Browse Prior Art Database

TWO-CHANNEL SECURE TRANSACTION

IP.com Disclosure Number: IPCOM000009860D
Original Publication Date: 2000-May-01
Included in the Prior Art Database: 2002-Sep-24
Document File: 2 page(s) / 103K

Publishing Venue

Motorola

Related People

Man Fai Tam: AUTHOR [+2]

Abstract

The current credit card transaction model is faulty and credit card fraud has blossomed with the use of technology. Figures show that financial institutions lost billions of dollars on credit/charge card fraud in the US alone last year. A conventional credit card transaction model is summarized below in Figure 1.

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MOTOROLA

Technical Developments

TWO-CHANNEL SECURE TRANSACTION

by Man Fai Tam and Jui Chuan Na

INTRODUCTION

The current credit card transaction model is faulty and credit card fraud has blossomed with the use of technology. Figures show that financial institutions lost billions of dollars on credit/charge card fraud in the US alone last year. A conventional credit card transaction model is summarized below in Figure 1.

I":"\ Consumer hands over the I":\ Retailer request:r for \!-I cr~it/charge card 10 retailer ~ credil card approval (Unsecure) /..-~n)

I Consumer I /-~ I Rctailer I e

creditlcharge card 10 consumer ~ approves the lransaclioll (U1Isec;IU' (S,C;IlTI)

Fig. 1 Conventional Credit/Charge Card Transaction

Most occurrences of credit card fraud are related to the unsecured channel in the transaction model, when the credit/charge card is handed to the retailer.

A dishonest retailer or employee can "steal" the creilit/charge card information and "clone" multiple credit cards based on the stolen information, This kind of operation normally takes place simultaneously in multiple locations around the world, rnak~ ing it hard to be detected in time to stop huge loss from accumulating.

Although new technology, like smart cards, make cloning of credit cards difficult, it is quite likely that with the use of technology these new cards could still be cloned.

The conventional transaction model was developed decades ago when the financial institutions could only rely on credit card readers installed at

Motorola, Inc. 2000

retail outlets to make the transactions possible. However, with the help of advanced technologies, like mobile phones or two-way messaging devices, a second secure channel is readily available to the financial institutions and consumers to make credit/charge card transactions, without giving the retailers their credit/charge cards to the retailer. This second secure channel could alleviate the problem of credit card fraud at retail outlets.

DESCRIPTION

A new transaction model is shown in Figure 2

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