What Is Secure Electronic Transaction

Secure Electronic Transaction (SET) is a security protocol that protects your personal and financial information when you shop online. In 1996, Visa and MasterCard began developing the SET protocol to ensure the security of Internet credit card transactions.

SET uses digital signatures to identify both the consumer’s and the merchant’s identities. Learn how a SET transaction works to ensure your secure electronic transactions.

How Does a SET Transaction Work?

SET transactions use digital certificates to verify the identities of consumers and companies doing business online. Digital certificates are electronic documents that contain a name, serial number, expiration dates and a public key used to encrypt data.

A consumer begins by opening a credit card account, such as a Visa or MasterCard, with a bank that uses SET. The consumer then receives a digital certificate. Merchants accepting these cards also have digital certificates.

When you make a secure electronic transaction purchase, your order involves the following steps:

  1. You place an online order with a merchant.
  2. Your web browser checks the merchant’s digital certificate to ensure its authenticity.
  3. Upon verification, the browser sends the order with encrypted payment information to the merchant.
  4. The merchant verifies your identity by checking the digital signature on your certificate.
  5. The merchant sends the order information to the bank to request payment authorization.
  6. The bank authorizes the payment, and the merchant fulfills your order.

Benefits of a SET Transaction

Both consumers and merchants have to authenticate their identities with digital certificates. This way, consumers can verify that the merchant is authentic, and merchants can make sure that the consumer is the right person, and not someone trying to use a stolen credit card.

Secure Electronic Transactions encrypt data so that the consumer, the merchant and the bank see only the information relevant to them. For instance, the merchant receives only the order information while the bank receives the payment information. The merchant never sees the consumer’s credit card numbers.

SET has proven to be one of the strongest forms of online security available today. For a few years after its development, many companies thought it was too complicated and didn’t use it. Now, consumers who choose to use debit cards online are at higher risk for theft, so SET is becoming more widely used and is considered to be the best and strongest solution.