or process any information to or from the card reader device 115. In a variant the mobile phone 114 may have software that processes some of the information from the card reader device 115 and/or a remote party such as a server communicating with the mobile phone. In this way the unsecure mobile phone may be used as a modem only and thus being safe to use (as long as the traffic through the mobile phone is encrypted and secure) for card payments.
FIG. 1c shows a variant of a secure payment unit 119 where the card reader device 122 and the PIN entry device 124 are physically connected together but not physically connected to the mobile phone 120. In this variant the smart card 123 is inserted into the card slot of the card reader device 122 which communicates via a wireless link 121 (or optionally via a wire) directly with the mobile phone 120 or via the PIN entry device 124. The wireless communication 121 between the card reader device 122 (or the PIN entry device 124) and the mobile phone 120 may in a variant of the embodiment be encrypted, using standard encryption algorithms, to eliminate any eavesdropping. The PIN entry device 124 may be communicating with the card reader device 122 either via wireless communication or via an electrical contact interface (i.e. a wire). The PIN entry device 124 may be communicating with the mobile phone 120 via wireless communication 121, wherein the wireless communication 121 may be encrypted or not.
The PIN entry device 124 may in the configuration shown in FIG. 1c power the card reader device 122 during the payment transaction. In a variant both the PIN entry device 124 and the car reader device 122 have their own power source. In yet another variant the card reader device 122 is capable of powering the PIN entry device 124 during the payment transaction.
FIG. 2 shows a block diagram of a system for making secure credit payment 200 using a secure payment unit 201 comprising a mobile phone 204, a card reader device 202, a smart card 203, and a stand-alone PIN entry device 219, as described in detail in conjunction with FIGS. 1a to 1c. 
The card reader device 202 may be programmed (in hardware or in software, or both) with a unique card reader device key (hereinafter referred to as a reader key, RK) and a unique reader serial number (hereinafter referred to as reader serial number, RSN) at the time of manufacture or after the manufactured by the card issuer. As discussed in conjunction with FIG. 1a, the card reader device 202 can been made tamper proof so that it is impossible to gain illegal access to the RK without destroying the card reader device. In the same way, the PIN entry device 219 may be programmed (in hardware or in software, or both) with a unique PIN entry device key (hereinafter referred to as a PIN key, PINK) and a unique PIN entry device serial number (hereinafter referred to as PIN serial number, PINSN) at the time of manufacture or after the manufactured by the card issuer.
In an embodiment of the present invention the RK and PINK is the same key or a related key (for instance if the card reader device and the PIN entry device is manufactured in matched pairs and/or sold together as matched pairs). In a variant the matched card reader device and PIN entry device may only be used together and not separately or in combination with another card reader device or PIN entry device. In the same manner the RSN and the PINSN may be related or the same in a matched pair.
A payment procedure may be initiated by activating the card reader device 202 by plugging it into the mobile device 204 and thereby starting, automatically or manually, a dedicated software application in the mobile device 204. The payment procedure may in a variant be initiated by entering a smart card into the card reader device 202 which has already been plugged into the mobile phone 204. The software application, when started, will then setup the communication between the mobile phone 204 and the card reader 202, between the mobile phone 204 and the PIN entry device 219, and in a variant also the communication between the mobile phone 204 and the smart card 203 via the card reader device 202. The communication between the mobile phone 204 and the PIN entry device 219 may (optionally) be additionally encrypted (since the information communicated will be encrypted) using for instance standard encryption protocols such as the Transport Layer Security (TLS), the Secure Sockets Layer (SSL) or some other suitable encryption method.
In yet another variant the PIN entry device initiates the set up procedure by communicating with the mobile phone 204 which then initiates the software application setting up the communication between the devices. In another embodiment the PIN entry device 219 may be connected to the card reader device 202, or the mobile phone 204, via a wire 221 only during the setup procedure or during the complete payment procedure.
The mobile phone 204 then establishes communication with a payment server 208, which could be owned and maintained by any of; the credit card issuer, the card reader device manufacturer (if not the same company), a card reader device owner company, or a bank. The communication between the mobile phone 204 and the payment server 208 is encrypted using for instance standard encryption protocols such as the Transport Layer Security (TLS), the Secure Sockets Layer (SSL) or some other suitable encryption method.
When secure communication have been established between the mobile phone 204 and the payment server 208 (using TLS, SSL or some other encryption method), the card reader device 202 transmits its unique RSN either in plain text, or encrypted (by the card reader device) if enhanced security is needed, via the mobile phone 204 now acting only as a gateway or transceiver relaying information between the card reader device 202 and the payment server 208. At the payment server 208, a card and PIN code identifying software application 210 derives, in cooperation with a security module 212, the card reader device's unique RK based on the received RSN and a Reader Master Key (RMK) stored in the security module 212 (which could be realized either in hardware or in software or both). In this way the payment server is able to decrypt RK encrypted information sent from the card reader device during the payment process. The RMK may be issued by the card manufacturer, the card reader device manufacturer or the card reader device owner company. The security module 212 may either be included as a unit in the payment server 208 (as illustrated by the dotted box 211 enclosing both the security module 212 and the payment server 208) or it could be a standalone server 212 communicating with the payment server using encryption.
When the RK is derived, an acknowledgement may or may not be sent to the payment unit 201. All information exchanged between the card reader device 202 and the payment server 211 and/or the security module 212 is then encrypted using the RK. In this way no sensitive information coming from the card reader device (or the payment server 208 and/or the security module 212) can be accessed or revealed by the mobile phone 204 or any third party eavesdropping on the communication between 206 the mobile phone 204 and the security module 212 (i.e. the wired or wireless communication over a network such as the Internet 206) since it is encrypted using the RK. In this way an ordinary and unsecure mobile phone can be used to perform a secure credit card payment transaction without jeopardizing any sensitive card information.
In basically the same way, the PIN entry device 219 must be verified by the payment server 208 (or the payment acquirer server 214) before it is allowed to be used in the payment transaction. When secure communication have been established between the mobile phone 204 and the payment server 208 (using TLS, SSL or some other encryption method), the PIN entry device 219 transmits its unique PINSN either in plain text, or encrypted (by the PIN entry device) if enhanced security is needed, via the mobile phone 204 now acting only as a gateway or transceiver relaying information between the PIN entry device 219 and the payment server 208. At the payment server 208, the card and PIN entry device identifying software application 210 derives, in cooperation with a security module 212, the PIN entry device's 219 unique PINK based on the received PINSN and a PIN Master Key (PINMK) stored in the security module 212. In this way the payment server is able to decrypt PINK encrypted information sent from the PIN entry device 219 during the payment process. The PINMK may be issued by the card manufacturer, the card reader device manufacturer or the card reader device owner company.
When the PINK is derived an acknowledgement may or may not be sent to the payment unit 201. All information exchanged between the PIN entry device 219 and the payment server 211 and/or the security module 212 is then encrypted using the PINK. In this way no sensitive information such as PIN codes coming from the PIN entry device 219 (or the payment server 208 and/or the security module 212) can be accessed or revealed by the mobile phone 204 or any third party eavesdropping on the communication between 206 the mobile phone 204 and the security module 212 (i.e. the wired or wireless communication over a network such as the Internet 206) since it is encrypted using the PINK. In this way an ordinary and unsecure mobile phone can be used to perform a secure credit payment transaction without jeopardizing any sensitive personal identification information.
In another embodiment, when there for instance is no communication channel to the payment server 208, the PIN entry device 219 may have to be verified by the smart card 203 via the card reader device 202 before a payment transaction is allowed to be performed. When secure communication have been established between the mobile phone 204 and the PIN entry device 219 or the car reader device 202 depending on implementation (using TLS, SSL or some other encryption method), the PIN entry device 219 transmits its unique PINSN either in plain text, or encrypted (by the PIN entry device) if enhanced security is needed, via the mobile phone 204 to the card reader device 202. At the card reader device 202, a PIN entry device identifying software application derives, in cooperation with information on the smart card 203, a unique PINK based on the received PINSN and a PIN Master Key (PINMK) stored in the chip on the smart card 203. In this way the card reader device 202 or more correct the smart card 203 is able to decrypt PINK encrypted information sent from the PIN entry device 219 during the payment process.
In another embodiment the PIN entry device 219 may communicate wirelessly directly with the payment server, and thus avoiding having to send any information via the unsecure mobile phone 204. In yet another embodiment the PIN entry device 219 may communicate wirelessly directly with the payment acquirer server 214, and thus avoiding having to send any information via the unsecure mobile phone 204.
The information transmitted wirelessly and over the Internet 206 from the card reader device 202 and the PIN entry device 219 are both encrypted with the RK and PINK and a standard encryption protocol, such as TSL or SSL, used in the communication between the mobile phone 204 and the payment server 208. However, the information entered into the mobile phone 204 and communicated to the payment server 211 is only encrypted using a standard encryption protocol, such as TSL, SSL or any other suitable encryption protocol.
When a card holder want to make a payment, the smart card information stored on the smart card 203 (in a memory in the smart card's microchip) is read and processed by the card reader device 202. This processing may or may not include decryption (and/or encryption) of the communicated information between the smart card 203 and the card reader device 202.
In an embodiment of the present invention the card holder is then asked to enter payment details which for instance could be details about the recipient of the payment, the amount to pay, personal details (such as address, social security number, place of birth, etc.), which account to draw money from, if a receipt and/or an acknowledgment of the transaction is wanted or not, etc. Then the card holder may be asked to sign the transaction by entering his or hers signature into the PIN entry device 219 or the mobile phone 204. The mobile phone may then sends a request to the PIN entry device 219 asking for the user's credentials such as a personal PIN code. The user enters his or hers PIN code in the PIN entry device 219 which is then encrypted using the PINK. The encrypted PIN code information is then sent to the mobile phone which acknowledges that it has been received by for instance displaying a message on the display of the mobile phone. Payment information containing the RK encrypted smart card information, the PINK encrypted PIN code and the payment details is then sent, using a standard encryption protocol such as TSL or SSL, to the payment server 208.
In a variant, biometric information has to be entered together with or instead of the signature or the PIN code into the PIN entry device 219.
The payment server 208 and the security module 212 then decrypt the RK encrypted smart card information and the PINK encrypted PIN code and/or signature in the received payment information and the card identification software in the payment server identify the smart card information, the payment details and the card holder's PIN code and/or signature. In this way the payment server 211 can verify that the payment information is connected to a legit and valid smart card 203 and verified by a valid PIN entry device 219. The payment details and/or the card holder's PIN code and/or signature may then be communicated, via the security module 212, to a payment acquirer server 214 via a security module 216. In the same manner as with the payment server 208 and security module 212, the security module 216 and the payment acquirer server 214 may either be realized as stand-alone units or incorporated in the same server (as illustrated by the dotted box 217 enclosing both the security module 216 and the payment acquirer 214). When the payment acquirer server 214 has received the payment details, and/or the card holder's PIN code and/or signature, and accepted it, a message may be sent to the payment server 211 where a payment receipt may be generated and sent to the mobile phone 204 to alert the user of that the transactions has been completed. The message may contain information about the completion of the transaction, information about whether the payment was authorized with the card holder's PIN code and/or signature in an image format and possibly an image of the item that buyer has acquired. The payment receipt may also be stored in a log 218 together (or not) with the card holder's signature. In a variant the payment receipt may instead be generated in the payment acquirer server 214 and sent to the payment server 208 which relays it to a log 218 (together or not with the card holder's graphical signature) and also to the mobile phone 204 to alert the user of that the transactions has been completed.
The payment acquirer server 217 is usually owned by a bank, a credit company or a credit institute who is administrating the account of the person or company the payment is made to.
The communication between the security modules 212 and 216 is usually encrypted using some standard strong encryption method.
An optional collector 215 may be situated between the payment server 211 and the payment acquirer server 217. A typical collector 215 could for instance be a bank, a credit company or a credit institute handling payment transactions for either the user making the payment or the payment acquirer who is receiving the payment. The collector 215 may then authorize all transactions and payment instructions between the two servers 211,217. The communication between the servers 211 and 217 is usually encrypted using some standard strong encryption method.
A log or database 218 saves all, or some (depending on local laws and regulations), of the transactions made in the secure credit payment system 200 either together or not with the card holder's graphical signature.
In an embodiment of the present invention the payment server 208 is in charge of saving and utilizing transaction information made in the secure credit payment system 200 in the log 218. The server with the log on may either be placed in the vicinity of the payment server 211 (in a variant it may be incorporated into the payment server 211) or it may be placed in another geographical location. The communication between the log 218 and the payment server 208 is preferably encrypted using some standard strong encryption method.
Optionally, hence the dotted lines, other servers 215,217 or parties 204,220 may be authorized to store and/or to access log information stored in the log 218. For instance the user making the payment may have access to later, via the Internet 206, access the log 218 and view receipts of previous transactions.
The information in the log 218 may in some variants be used for tracking shopping behavior and provide offers to the user based on recent type of purchases. It may also be used for additional security by for instance being capable of providing an alarm, by combining the log data with the GPS, cell-ID or WiFi-positioning output from the mobile device, when payments are made from certain geographical locations or when the purchase behavior changes. It could also be a plug-in application used for accounting purposes by another party 220 such as a company, providing comprehensive output directly into a balance sheet.
All communication with the log 218 may either be encrypted or not encrypted depending on which type of information that is going to be communicated.
The wireless data communication over the Internet 206 may be enabled by using GSM, UMTS, CDMA, WiFi or any other communication standard suitable for transmission of data to a mobile communication terminal. The communication may also be a mixture of wirelessly and wire communication wherein a base station receives the wireless transmission and relays it via wire using the traditional wired Internet infrastructure.
The wireless data communication between the PIN entry device 219 and the mobile phone 204 and card reader device 202 may be enabled using any type of wireless communication such as GSM, UMTS, CDMA, WiFi, Bluetooth, NFC, wireless USB, or any other suitable communication technique. The same, if suitable, communication techniques may be used if the PIN entry device 219 is going to communicate with the payment server 208 or the payment acquirer server 214.
FIG. 3 shows a flowchart 300 describing the setup process of the secure payment unit in more detail. The setup process is initiated 302 when the card reader device is connected (wirelessly or by wire) to the mobile phone. Optionally the payment process is initiated 302 when a smart card is placed in the card reader device (already connected to the mobile phone), when the PIN entry device initiates wireless communication with the mobile phone, or when the mobile phone initiate wireless communication with the PIN entry device.
In the next step 304, communication between the card reader device and the mobile device is established (i.e. determining how to communicate with each other) as well as communication between the PIN entry device and the mobile phone. The card reader and the mobile device detect each other and determines if and how the devices may securely communicate with each other. In the same manner the PIN entry device and the mobile phone detects each other and determines if and how the devices may securely communicate with each other. In an alternative a setup PIN code must be entered into the PIN entry device to be able to establish connection with the mobile phone. If a communication can't be established 306 between any of the devices due to incompatibilities, faults or for security reasons, an error message 308 is communicated to the user operating the secure payment unit. The user may optionally redo the step 304 or the steps 302 and 304 to try to establish communications between the devices.
If the card settings so require, or for other reasons, an off-line payment procedure may be initiated. In this procedure the PIN code or other credentials entered in the PIN entry device is verified against information encrypted on the smart card instead of in the payment server. The credit card verifies the encrypted PIN code assuming that “off-line communication” 306 are established. If the encrypted PIN code is verified, the payment may be initiated 310. If not, a display error message is prompted to the user. In an off-line state all information is gathered in the mobile phone and may be transmitted to the payment server as soon as communications may be established.
When communication has been established between the card reader device and the mobile phone 304 and the PIN entry device and the mobile phone, the payment software in the mobile phone is initiated and begins setting up the communication with the card reader device, the PIN entry device and a payment server 312 via a wireless or wired link. Which payment server that the communication shall be established with may be determined by the user from a list of trusted servers, or it may be preset in the hardware or firmware of the card reader device, or in may be preset in the payment software installed in the mobile phone, or it may be extracted from the memory of the microchip of the smart card, or it may be extracted from the memory of the PIN entry device. When establishing communication with the payment server the unique RSN and PINSN are transmitted to the payment server. The payment server then derives the unique RK and PINK which is used throughout (as described in detail in conjunction with FIG. 2) the payment process to guaranty that sensitive smart card information and PIN codes are safe and secure during the payment transaction. If the RK and/or the PINK can't be derived or if the RSN and/or the PINSN are faulty or black listed an error message 308 is communicated to the user operating the secure payment unit.
In a variant, the necessary payment software is, during the establishing of the communication between the card reader device and the mobile device 304, downloaded (from the card reader device or from an external server such as the payment server) and executed and/or installed in the mobile device.
When communication has been established with the payment server 312, the user of the secure payment unit must identify him or herself. The identification process 314 may be in the form of entering his or hers PIN code on the PIN entry device, writing a signature on the display of the mobile phone (or the PIN entry device is a display is present), entering user name and password in the PIN entry device or maybe in the form of identifying biometric data (eye/retina information via the mobile devices camera, voice recognition via the mobile devices microphone, or fingerprint identification via an built in fingerprint reader in the PIN entry device). The collected credentials in 314 may, in a variant of the present invention, be transmitted encrypted via the mobile phone to the payment server to be verified when communication with the payment server just has been established.
If the credentials checks out 316 the unit is ready for performing a secure credit payment, and the startup process is completed. If the credentials do not check out 316 an error message 318 is communicated to the user operating the secure payment unit. The user may then be prompted to enter its credentials again in the PIN entry device, and if the credentials does not check out again (or after three trials), and/or if the user is “black-listed” at the payment server a “payment permission denied message” may be communicated to the user.
FIG. 4 shows a flowchart 400 describing the process of performing a secure credit card payment. A secure credit card payment may be initialized after the setup process of the secure payment unit described in the flowchart 300 in FIG. 3 have been successfully completed. Alternatively the secure credit payment may be initialized at the same time as the setup process of the secure credit payment system (for instance during one, some or all of the steps 310 to 320) as described in the flowchart 300 in FIG. 3 is executed.
The secure payment is a monetary transaction between two parties namely user 1 who is going to receive payment and user 2 who is going to pay user 1. In some cases several users may be involved in the payment procedure, but in the example below illustrating the present invention only the case where two parties are involved in the transaction is described in detail. However, a person skilled in the art can easily see that the secure credit card payment process may be extended to include several parties as well. A user may either be private person, legal person or transaction equipment belonging to a private person or a legal person.
The secure payment process 400 is initiated when user 2, who is going to pay user 1, inserts a smart card in the card reader device. The card reader device accesses and reads the microchip containing smart card information such as card number, account number, or any other identification and/or credit card information.
The card reader device will then start to communicate with the payment server to verify the smart card information. If the smart card information is not cleared by the payment server 404 (or, depending on the arrangement, by the payment acquirer server 214), an error message 406 is presented to user 2 (and/or to user 1 if available). If the smart card information is cleared by the payment server, then user 2 is prompted to enter, into the mobile phones payment software, the amount 408 that is going to be transferred to the payment acquirer server 214, which in this case would be the server managing user 1's bank account.
User 2 will then be prompted to enter his or hers personal details 410 related to the purchase. Personal details may be one or several of; his or hers address, telephone number, alias, email address, personal number (social security number), or other personal identification number. Alternatively, the required information could be stored in the card reader device, the mobile device or on the server and automatically (or when requested by the user) filled in.
User 2 will then be prompted to enter his or hers PIN code and/or signature 412 or some kind of card verification code to approve the payment order on the PIN entry device. This is the same procedure as when a person enters his or hers PIN code in a POS terminal to verify the purchase. In another embodiment user 2 is also prompted to enter his or hers written signature on the PIN entry device or the in the mobile phone. This extra step is corresponds to when a user physically signs the paper slip when making a payment using a POS terminal. The approved information is then communicated to the payment server 414 (or alternatively to the payment acquirer server) for verification and processing of the transaction 416.
The entered personal details 408 may be verified and approved 418 by either the payment server or the payment acquirer server. If the personal details are not approved 418, then user 2 will be prompted with an error message 420 and returned to the “enter personal details” 410 step in the process, or optionally, the secure credit card payment process 400 will be terminated.
If the personal details are approved 418, the next step is to verify and approved 422 the entered PIN code and/or signature 412. This is done either by the payment server or the payment acquirer server. If the PIN code and/or signature is not approved 422, user 2 will be prompted with an error message 424 and returned to the “enter PIN code” and/or “enter signature” 412 step in the process, or optionally, to the “enter personal details” step 410, or in yet another variant, the secure credit card payment process 400 may be terminated. In a variant only the existence of a signature is verified and stored on the payment server or on in a transaction log for future verification needs.
When the credentials of user 2 have been verified, the amount to be paid is sent to the payment acquirer server from the payment server. The payment could also be sent from a legal person or a server instructed by the payment server to execute the payment.
The paid amount is verified 428 by the payment acquirer and/or the payment server. If the paid amount is too low and/or too high, user 2 will be prompted by an error message 430 and optionally returned to the “enter amount” step 408. If the paid amount is ok 428, the amount is withdrawn from user 2's smart card or user 2's bank account (optionally connected to the credit card) by the payment acquirer server or the payment server. The paid amount is transferred by the payment acquirer server to user 1 based on account input provided by the payment server and/or user 2 to the payment acquirer server.
In the next step 434 a receipt is generated and distributed to one or several of; user 1, user 2, payment acquirer server or a payment server. The receipt may be distributed via for instance SMS, email, published on a web site or alternatively via regular mail, based on the input of details in 410 and/or on account settings/information stored at the payment server. Optionally, the receipt is stored on a server in a log, with or without the signature 412, which different parties may have access to and are able to view the receipt on and/or download it.
The transaction information may be stored in a log file, with or without the signature 412, containing transaction history where information such as the amount transferred, from who to whom, time of transaction, type of credit card used, photo of the item sold, buyer and/or seller, the location on which the transaction was completed, hardware ID of the mobile device, unique serial key from the card reader device, unique serial number of the PIN entry device and other identifying information may be stored.
The information that is transferred in 414 to the payment server may be fully or partially encrypted using the RK and the PINK, and transferred over the Internet via a wireless or a wire connection. The information could also be communicated over a proprietary dial up connection, directly to the payment server where the dial up connection uses standard secure communication protocols.
The information stored from the transaction in 436 may alternatively be used to provide cash withdrawal lists that can be sent to user 1 via regular mail, or alternatively via email or text messages.
The information stored from the transaction in 436 may alternatively be used to present purchase information on a web page where the users or a third party can login using the username and password used in the payment software in the mobile device.
Some of the steps shown in the flowcharts in FIGS. 3 and 4 may be omitted or rearranged in different embodiments of the present invention. Also, additional blocks further clarifying the processes discussed in conjunction with FIGS. 3 and 4 may be inserted into the flowchart to better describe embodiments of the present invention.
The present invention, as described above, can be applied to existing payment systems on the market without having to change, modify or circumvent the payment systems specifications. An example of a payment system in which the present invention may be applied is the EMV payment system. EMV is a payment system specification for smart cards that was jointly developed by the companies Europay International, Mastercard International, and Visa International, hence the name. One of the purposes with EMV was to create a more secure payment system that the traditional magnetic-stripe credit card payment system. The EMV specification has two security levels, EMV Level 1 and EMV Level 2.
EMV Level 1 covers the electrical and physical interfaces, and the transmission of data between the terminal and the card. EMV Level 2 covers the set of functions that provide all the necessary processing logic and data that is required to process a smart card application in order to perform an EMV transaction. A POS terminal must go through an extensive EMVCo (http://www.emvco.com) defined level 1 and level 2 approval processes, which require that every terminal goes through a laboratory type testing and approval before they can be used for EMV transactions. This is one of the factors which make POS terminals very expensive to own for a private person and very bulky in its design (due to the tampering proof security measures). EMVCo also require that the approval is renewed at defined intervals to retain compliance. For more information regarding the EMV specification, the reader is referred to EMV 2000 Books from EMVCo.
EMV approved POS terminals on the market today performs both EMV Level 1 and Level 2 security measures in the POS terminal. By applying the present invention to the EMV standard, EMV Level 1 and Level 2 can be separated and still maintain the same, or a higher, security standard. For example in FIG. 2 EMV Level 1 security measures are fulfilled in the PIN entry device and/or the card reader device while EMV Level 2 security measures are fulfilled in the payment server. In this way it becomes possible to make a small and cost effective secure payment unit, which is approved by the EMVCo, which can be used together with an ordinary mobile phone, which doesn't need to be approved by the EMVCo since it only acts as a transceiver for information. In this way the present invention makes it possible to manufacture a small, cost effective, easy-to-use and secure payment unit which a user is capable of making safe credit card payments with in stores, on Internet and person-to-person.
The present invention described above have shown that a stand-alone PIN entry device, which can be implemented to fulfill the EMV Level 1 security specification, may effectively remove the unsecure step of entering personal identification information such as a PIN code when using a mobile phone and a card reader device for performing a payment transaction. The PIN entry device could also be used in other type of arrangements where an EMV Level 1 secure “information entry device” is needed. By using a EMV Level 1 secure PIN entry device is it also possible to only use a standard card reader device and thus reduce the manufacturing costs for producing the card reader device or incorporate it into a mobile phone.
It is important to understand that a card reader device may incorporate other type of “reader” devices and not only traditional credit card readers. In the future the card reader device may for instance be a NFC device and the credit card then might be a NFC tag. So the term card reader device should be interpreted in a much wider sense to include any type of device capable of reading another passive or active device for the purpose of extracting personal information related to some kind of payment transaction. In the same way the term PIN entry device should be interpreted as a device capable of receiving and relaying personal information for verification of a persons identity in some kind of process, such as a payment transaction.
An important difference between the payment method described above in the present invention and an ordinary Internet payment transaction is that the credit card, in this case the smart card, must be available on-line to the payment server during the whole payment process, thus making the payment process in the present invention much safer than an ordinary Internet payment transaction where the (physical) credit card does not need to be available at all (only the credit card information such as number and in some cases a code must be available).
The terminology used herein is for the purpose of describing particular embodiments only and is not intended to be limiting of the invention. As used herein, the singular forms “a”, “an” and “the” are intended to include the plural forms as well, unless the context clearly indicates otherwise. It will be further understood that the terms “comprises” “comprising,” “includes” and/or “including” when used herein, specify the presence of stated features, integers, steps, operations, elements, and/or components, but do not preclude the presence or addition of one or more other features, integers, steps, operations, elements, components, and/or groups thereof.
Unless otherwise defined, all terms (including technical and scientific terms) used herein have the same meaning as commonly understood by one of ordinary skill in the art to which this invention belongs. It will be further understood that terms used herein should be interpreted as having a meaning that is consistent with their meaning in the context of this specification and the relevant art and will not be interpreted in an idealized or overly formal sense unless expressly so defined herein.
The foregoing has described the principles, preferred embodiments and modes of operation of the present invention. However, the invention should be regarded as illustrative rather than restrictive, and not as being limited to the particular embodiments discussed above. The different features of the various embodiments of the invention can be combined in other combinations than those explicitly described. It should therefore be appreciated that variations may be made in those embodiments by those skilled in the art without departing from the scope of the present invention as defined by the following claims.

## Claims

1. A method of conducting electronic payments to a payment acquirer server using a credit payment unit, comprising a smart card, card reader device, a mobile phone and a personal identification number (PIN) entry device, and a payment server, said method comprising:
initializing said credit payment unit by establishing communication between said smart card and said card reader device, establishing communication between said card reader device and said mobile phone;
starting a dedicated software application in said mobile phone;
said software application establishing communication between said mobile phone and said PIN entry device;
said software application establishing communication between said credit payment unit and said payment server using said mobile phone;
said software application communicating a reader serial number stored in said card reader device via said mobile phone to said payment server;
communicating a PIN serial number stored in said PIN entry device to said payment server;
deriving a reader key in said payment server based on said communicated reader serial number and a master reader key stored in said payment server;
deriving a PIN key in said payment server based on said communicated PIN serial number and a PIN master key stored in said payment server;
reading, in said card reader device, smart card information from said smart card and encrypting said smart card information using a preexisting instance of said reader key stored on the card reader device;
receiving user inputted payment details in said mobile phone;
receiving user inputted PIN information in said PIN entry device, encrypting said PIN information using said PIN key and communicating said encrypted PIN information to said payment server;
communicating, using said mobile phone, said encrypted smart card information from said card reader device, and said payment details to said payment server;
decrypting and verifying said encrypted smart card information and said encrypted PIN information in said payment server; and
completing an electronic payment by communicating said payment details from said payment server to said payment acquirer server.

2. The method according to claim 1, wherein the mobile phone communicates said encrypted PIN information to said payment server.

3. The method according to claim 1, wherein said encrypted PIN information is communicated wirelessly to said payment server.

4. The method according to claim 1, wherein said encrypted PIN information is communicated wirelessly to said payment acquirer server.

5. The method according to claim 1, wherein said decrypted encrypted PIN information is communicated from said payment server to said payment acquirer server for verification.

6. The method according to claim 1, wherein said communication between said credit payment unit and said payment server, using said mobile phone, is encrypted using the Transport Layer Security protocol or the Secure Sockets Layer protocol, and wherein said communication between said smart card and said card reader device is encrypted using said reader key in said card reader device.

7. The method according to claim 1, wherein said communicating of said payment details from said payment server to said payment acquirer server is encrypted.

8. The method according to claim 1, further comprising:
receiving, in said payment server, an acknowledgement from said payment acquirer server that said electronic credit payment has been completed;
generating a receipt of said electronic credit payment in said payment server;
communicating said receipt to said credit payment unit;
displaying said receipt in said mobile phone; and
storing said receipt in a log.

9. The method according to claim 1, wherein said electronic credit payment complies with an EMV payment system specification.

10. A payment unit adapted to communicate with a payment server for making electronic payments, comprising:
a smart card containing smart card information;
a card reader device containing a unique reader serial number and a unique reader key, wherein said card reader device is adapted to read said smart card information and to encrypt said smart card information using said reader key;
a PIN entry device containing a unique PIN serial number and a unique PIN key, wherein said PIN entry device is adapted to receive user inputted PIN information and encrypt said PIN information using said PIN key, and communicate said encrypted PIN information to said payment server;
a mobile phone, comprising a dedicated software application adapted to, when started, setup the communication between said mobile phone and said pin entry device, and between said mobile payment unit and said payment server, wherein said mobile phone is further adapted to receive said reader serial number and said encrypted smart card information from said card reader device, wherein said mobile phone is further adapted to receive user inputted payment details, and wherein said mobile phone is further adapted to communicate said reader serial number, encrypted smart card information, payment details to said payment server for completing a secure credit payment.

11. The payment unit according to claim 10, wherein said mobile phone is adapted to receive a receipt from said payment server and to display said receipt on a display in said mobile phone.

12. The payment unit according to claim 10, wherein said mobile phone is adapted to receive said inputted payment details via a touch sensitive display.

13. The payment unit according to claim 10, wherein said mobile phone is further adapted to receive said PIN serial number and said encrypted PIN information from said PIN entry device, and communicate said received PIN serial number and said encrypted PIN information to said payment server.

14. The payment unit according to claim 10, wherein said PIN entry device is adapted to communicate said PIN serial number and said encrypted PIN information to either said payment server or to a payment acquirer server.