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used to generate the coins to spend with only one specified merchant. Thus, the client
is required to request the bank to issue a new payment token every time she wants to
perform a payment transaction to a new merchant.
In this paper, we propose a prepaid micropayment protocol which employs a secure
symmetric cryptographic technique that not only the computation at all parties, espe-
cially at the client, is reduced, but the proposed protocol also satisfies transaction secu-
rity properties including non-repudiation [1]. Moreover, it offers the ability to resolve
disputes among parties. Furthermore, all parties’ private information such as payment
information and secret keys are well-protected.
In any prepaid payment system, a client has to purchase an electronic coupon which
contains spending credits and the amount paid by the client is transferred to a specified
merchant before a transaction. In our proposed protocol, we present an efficient method
to refund either un-spending credits or coupons. This offers the practicability to the
system. Moreover, the coupon in our protocol is general-purposed in that it can be split
into smaller value merchant-specific coupons to spend with many merchants.
We analyze the performance of the proposed protocol and compare with PayWord
[6] and PayFair [8]. The results show that our protocol has better performance than
others in terms of party’s computation and the numbers of message passes. Therefore,
the proposed protocol can be implemented in limited capability wireless devices with
higher performance than existing micropayment protocols.
Section 2 provides overviews of PayWord and PayFair protocols. Section 3 intro-
duces our proposed protocol. Section 4 discusses about security and performance of the
proposed protocol. Section 5 concludes our work.
2 Overviews of Existing Micropayment Protocols
In this section, we outline two existing micropayment protocols: PayWord [6] and Pay-
Fair [8]. In section 2.1, PayWord is presented to provide an idea about how a micropay-
ment protocol with public-key operations works. In section 2.2, PayFair is outlined to
show how to secure transactions using symmetric-key operations.
2.1 PayWord
PayWord [6] is a postpaid micropayment protocol based on public-key cryptography.
Three parties are involved in the system: client, merchant, and bank. The client and
the merchant establish accounts with the bank. At the beginning of the protocol, the
bank issues the client a PayWord certificate which contains authorized amount CL that
the client is allowed to make a payment to each merchant. To make a payment to a
merchant, the client generates a set of coins c
0
, ..., c
n
, where n = CL. The set of c
i
is
generated as follows: c
i
= h(c
i+1
), where i = 1, ..., n − 1.
In the first payment, the client sends the merchant a commitment, which contains the
PayWord certificate and c
0
, digitally signed by the client. Later on, in each payment,
the client sends the coin c
i
to the merchant. The merchant can infer the value of the
coin by applying a number of hash functions to c
i
. At the end of the day, the merchant
sends the highest value of c
i
together with the commitment to the bank. The bank then
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