Resilient payment systems
There have been decades of attempts to evolve or revolutionise the traditional financial system, but not all such efforts have been transformative or even successful. From Chaum’s proposals in the 1980s for private payment systems to micropayments, previous attempts failed to take off for a variety of reasons, including non-existing markets, or issues pertaining to usability, scalability and performance, resilience against failure, and complexity of protocols.
Towards creating more resilient payment systems, we investigated issues related to security engineering in general, and payment systems in particular. We identified that network coverage, central points of failure, and attacks may cripple system performance. The premise of our research is that offline capabilities are required to produce resilience in critical systems.
We focus on issues related to network problems and attacks, system resilience, and scalability by introducing the ability to process payments offline without relying on the availability of network coverage; a lack of network coverage renders some payment services unusable for their customers. Decentralising payment verification, and outsourcing some operations to users, alleviates the burden of contacting centralised systems to process every transaction. Our secondary goal is to minimise the cost of providing payment systems, so providers can cut transaction fees. Moreover, by decentralising payment verification that can be performed offline, we increase system resilience, and seamlessly maintain offline operations until a system is back online. We also use tamper-resistant hardware to tackle usability issues, by minimising cognitive overhead and helping users to correctly handle critical data, minimising the risks of data theft and tampering.
We apply our research towards extending financial inclusion efforts, since the issues discussed above must be solved to extend mobile payments to the poorest demographics. More research is needed to integrate online payments, offline payments, and delay-tolerant networking. This research extends and enhances not only payment systems, but other electronically-enabled services from pay-as-you-go solar panels to agricultural subsidies and payments from aid donors. We hope that this thesis is helpful for researchers, protocol designers, and policy makers interested in creating resilient payment systems by assisting them in financial inclusion efforts.