The explosion of Internet and World Wide Web is rapidly changing the way the business transactions are carried out. It is emerging as a medium through which the goods and services are being provided to the customer. This medium is being used to serve the customers at faster rated and at lower cost.

It is also being used to provide the better quality of service. Most business transactions involve the payment and settlement process. Electronic payment systems have become necessary to enable the Internet commerce. The requirements of payment transactions include confidentiality, security, integrity, non-repudiation and authentication. One of the main bottlenecks in the growth of E-commerce is lack of suitable payment instrument and corresponding electronic payment system.

When you make an online purchase on the internet, your credit card information is vulnerable to interception by network snuffers. Software that easily recognizes credit card number formats. Several basic security measures are being used to solve the security problems:

(i)    Encrypt (code and scramble) the data passing between the customer and merchant
(ii)    Encrypt the data passing between customer and the company authorizing the credit card transaction or
(iii)    Take sensitive information offline.

For example many companies use the Secure Socket Layer (SSL) security method developed by Netscape Communications that automatically encrypts data passing between your Web browser and a merchant’s server.

However, sensitive information is still venerable to misuse one it’s decrypted (decoded and unscramble) and stored in a merchant’s server. So a digital wallet approach such as the Cyber Cash payment was developed. In this method, you add security software add-on modules to your Web browse: That enables your browser to encrypt your credit card data in such a way that only the bank that authorizes credit card transactions for the merchant gets to see it. All the merchant is told whether our credit card transaction is approved or not.

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