A Novel Peer-to-peer Payment Protocol

In this paper a novel electronic payment protocol suitable for “peer-to-peer” (P2P) networks is presented. It implements electronic cash-based transactions, between buyers and merchants. It is based on a bank account, though it can be easily extended and can be readily applied to other account payment models like debit cards. The proposed protocol is designed using Millicent’s main concept (scrip) and the digital envelope cryptography technique. In this protocol, financial institutions become partners in the ecommerce transaction, conducted by their customers over the Internet. The innovation of the proposed protocol is the reduction of the involvement of the financial institutions to ancillary support services like helping on establishing trust between the parties and at the completion of the peer-to-peer payment transaction. Moreover, the proposed system can be characterized as distributed allocation of provinces to merchants, who are responsible for locally authorizing payments. Finally, it is optimized for repeated payments to the same merchants.