Definition. CyberCash is a system that allows customers to pay by a credit card without reveling the credit card number to the merchant. To achieve this, a credit card number is sent to the merchant in an encrypted from.

To enroll, a customer installs a software called CyberCash wallet on their computer. At the time of the installment the wallet generated a pair of a public and a private key. The wallet was protected by a passphrase, and a backup key was stored encrypted on a floppy disk. A CyberCash account was linked to the customer’s credit card. A variation of this scheme called CyberCoin was linked to the customer’s checking account.

A purchase was conducted the following way:

(i)    When the purchase was initiated, the CyberCash wallet displayed the amount, the merchant’s name, and other information. After the customer approved the transaction, an encrypted payment order was sent to the merchant.

(ii)    The merchant could decrypt some of the information in the order, such as the product list, the address, etc., but not the other (such as the credit card information). The merchant’s software would add its own payment information to the order, digitally sing it, and the sent it to the CyberCash gateway.

(iii)    The CyberCash gateway would decrypt the information. The order would be checked for duplicate requests. The gateway would verify that the customer’s and the merchant’s order information match (i.e. no fraud was committed on either side). Then it would perform the money transfer and send the approval message to the merchant.

The main pint of this scheme was to prevent merchant’s fraud, and thus allow customers to do business with more merchants without fear of scam. However, CyberCash and CyberCoin were not able to find the market. The main reasons for the failure were the large size of customer’s software and the fact that very few merchants would accept CyberCash payment. The company was eventually bought by VeriSign.

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