Consumers must have faith in the authenticity of the merchant, and merchants must have faith in the authenticity of the consumer. Without authentication, any individual could pose as a merchant, and besmirch a merchant's good name by failing to deliver goods and billing up credit card bills. Without authentication, any individual could pose as a consumer, ordering costly goods to an abandoned house or apartment, and defrauding the merchant. Without authentication, an individual could pose as a willing buyer, accept the goods, and then repudiate the transaction. Authentication is critical to achieving trust in electronic commerce.
Authentication is achieved through the use of digital signatures.
Using a hashing algorithm, SET can sign a transaction using the sender's private key. By comparing the transaction message and the message digest, along with the sender's public key, the authenticity of the transaction can be verified. Digital signatures are aimed at achieving the same level of trust as a written signature has in real life. This helps achieve non-repudiation, as the consumer cannot later establish that the message wasn't sent using his private key 1 . Secure electronic transactions will be an important part of electronic commerce in the future.