Secure Credit Transactions
A system and method for engaging in a credit or debit transaction do not transmit an individual's account number to a vendor or merchant. The individual provides the account number to a transaction acquiring device (TAD). The TAD requires the individual to provide one or more pseudo-random numbers that identify the individual. These numbers are only obtainable from an authentication device that can be unlocked only by passing an authentication challenge. The TAD then provides transaction data to a credit or debit issuer and the vendor, but does not provide or store the account number. The issuer provides the merchant with an identifier other than the account number that is nevertheless unique to the individual. This identifier may be used to track the individual's purchase history or perform other business functions.
1 . A method for engaging in a transaction with an individual having possession of a credit or debit card, the card having a primary account number digitally encoded thereon, the primary account number being uniquely associated with an issuer, the method comprising:
in a transaction acquiring device, receiving the primary account number using a first input and receiving an encryption seed using a second input, the encryption seed having been previously obtained from the issuer by an authentication device of the individual, wherein the individual must pass an authentication challenge of the authentication device before the encryption seed may be received by the transaction acquiring device;
in the transaction acquiring device, applying a one-way hash function to a combination of the primary account number and the encryption seed, thereby producing a transaction hash;
transmitting the transaction hash and encryption seed to the issuer using a data communication network according to a financial transaction standard, wherein the primary account number is not transmitted to the issuer; and
receiving, from the issuer using the data communication network according to the financial transaction standard, an indication that the issuer recovered the primary account number from the transaction hash.
2 . A method according to claim 1 , wherein the authentication device is a smartphone.
3 . A method according to claim 1 , wherein the authentication challenge comprises entry of a username and password into the authentication device.
4 . A method according to claim 1 , wherein receiving the primary account number comprises passing the card through a magnetic stripe reader.
5 . A method according to claim 1 , wherein the transaction acquiring device includes a numeric keypad and receiving the encryption seed comprises use of the numeric keypad.
6 . A method according to claim 1 , further comprising deleting all electronic storage of the primary account number within the transaction acquiring device.
7 . A method according to claim 1 , wherein the primary account number is recovered from the transaction hash by using the hash to retrieve a record from a database indexed by transaction hashes, the record including the primary account number and the received encryption seed.
8 . A method according to claim 1 , further comprising receiving, from the issuer using the data communication network according to the financial transaction standard, an indication that the transaction is authorized.
9 . A method for authorizing a requested transaction, the method comprising:
in an initialization phase:
generating an encryption seed in response to receiving a request from an authentication device of an individual, wherein the individual must pass an authentication challenge of the authentication device before the request may be received,
forming an issuer hash by applying a one-way cryptographic hash function to a combination of the generated encryption seed and a primary account number that is uniquely associated to the individual, and
storing a record in a database, the record including the issuer hash, the primary account number, and the generated encryption seed; and
in a transaction phase occurring after the initialization phase:
receiving a transaction request from a merchant that includes an encryption seed and a transaction hash,
retrieving, from the database, a record that includes the transaction hash; and
determining to authorize the transaction only if the received encryption seed matches an encryption seed contained in the retrieved record.
10 . A method according to claim 9 , wherein the encryption seed is obtained from a pseudorandom number generator.
11 . A method according to claim 9 , wherein the transaction phase further comprises:
retrieving the primary account number of the individual from the record;
retrieving a transaction amount from the transaction request; and
determining to authorize the transaction only if a balance associated with the primary account number is greater than the transaction amount.
12 . A method according to claim 9 , further comprising generating identification data that are unique to the individual but different from the primary account number of the individual.
13 . A method according to claim 12 , further comprising transmitting a determined authorization and the identification data to the merchant.