Micro payment gateways (2005)

In the next years, the market for low value online content, like music and videos, is expected to grow substantially. To allow "pay-per-use" of such content, micropayment systems are expected to play an important role. Since there are already many competing micropayment systems on the market, customers and merchants are forced to use multiple systems. To overcome the problems associated with using multiple systems (e.g., learn the usage of several systems, manage multiple accounts and e-wallets, remember multiple passwords, trust different micropayment system operators), in this thesis, we propose a hybrid payment system that allows customers and merchants to use their micropayment system of choice, while still being able to pay each other in a seamless manner regardless the choice of the other party. The core component of our system is the Payment Gateway, which is responsible for interconnecting the existing (and future) micropayment systems. To become successful, such a system needs to have global acceptance and penetration, a high micropayment volume, high trust level and secure money transfer. The main objective of this thesis is to develop an architecture of the hybrid payment system. To solve the micropayment system interconnection problem, we propose a generic and systematic interconnection method for existing micropayment systems. This method is to harmonize the payment services of existing systems to a uniform level, called the uniform payment service, and interconnect these uniform payment services. We call a system that provides the uniform payment service a uniform payment system. Using this method, the number of mapping rules and the amount of information that must be stored will remain limited, which makes this method scalable and the design and realization of the Payment Gateways will become much easier. A prerequisite for this method is that the harmonization of existing (and future) micropayment systems to the uniform payment service is possible. We will define the uniform payment service such that the vast majority of existing payment systems can comply with this service without changing their functionality. We will also prove this fact by presenting two case studies. The compliance of current payment systems with the uniform payment service also means that they can be interconnected without changing their functionality. The uniform payment service could guide the design of future electronic payment systems such that new systems can be interconnected easily with existing systems. In this way, the uniform payment service, possibly extended with interactions that have only local significance, could become a de facto standard for micropayment systems. On top of the uniform payment systems, we design a hybrid payment (or interconnection) protocol. This protocol bridges the gap between the hybrid and uniform payment services. This protocol will be designed such that (1) the threats for the normal operation and security of the protocol are not considerably bigger than that of the existing systems, (2) hardly any money loss situations will occur, (3) commonly used security techniques can be employed to secure the interactions between the various components of the hybrid payment systems, and (4) that the protocol will be optimized in case no interconnection is needed. This thesis begins with presenting the research context, problem definition, possible solutions, objective, related research questions and approach followed (Chapter 1). We start our research with studying the payment function within the context of (product) accounting (Chapter 2). We then analyse the structure and functionality of existing electronic payment systems, identify the business roles within these systems, define their main functional characteristics and present an overview of these systems (Chapter 3). Afterwards, the requirements for the hybrid payment system will be derived from the viewpoints of end-users (customer and merchant), stakeholders (operators of micropayment systems and Payment Gateways), legal and regulatory frameworks (Chapter 4). The main functional characteristics of existing payment systems and the requirements will guide the design of the hybrid payment system. The design will be structured in three phases: (1) formulate the functional requirements for the hybrid system, (2) design the hybrid payment service, (3) discuss the most suitable interconnection method and design the interconnection protocol (Chapter 5 and Chapter 6). The uniform payment systems and interconnection protocol will be demonstrated to be implementable, which implies that an implementation of the hybrid payment system is achievable. Besides this demonstration, the design of the hybrid payment system will be evaluated to verify whether the hard requirements from Chapter 4 are satisfied (Chapter 7). Finally, the conclusions of our work will be drawn and some research topics for future work will be formulated (Chapter 8).