O ine Micropayments without Trusted Hardware

We introduce a new micropayment scheme, suitable for certain kinds of transactions, that requires neither online transactions nor trusted hardware for either the payer or payee. Each payer is periodically issued certi ed credentials that encode the type of transactions and circumstances under which payment can be guaranteed. A risk management strategy, taking into account the payers' history, and other factors, can be used to generate these credentials in a way that limits the aggregated risk of uncollectable or fraudulent transactions to an acceptable level. These credentials can also permit or restrict types of purchases. We show a practical architecture for such a system that uses a Trust Management System to encode the credentials and policies. We describe a prototype implementation of the system in which vending machine purchases are made using consumer PDAs.