Created by Visa and MasterCard specifically for the use in financial transactions, the SET protocol requires that all participants have certificates for identification. In the SET protocol, the merchant never sees the credit card number because the information is encrypted for the merchant's bank only. In a SET, the software components required by the various participants are:
- Card holder wallet application
- Merchant SET point-of-sale software
- Payment gateway software
- CA software
SET supports activities such as credits, returning of goods, reverse authorizations, and chargebacks.
SET uses the concept of trust chaining
. All the parties trust each other and can exchange information with each other. What is more, each party in the transaction processes only that information that directly concerns it. For example, the merchant never learns the credit card number of the client. The merchant simply trusts the merchant bank to inform it that the bank authorized the transaction.
One of the important differences between a SET and other e-commerce transactions that occur in the United States is that SET provides for the use of an acquirer to verify the card holder's credit card instantly.
The Slide Show below is an abbreviated presentation of a SET.