The Secure Electronic Transaction System

The Secure Electronic Transaction System was designed to help process credit card payments securely. This system was designed to be the method of choice for people to make purchases with credit cards on the Internet. It never really caught on and is now rarely used. Here are the basics of the Secure Electronic Transaction System, or SET.

Secure Electronic Transaction System

With this system, there are several layers of security present for both parties. This system encrypts information so that neither party has certain specific pieces of information about the other party in the transaction. This is not a payment processing system, but it is a protocol that is used when processing payments or passing along other delicate financial information such as a bank account number. When it was originally introduced, many companies backed the system. For example, major credit card companies utilized this method for transactions. However, it failed to gain market share partly because of its complicated nature. With this solution, individuals have to download a piece of software and use a digital wallet to make transactions. This was not as easy as some of the other payment solutions that were available on the Internet.


Even though this method did not become popular, it does have a few key features that were attractive. For example, with this particular system, you can make purchases, and your personal information will remain confidential. This means that the merchant will not have access to anything that you do not want it to have. The system also features card holder authentication. This is achieved by setting up the digital wallet. The merchants that use the solution also have to be authenticated. This significantly reduces the possibility of fraud or danger for merchants and consumers.

A Typical Transaction

Here are the basics of a transaction with the Secure Electronic Transaction System. The customer first has to obtain a credit card account from a financial institution that is involved with the SET system. When this happens, the customer receives a digital certificate from the financial institution. Merchants that use this system also have certificates. Then when a customer orders something from a merchant, the merchant will send a copy of its certificate to the customer so that the customer can verify everything. At that point, the consumer sends the order and the payment. The merchant then requests a payment authorization from the company. Once the merchant receives this, it confirms the order and ships the goods to the consumer. A merchant can then request payment from the system. 

Separate Information

One of the unique aspects of the system is that different information goes to different parties. The order information from the consumer goes to the merchant, while the payment information goes to the bank. This was designed to keep everything separate and provide only the information that each party needs to be aware of.

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