IT430

IT430 Complete Assignment Solution
Question No. 1: Write down advantages and disadvantages of “Virtual PIN
Payment System”.
Answer: Virtual PIN payment system is one of the earliest credit card based system. This
system does not involve use of encryption and payment is made through credit card.
There are certain advantages and disadvantages associated with this system
Advantages:
• No special software or hardware in needed at buyer or seller side
• First Virtual has very low processing fee as compared to other Internet payment
schemes or even straight credit card processing
• Purchases are essentially anonymous. The merchant is never given the buyer's
name from First Virtual
• Buyers are fully protected from fraud. No charges are processed against their
account without their confirmation
Disadvantages:
• Pre-registration with First Virtual in set up is mandatory for buyer and seller
• Most risk is borne by merchant because goods are delivered by merchant before
actual payment
• Long waiting period between sale and actual payment made to merchant
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Question No. 2: How stolen credit cards can be used for fraud in Virtual PIN
Payment System?
Answer: Virtual PIN payment system is a credit card based payment system. Both
merchant and buyer need to register with First Virtual (FV).
When the customer makes an order, they give the merchant their virtual PIN. The
merchant then contacts First Virtual, quotes them the PIN and asks for the money. First
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Hafiz Salman Majeed
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Virtual send the customer an e-mail asking for their confirmation, customer either replies
YES, NO or Fraud. If the answer indicates “fraud” it means that the goods were never
ordered. In such an eventuality the First Virtual Internet Payment Server System
(FVIPSS) immediately blacklists Virtual PIN so that it cannot be used in the future. In
case of fraud indication it means buyer to whom PIN actually belongs has not made the
order and somebody might have stolen the PIN and misused it. There is a said waiting
period to answer the e-mail about indication of transaction and in case of no reply FV
proceeds the payment, in such a case since no fraud indication is made by buyer the
stolen Virtual PIN can then be used for transaction. Similarly a stolen credit card number
can also be used to set up Virtual PIN associated with an email address controlled by the
attacker to carry out bogus transactions.
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