Secure Electronic Transaction (SET)

Simple definition
A system making online card payments safe.
Expanded definition
A standard protocol ensuring security and confidentiality of payment card transactions over the internet.


In today's digital age, where online shopping has become second nature, ensuring the security of online transactions is paramount. Secure Electronic Transaction (SET) emerges as a beacon of safety in this realm. Let's delve into the significance of SET and how it safeguards online card payments.

What is Secure Electronic Transaction (SET)?

In the mid-1990s, as the internet began to flourish, there was an urgent need to create a standard for secure online transactions. In response, SET was developed, primarily backed by leading credit card companies. It aimed to ensure confidentiality and authenticity in electronic transactions, especially those involving credit cards.

Core Components of SET

  • Cardholder's Digital Wallet: This software component allows consumers to conduct electronic commerce transactions with ease and security. It securely stores the user's payment information and ensures data is only transferred to authorised parties.
  • Merchant's Software: Tailored for e-commerce, this software helps online businesses authenticate and manage transactions while ensuring cardholder information remains confidential.
  • Payment Gateway: This system facilitates communication between the merchant and the credit card company or bank. It ensures that payment details are securely processed.
  • Certificates: Digital certificates serve as electronic IDs, ensuring that both the cardholder and the merchant are legitimate parties in a transaction.

How SET Works: A Step-by-Step Breakdown

  1. Initiating a Purchase: The customer, using their digital wallet, chooses a product and initiates the payment.
  2. Digital Certificate Verification: Before processing, the digital certificates of both the customer and the merchant are verified for authenticity.
  3. Transaction Encryption: All sensitive transaction details, like credit card numbers, are encrypted. This encryption ensures that, even if intercepted, the data remains unreadable.
  4. Authorisation and Completion: The payment gateway processes the transaction, obtaining authorisation from the credit card issuer, and then the payment is completed.

Benefits of Using SET for Online Transactions

  • Enhanced Security: With multiple layers of encryption and verification, SET significantly reduces the risk of fraud.
  • Customer Confidence: Knowing that their data is secured with SET, customers are more likely to trust and complete purchases on an online platform.
  • Streamlined Processes: For merchants, SET provides a smoother and more efficient transaction process.
  • Global Compliance: SET aligns with international security standards, ensuring merchants cater to a global audience seamlessly.

Challenges and Criticisms of SET

  • Implementation Complexity: For many businesses, especially smaller ones, the intricate nature of SET can be daunting to implement.
  • Integration Issues: Some older e-commerce platforms may find it challenging to integrate SET standards without significant overhauls.
  • Evolving Threats: While SET is robust, the world of cyber threats is always evolving, demanding continuous updates and vigilance.

The Future of SET and Online Payment Security

  • Technological Enhancements: As technology advances, we can expect SET to incorporate more sophisticated encryption methods.
  • Biometrics and AI: With biometrics (like fingerprint and facial recognition) and Artificial Intelligence becoming commonplace, future SET standards might integrate these to offer even tighter security.
  • Emerging Payment Methods: As cryptocurrency and other novel payment methods gain traction, how SET adapts or integrates with these new models will be pivotal.


In the vast world of online commerce, SET stands tall as a guardian of security and trust. As businesses and consumers increasingly rely on online transactions, prioritising and adopting robust standards like SET is not just advisable—it's imperative.