What Is The SET Protocol?

Date First Published: 26th July 2023

Topic: Cybersecurity

Subtopic: Security Mechanisms & Technologies

Article Type: Computer Terms & Definitions

Difficulty: Medium

Difficulty Level: 7/10

CONTENTS

How Does SET Work?
SET Architecture
History

Learn about what the SET protocol is in this article.

Stands for the Secure Electronic Transmission protocol. The SET protocol is a communications protocol used to secure electronic payments made using a debit or credit card. SET is a set of security protocols that provides a secure transaction environment for customers and merchants involved in ecommerce transactions, not a payment system or gateway.

How Does SET Work?

SET works by allowing merchants to verify their customer's card information without actually seeing it to protect the customer. The card information is directly transferred to the debit or credit card company for verification.

With SET, a user is given an electronic wallet and a transaction is performed and verified using a mix of digital certificates and digital signatures. Both cardholders and merchants must register with the certificate authority first before they can buy or sell online. After the registration is complete, the cardholder and merchant can start to perform transactions. The 9 steps of this communications protocol are:

The customer browses the website and decides what to purchase.
The customer sends their order and payment information. The order information is for the merchant and the card information is for the merchant's bank only.
The merchant forwards the card information to their bank.
The merchant's bank checks with the issuer for payment authorisation.
The issuer sends authorisation to the merchant's bank.
The merchant's bank sends authorisation to the merchant.
The merchant completes the order and sends confirmation to the customer.
The merchant captures the transaction from their bank.
The issuer prints the credit card bill to the customer.

SET Architecture

The SET architecture consists of:

Digital certificates - These verify the merchant's and customer's identities to reduce the risks of a third party manipulating the transaction information. Digital certificates are issued to the bank by the certificate authority.
Dual signatures - The customer's order information and payment information are encrypted with separate public keys. The payment information is encrypted with the bank's public keys and the order information is encrypted with the merchant's public keys. This ensures that the encrypted payment information can only be decrypted by the bank and the encrypted order information can only be decrypted by the merchant.
Digital wallet - By requiring customers to activate their digital wallet by entering a password, SET ensures customer self-authentication. This happens before the customer start a payment transaction. After authentication, the customer's computer, phone, or other device sends the merchant their order and payment details. When the cardholder's identity has been verified, the issuing bank gives the bank that received the card information a payment authorization, which it then sends to the merchant.

History

SET was an early communication protocol used that was developed in 1996 and used by ecommerce sites. The increase in ecommerce transactions over the internet led to the development of secure payment protocols. Most major providers, including MasterCard and VISA supported it for secure payments, but it did not gain much popularity and it is not commonly used now. Usage and support for this protocol has declined over time and it has been superseded by other security standards, like the 3D secure protocol.

When this protocol was first introduced, it was predicted that it would be widely used within the next few years, but that didn't happen. A reason for that is due to some disadvantages in the protocol. The greatest disadvantage is the complexity. SET requires customers and merchants to install card readers and digital wallets, meaning that more tasks had to be completed to implement it, slowing down the speed of transactions.