wallet-core/articles/ui/ui.tex

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\begin{document}
\title{GNU Taler: Usable, privacy-preserving payments for the Web}


% Not sure how to do authors with the
% IEEEtran template correctly ...
\author{Jeffrey Burdges,
Christian Grothoff,
Florian Dold,
Marcello Stanisci}
\institute{Inria Rennes - Bretagne Atlantique \\
\email{FIRSTNAME.LASTNAME@inria.fr}
}

\maketitle

\begin{abstract}
GNU Taler is a new electronic online payment system which provides
privacy for customers and accountability for merchants. It uses an
exchange service to issue digital coins, and is thus not subject to
the performance issues that plague Byzantine fault-tolerant
consensus-based solutions.

We first describe the interaction processes of various existing online
payment systems, and analytically compare the processes involved for
both customers and merchants.  The focus here is in particular on how
to make electronic payments work nicely with the current Web
architecture.

We then focus on the key advantages the Taler payment system offers,
in particular in the context of Web payments.  Web payment systems
must face the reality of constraints imposed by modern Web browser
security architecture, so the analysis includes considerations of how
Taler exploits the security infrastructure provided by the modern Web.
Here, we include in particular the perspective of merchants, as
existing systems have often struggled with securing payment information
at the merchant's side.

Finally, we discuss possible failure modes, highlighting how the
various payments systems can fail in practice.  We argue that the
Taler payment system offers a good combination of accountability,
privacy, security and usability.
\end{abstract}

\section{Introduction}

The Internet needs a secure, usable and privacy-preserving
micropayment system, which is not backed by a ``crypto currency''.
Payment systems involving state-issued currencies have been used for
centuries to facilitate transactions, and the involvement of the state
has been critical as state institutions can dampen fluctuations in the
value of the currency.~\cite{dominguez1993} Controlling money supply
is critical to ensure stable prices that facilitate
trade~\cite{quantitytheory1997volckart} instead of speculation~\cite{lewis_btc_is_junk}.

Internet transactions, such as sending an e-mail or reading a Web
site, tend to be of smaller commercial value than traditional
transactions involving the exchange of physical goods.  Consequently,
if we want to associate payments with these types of transactions, we
face the challenge of reducing the mental and technical overheads of
existing payment systems.  For example, executing a 3DS payment
process (Figure~\ref{fig:cc3ds}) takes too long, is way too complex
and way to expensive to be used for payment for typical Web articles.

Addressing this problem is urgent: ad-blocking technology is eroding
advertising as a substitute for micropayments~\cite{adblockblocks},
and the Big Data business model in which citizens pay with their
private information~\cite{ehrenberg2014data} in combination with the
deep state hastens our society's regression towards
post-democracy~\cite{rms2013democracy}.


The focus of this paper is GNU Taler, a new free software payment
system designed to meet certain key ethical considerations from a
social liberalism perspective. In Taler, the paying customer remains
anonymous while the merchant is easily identified and thus taxable.
Here, anonymous simply means that the payment system does not require
any personal information from the customer, and that different
transactions by the same customer are unlinkable.  Naturally, the
specifics of the transaction---such as delivery of goods to a shipping
address, or the use of non-anonymous IP-based communication---may
still leak information about the customer's identity.  {\em Taxable}
means that for any transaction the state can easily obtain the
necessary information about the identity of the merchant and the
respective contract in order to levy income, sales, or value-added
taxes. Taler uses blind signatures~\cite{chaum1983blind} to create
digital coins, and a new {\em refresh} protocol~\cite{talercrypto} to
allow giving change and refunds while maintaining unlinkability.

This paper will not consider the details of Taler's cryptographic
protocols\footnote{Details of the protocol are documented
at \url{https://api.taler.net/}} and instead focuses on how a modern
payment system using blind signatures could practically be integrated
with the modern Web.  This includes the challenge of hiding the
cryptography from the users.  We also illustrate how existing {\em
mental models} users have from existing widespread payment systems
apply naturally to Taler.

\newpage
Key contributions of this paper are:
\begin{itemize}
 \item A description of different payment systems using
  common terminology, which allows us to analytically compare
  these systems.
 \item An introduction to the Taler payment system from the
  perspective of users and merchants, with a focus on how
  to achieve secure payments in a way that is intuitive and
  has adequate fail-safes.
 \item Detailed considerations for how to adapt Taler to
  Web payments and the intricacies of securing payments
  within the constraints of modern browsers.
 \item A publicly available free software
  reference implementation of the proposed architecture.
\end{itemize}


\section{Existing payment workflows}

Before we look at the payment workflow for Taler, we sketch the
workflow of existing payment systems. This establishes a common
terminology which we will use to compare different payment processes.
We include interaction diagrams for some of the payment systems
based on resources from the W3c payment interest group.

\subsection{Cash}

Cash has traditionally circulated by being passed directly from buyers
to sellers with each seller then becoming a buyer. Thus, cash is
inherently a {\em peer-to-peer} payment system as participants all
appear in the both buyer and seller roles, just at different times.
However, this view is both simplified and
somewhat dated.

In today's practice, cash is frequently first {\em withdrawn} from
ATMs by customers who then {\em spend} it with merchants, who, in turn,
{\em deposit} the cash with their respective {\em bank}.  In this
flow, security is achieved as the customer {\em authenticates} to the
ATM using {\em credentials} provided by the customer's bank, and the
merchant specifies his {\em account} details when depositing the cash.
The customer does not authenticate when spending the cash, but the
merchant {\em validates} the authenticity of the {\em coins} or bills.
Coins and bills are {\em minted} by state-licensed institutions, such
as the US Mint.  These institutions also provide detailed instructions
for how to validate the authenticity of the coins or
bills~\cite{ezb2016ourmoney}, and are typically the final trusted
authority on the authenticity of coins and bills.

As customers need not authenticate, purchases remain {\em
  anonymous}, modulo the limited tracking enabled in theory
by serial numbers printed on bills~\cite{pets2004kuegler},
which make each bill {\em unique}.
% NOTE : Internet claims this does not happen, but no references.
% https://rocketatm.com/notice-_recorded_serial_numbers_atm_decal

Spending cash does not provide any inherent {\em proof of purchase}
for the customer. Instead, the merchant provides paper
{\em receipts}, which are generated independently and do not receive
the same anti-forgery protections that are in place for cash.

Against most attacks, customers and merchants {\em limit} their risks
to the amount of cash that they carry or accept at a given
time~\cite{Bankrate}.  Additionally, customers are advised to choose
the ATMs they use carefully, as malicious ATMs may attempt to {\em
  steal} their customer's credentials.  Authentication with an ATM can
involve a special ATM card, or, more commonly, the use of credit or
debit cards.  In all these cases, these physical security tokens are
issued by the customer's bank.


% \smallskip
\subsection{Credit and debit cards}

\begin{figure*}[h!]
\begin{center}
\includegraphics[width=0.95\textwidth]{figs/cc3ds.pdf}
\end{center}
\caption{Card payment processing with 3DS. (From: W3c Web Payments IG.)}
\label{fig:cc3ds}
\end{figure*}

Credit and debit card payments operate by the customer providing their
credentials to the merchant.  Many different authentication and
authorization schemes are in use in various combinations including
both secret information, which are usually PINs, and physical security
devices such as TANs~\cite{kobil2016tan}, cards with an EMV
chip~\cite{emv}, and the customer's mobile phone~\cite{mtan}.  A
typical modern Web payment process involves: {(1.)} the merchant
offering a secure communication channel using TLS based on the X.509
public key infrastructure;\footnote{Given numerous TLS protocol and
  implementation flaws as well as X.509 key management incidents in
  recent years~\cite{holz2014}, one cannot generally assume that the
  security provided by TLS is adequate under all circumstances.}
{(2.)} selecting a {\em payment method}; {(3.)} entering the credit
card details like the owner's name, card number, expiration time, CVV
code, and billing address; and {(4.)} (optionally) authorizing the
transaction via mobile TAN, or by authenticating against the
customer's bank, often on a Web site that is operated by the payment
processor and {\em not} the customer's bank.  Figure~\ref{fig:cc3ds}
% FIXME why "..on the Web today using.." and not just "..on the Web using.."
shows a typical card-based payment process on the Web today using the
UML style of the W3c payment interest group~\cite{pigs}.  Most of the details
are not relevant to this paper, but the diagram nicely illustrates the
complexity of the common 3-D secure (3DS) process.

Given this process, there is an inherent risk of information leakage
of customers' credentials.  {\em Fraud detection} systems attempt to detect
misuse of stolen credentials, and payment system providers handle
disputes between customers and merchants.  As a result, Web payment
processes may finish with {(5.)} the payment being rejected for a
variety of reasons, such as false positives in fraud detection or
the merchant not accepting the particular card issuer.

Traditionally, merchants bear most of the financial risk, and a key
``feature'' of the 3DS process compared to traditional card payments
is to shift dispute {\em liability} to the issuer of the card---who
may then try to shift it to the customer.
%
% online vs offline vs swipe vs chip vs NFC ???
% extended verification
%
Even in cases where the issuer or the merchant remain legally first in
line for liabilities, there are still risks customers incur from the
card dispute procedures, such as neither them nor the payment
processor noticing fraudulent transactions, or them noticing
fraudulent transactions past the {\em deadline} until which their bank
would refund them.  The customer also typically only has a
merchant-generated comment and the amount paid in his credit card
statement as a proof for the transaction.  Thus, the use of credit
cards online does not generate any cryptographically {\em verifiable}
electronic receipts for the customer, which theoretically enables
malicious merchants to later change the terms of the contract.

Beyond these primary issues, customers face secondary risks of
identity theft from the personal details exposed by the authentication
procedures. In this case, even if the financial damages are ultimately
covered by the bank, the customer always has to deal with the hassle
of {\em notifying} the bank in the first place.  As a result,
customers must remain wary about using their card, which limits their
online shopping~\cite[p. 50]{ibi2014}.
% There is nevertheless a trend towards customers preferring cards
% over cash even in face-to-face purchases \cite{} in part because
% cash theft can be violent even if the amounts as stake are smaller
% than with electronic theft.
%
%Merchants are exposed to these same risks because either laws and/or
%contracts with the payment system providers require them to take care
%in handling customer information.
% 40 million stolen at target.  fine?

%In cash payments, these risks do not exist because customers have
%complete control over the authentication procedure with their bank
%and the merchant is not involved.

% pressure to shop with big merchants
% merchants keep payment credentials on file
% Just a few merchants like Apple demand credentials up front
%  "this reversal of authentication vs shopping slows shopping"

% \smallskip
\subsection{Bitcoin}

\begin{figure*}[b!]
\includegraphics[width=\textwidth]{figs/bitcoin.pdf}
\caption{Bitcoin payment processing. (From: W3c Web Payments IG.)}
\label{fig:bitcoin}
\end{figure*}

Bitcoin operates by recording all transactions in a pseu\-do\-ny\-mous
public {\em ledger}.  A Bitcoin account is identified by its public
key, and the owner must know the corresponding private key to
authorize the transfer of Bitcoins from the account to other accounts.
The information in the global public ledger allows everybody to
compute the balances in all accounts and to see all transactions.
Transactions are denominated in a new currency labeled BTC, whose
valuation depends upon {\em speculation}, as there is no authority
that could act to stabilize exchange rates.  Adding transactions to
the global public ledger involves broadcasting the transaction data,
peers verifying and appending it to the public ledger, and some peer
in the network solving a moderately hard computational proof-of-work
puzzle, which is called {\em mining}.

The mining process is incentivised by a combination of transaction
fees and mining rewards. The latter process also provides primitive
accumulation~\cite{primitiveacc} for BTC.~\cite{nakamoto2008bitcoin}
Conversion to BTC from other currencies and vice versa incurs
substantial fees~\cite{BTCfees}.  There is now an extreme diversity of
Bitcoin-related payment technologies, but usability improvements are
usually achieved by adding a trusted third party, and there have been
many incidents where such parties then embezzled funds from their
customers~\cite{BTC:demise}.

The classical Bitcoin payment workflow consisted of entering payment
details into a peer-to-peer application.  The user would access their
Bitcoin {\em wallet} and instruct it to transfer a particular amount
from one of his accounts to the account of the merchant. He could
possibly include additional metadata to be associated with the
transfer and embedded into the global public ledger.  The wallet
application would then transmit the request to the Bitcoin
peer-to-peer overlay network.  The use of an external payment
application makes wallet-based payments significantly less
browser-friendly than ordinary card payments, as illustrated in
Figure~\ref{fig:bitcoin}. This has led to the development of
browser-based
wallets.\footnote{\url{https://github.com/frozeman/bitcoin-browser-wallet}}

Bitcoin payments are only confirmed when they appear in the public
ledger, which is updated at an average frequency of once every 10
minutes.  Even then, it is possible that a fork in the so-called block
chain may void durability of the transaction; as a result, it is
recommended to wait for 6 blocks (on average one hour) before
considering a transaction committed~\cite{nakamoto2008bitcoin}.  In
cases where merchants are unable to accommodate this delay, they incur
significant fraud risks.

Bitcoin is considered to be secure against an adversary who cannot
control around a fifth of the Bitcoin miner's computational
resources~\cite{BTC:Bahack13,BTC:MajorityNotEnough,BTC:Eclipse}.  % 21percent?
As a result, the network must expend considerable computational
resources to keep this value high.
According to~\cite{vice_btc_unsustainable}, a single Bitcoin transaction uses roughly enough
electricity to power 1.57 American households for a day.
These costs are largely hidden by speculation in BTC,
but that speculation itself contributes to BTC being
unstable.~\cite{jeffries_economists_v_btc,lehmann_btc_fools_gold,lewis_btc_is_junk}. % exacerbating risk

% fees hit you 2-3 times with currency conversions
% more on massive transaction fees from blockchain.info

Bitcoin's pseudononymity applies equally to both customers and
merchants, which makes Bitcoin amen\-able to tax evasion, money
laundering, and sales of contraband.  As a result, anonymity tools
like mixnets do not enjoy particularly widespread support in the
Bitcoin community where many participants seek to make the currency
appear more legitimate.  While Bitcoin's transactions are difficult to
track, there are several examples of Bitcoin's pseudononymity being
broken by investigators~\cite{BTC:Anonymity}.  This has resulted in
the development of new protocols with better privacy protections.

\begin{figure*}[t!]
\includegraphics[width=\textwidth]{figs/paypal.pdf}
\caption{Payment processing with Paypal. (From: W3c Web Payments IG.)}
\label{fig:paypal}
\end{figure*}

Zerocoin \cite{miers2013zerocoin} is such an extension of Bitcoin:
It affords protection against linkability of transactions,
but at non-trivial additional computational costs even for
spending coins.  This currently makes using Zerocoin unattractive
for payments, espcially with mobile devices.

Bitcoin also faces serious scalability limitations, with the classic
implementation being limited to at most 7 transactions per second
globally on
average.\footnote{\url{http://hackingdistributed.com/2016/08/04/byzcoin/}}
There are a variety of efforts to confront Bitcoin's scaling problems
with off-blockchain techniques, like side-chains. % \cite{???}
Amongst these, the Blind Off-chain Lightweight Transactions (BOLT)
proposal~\cite{BOLT} provides anonymity by routing off-blockchain
transfers through bank-like intermediaries.  Although interesting,
there are numerous seemingly fragile aspects of the BOLT protocol,
including aborts deanonymizing customers, intermetdiaries risking
unlimited losses, and theft if a party fails to post a refute message
in a timely fashion.

% In addition, the Bitcoin protocol does not interact well with
% conventional anonymity networks like Tor \cite{BTC:vsTor}

% dark pools?

% mining suck0rs,

% DDoS : wired article?

% economic ideology

\subsection{Walled garden payment systems}

Walled garden payment systems offer ease of use by processing payments
using a trusted payment service provider. Here, the customer
authenticates to the trusted service, and instructs the payment
provider to execute a transaction on his behalf
(see Figure~\ref{fig:paypal}).  In these payment systems, the provider
basically acts like a bank with accounts carrying balances for the
various users.  In contrast to traditional banking systems, both
customers and merchants are forced to have an account with the same
provider.  Each user must take the effort to establish his identity
with a service provider to create an account.  Merchants and customers
obtain the best interoperability in return for their account creation
efforts if they start with the biggest providers.  As a result, there
are a few dominating walled garden providers, with AliPay, ApplePay,
GooglePay, SamsungPay and PayPal being the current {\em oligopoly}.  In this
paper, we will use PayPal as a representative example for our discussion
of these payment systems.

As with card payment systems, these oligopolies are politically
dangerous~\cite{crinkey2011rundle}, and the lack of {\em competition}
can result in excessive profit taking that may require political
solutions~\cite{guardian2015cap} to the resulting {\em market
  failure}.  The use of non-standard {\em proprietary} interfaces to
the payment processing service of these providers serves to reinforce
the customer {\em lock-in}.


\section{Taler}

Taler is a free software cryptographic payment system. It has an open
protocol specification, which couples cash-like anonymity for customers
with low transaction costs, signed digital
receipts, and accurate income information to facilitate taxation and
anti-corruption efforts.

% FIXME: maybe say what blind signature are
Taler achieves anonymity for buyers using {\em blind
signatures}~\cite{chaum1983blind}.  Since their discovery thirty years
ago, cryptographers have viewed blind signatures as the optimal
cryptographic primitive for consumer-level transaction systems.
However, previous transaction systems based on blind signatures have
failed to see widespread adoption.  This paper details strategies for
hiding the cryptography from users and integrating smoothly with the
Web, thereby providing crucial steps to bridge the gap between good
cryptography and real-world deployment.

%\subsection{Design overview}

\begin{figure}[t!]
\centering
\begin{tikzpicture}
 \tikzstyle{def} = [node distance=3em and 5em, inner sep=1em, outer sep=.3em];
 \node (origin) at (0,0) {};
 \node (exchange) [def,above=of origin,draw]{Exchange};
 \node (customer) [def, draw, below left=of origin] {Customer};
 \node (merchant) [def, draw, below right=of origin] {Merchant};
 \node (auditor) [def, draw, above right=of origin]{Auditor};

 \tikzstyle{C} = [color=black, line width=1pt]

 \draw [<-, C] (customer) -- (exchange) node [midway, above, sloped] (TextNode) {withdraw coins};
 \draw [<-, C] (exchange) -- (merchant) node [midway, above, sloped] (TextNode) {deposit coins};
 \draw [<-, C] (merchant) -- (customer) node [midway, above, sloped] (TextNode) {spend coins};
 \draw [<-, C] (exchange) -- (auditor) node [midway, above, sloped] (TextNode) {verify};

\end{tikzpicture}
\caption{Taler system overview.}
\label{fig:system}
\end{figure}


There are four components of the Taler system (Figure~\ref{fig:system}):

\begin{figure*}[b!]
\includegraphics[width=0.9\textwidth]{figs/taler-withdraw.pdf}
\caption{Withdrawing coins with Taler.}
\label{fig:taler-withdraw}
\end{figure*}




\begin{itemize}
\item
{\em Customers} use a digital wallet to withdraw,
hold, and spend coins. Wallets also manage the customer's accounts
at the exchange, and keep receipts in a transaction history.  Wallets can be
realized as browser extensions, mobile Apps or even in custom
hardware.  If a user's digital wallet is compromised, the current
balance may be lost, just like with an ordinary wallet with cash.


\begin{figure}[t!]%[36]{R}{0.5\linewidth}
\subfloat[Bank login. (Simplified for demonstration.)]{
\includegraphics[width=0.45\linewidth]{figs/bank0a.png}
\label{subfig:login}} \hfill
\subfloat[Specify amount to withdraw. (Integrated bank support.)]{
\includegraphics[width=0.45\linewidth]{figs/bank1a.png}
\label{subfig:withdraw}} \\
\subfloat[Select exchange provider. (Generated by wallet.)]{
\includegraphics[width=0.45\linewidth]{figs/bank2a.png}
\label{subfig:exchange}} \hfill
\subfloat[Confirm transaction with a PIN. (Generated by bank.)]{
\includegraphics[width=0.45\linewidth]{figs/bank3a.png}
\label{subfig:pin}}
\caption{Required steps in a Taler withdrawal process.}
\label{fig:withdrawal}
\end{figure}



\item
{\em Exchanges}, which are run by financial service providers, enable
customers to withdraw anonymous digital coins,
and merchants to deposit digital coins, in exchange for
bank money.  Coins are signed by the exchange using
a blind signing scheme~\cite{chaum1983blind}.  Thus, only
the exchange can issue new coins, but coins cannot be traced back
to the customer that withdrew them.
Furthermore, exchanges learn the amounts withdrawn by customers
and deposited by merchants, but they do not learn the relationship
between customers and merchants.  Exchanges perform online detection
of double spending, thus providing merchants instant feedback
---including digital proofs---in case of misbehaving customers.

\item
{\em Merchants} provide goods or services in exchange for coins held
by customers' wallets.  Merchants deposit these coins at the
exchange for their regular currency value.  Merchants consist of a
{\em frontend}, which interacts with the customer's wallet, and a {\em
backend}, which interacts with the exchange.  Typical frontends include
Web shops and point-of-sale systems.

\item
{\em Auditors} verify that exchanges operate correctly to limit the risk
that customers and merchants incur by using a particular exchange.
Auditors are typically operated by or on behalf of financial regulatory authorities.
Depending on local legislation, auditors mandate that exchanges
have enough financial reserves before authorizing them to create a given
volume of signed digital coins in order to compensate for potential risks due to
operational failures (such as data loss or theft of private keys) of the exchange.
\end{itemize}


The specific protocol between wallet and merchant depends on the
setting.  For a traditional store, a near field communication (NFC)
protocol might be used between a point-of-sale system and a mobile
application.  In this paper, we focus on Web payments for an online
shop and explain how the actors in the Taler system interact by way of
a typical payment.

Initially, the customer installs the Taler wallet extension for
their browser.  This only needs to be done once per
browser. Naturally, this step may become superfluous if Taler is
integrated tightly with browsers in the future.  Regardless,
installing the extension involves one or two clicks to confirm the
operation. Restarting the browser is not required.


\begin{figure*}[t!]
\includegraphics[width=0.9\textwidth]{figs/taler-pay.pdf}
\caption{Payment processing with Taler.}
\label{fig:taler-pay}
\end{figure*}


\subsection{Withdrawing coins}

As with cash, the customer must first withdraw digital coins
(Figure~\ref{fig:taler-withdraw}).  For this, the customer must first
visit the bank's online portal.  Here, the bank will
typically require some form of authentication, the specific method
used depends on the bank (Figure~\ref{subfig:login}).

The next step depends on the level of Taler support offered by the bank:
\begin{itemize}
\item If the bank does not offer integration with Taler, the
  customer needs to use the menu of the wallet to create a {\em reserve}.
  The wallet will ask which amount in which {\em currency} (e.g. EUR
  or USD) the customer wants to withdraw, and allow the customer to
  select an exchange.  Given this information, the wallet will
  instruct the customer to transfer the respective amount to the
  account of the exchange.  The customer will have to enter a
  % FIXME it is not said that this crypto token is the reserve,
  % or, more abstractly, that "identify" this operation
  % CG: I don't think this has to be said.
  54-character reserve key, which includes 256 bits of entropy and an
  8-bit checksum into the transfer subject.  Naturally, the above is
  exactly the kind of interaction we would like to avoid for
  usability reason.
\item Hence, if the bank fully supports Taler, the
  customer has a form in the online banking portal in which they can specify
  an amount to withdraw (Figure~\ref{subfig:withdraw}).
  The bank then triggers an interaction with
  the wallet to allow the customer to select an exchange
  (Figure~\ref{subfig:exchange}).  Afterwards,
  the wallet instructs the bank about the details of the wire
  transfer.  The bank asks the customer to authorize the transfer, and
  finally confirms to the wallet that the transfer has been
  successfully initiated.
\end{itemize}

In either case, the wallet can then withdraw the coins from the
exchange, and does so in the background without further interaction
with the customer.

In principle, the exchange can be directly operated by the bank, in
which case the step where the customer selects an exchange could be
skipped by default.  However, we generally assume that the exchange is
a separate entity, as this yields the largest anonymity set for
customers, and may help create a competitive market.

\subsection{Spending coins}
% \tinyskip

\begin{figure}[t!]
\subfloat[Select article. (Generated by Web shop.)]{
\includegraphics[width=0.30\textwidth]{figs/cart.png}
\label{subfig:cart}} \hfill
\subfloat[Confirm payment. (Generated by Taler wallet.)]{
\includegraphics[width=0.30\textwidth]{figs/pay.png}
\label{subfig:payment}} \hfill
\subfloat[Receive article. (Generated by Web shop.)]{
\includegraphics[width=0.30\textwidth]{figs/fulfillment.png}
\label{subfig:fulfillment}}
\caption{Required steps in a Taler checkout process.}
\label{fig:shopping}
\end{figure}


At a later point in time, the customer can spend their coins by
visiting a merchant that accepts digital coins in the respective
currency issued by the respective exchange
(Figure~\ref{fig:taler-pay}).  Merchants are generally configured to
either accept a specific exchange, or to accept all the exchanges
audited by a particular auditor.  Merchants can also set a ceiling for
the maximum amount of transaction fees they are willing to cover.
Usually these details do not matter for the customer, as we expect
most merchants to allow most accredited exchange providers, and for
exchanges to operate with transaction fees acceptable to most
merchants.  If transaction fees are higher than what is covered by the
merchant, the customer may choose to cover them.

% \tinyskip
\lstdefinelanguage{JavaScript}{
  keywords={typeof, new, true, false, catch, function, return, null, catch, switch, var, if, in, while, do, else, case, break, for},
  keywordstyle=\color{blue}\bfseries,
  ndkeywords={class, export, boolean, throw, implements, import, this},
  ndkeywordstyle=\color{darkgray}\bfseries,
  identifierstyle=\color{black},
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  morecomment=[s]{/*}{*/},
  commentstyle=\color{purple}\ttfamily,
  stringstyle=\color{red}\ttfamily,
  morestring=[b]',
  morestring=[b]"
}

\begin{figure*}[h!]
 \lstset{language=JavaScript}
 \lstinputlisting{figs/taler-presence.js}
 \caption{Sample code to detect the Taler wallet. Allowing the
  Web site to detect the presence of the wallet leaks one bit
  of information about the user. The above logic also works
  if the wallet is installed while the page is open.}
  \label{listing:presence}
\end{figure*}


\begin{figure*}[h!]
 \lstset{language=JavaScript}
 \lstinputlisting{figs/taler-contract.js}
 \caption{Sample code to pass a contract to the Taler wallet.
          Here, the contract is fetched on-demand from the server.
          The {\tt taler\_pay()} function needs to be invoked
          when the user triggers the checkout.}
 \label{listing:contract}
\end{figure*}



As with traditional Web transactions, customers first select which
items they wish to buy.  This can involve building a traditional
shopping cart, or simply clicking on a particular link for the
respective article (Figure~\ref{subfig:cart}).  As with card payments,
the Web shop may then allow the customer to select a payment method,
including Taler.  Taler also allows the Web shop to detect
the presence of a Taler wallet (Figure~\ref{listing:presence}), so
that this step may be skipped (as it is in Figure~\ref{fig:shopping}).
If Taler was detected or selected, the Web shop sends a digitally
signed {\em contract proposal} to the wallet extension
(Figure~\ref{listing:contract}).  The wallet then presents the
contract to the user.  The format of the contract is in an extensible
JSON-based format defined by Taler and not HTML, as the
rendering of the contract is done by the wallet to ensure correct
visual representation.  In case that transaction fees need to be
covered by the customer, these are shown together with the rest of the
proposed contract.

If the customer approves the contract by clicking the ``Confirm
Payment'' button (Figure~\ref{subfig:payment}), their wallet signs the
contract with enough coins to cover the contract's cost, stores all of
the information in its local database, and redirects the browser to a
{\em fulfillment} URL provided by the merchant
(Figure~\ref{subfig:fulfillment}).
% FIXME: technically this is not entirely true, if you
% allow CORS ...

\subsection{Browser security}

The Taler wallet operates from a secure {\em background} context on
the client side.  From this background context the wallet allows the
user to securely accept the payment.  If the user accepts, the
resulting signed coins are transferred from the client to the
merchant's server.

By running in the background context, the wallet can perform the
cryptographic operations protected from the main process of the Web
site.  In particular, this architecture is secure against a merchant
that generates a page that looks like the wallet's payment page
(Figure~\ref{subfig:payment}), as such a page would still not have
access to the private keys of the coins that are exclusive to the
background context.


\subsection{Managing browser context}

% FIXME: this is where we probably want to revise quite a bit,
% including improving the description AND addressing the JS-less
% implementation.

The wallet cannot directly send the payment to the merchant, as the
page showing the contract is provided as a background page controlled
by the Web
Extension\footnote{\url{https://developer.chrome.com/extensions}} and
thus submitting coins from the background would not use the
HTTP-context that the Web shop's page requires for session management.
%
% FIXME: can we do better with the description?
Instead, the server-side of the fulfillment page usually first detects
that the contract has not yet been paid by checking the merchant's
local database and the HTTP session state.  {\bf (A)} If the state
indicates that this customer did not yet pay, the merchant generates a
page that shows the customer an indication that the payment is being
processed, and tries to interact with the wallet, requesting payment.
If the wallet is not detected after a few milliseconds, the page
transitions to the card payment process.  If the wallet is present,
the page requests payment from the wallet.  The wallet then determines
that the customer already confirmed the payment and immediately
transfers the coins to the JavaScript logic of the fulfillment page.
The fulfillment page then transfers the coins to the merchant usually
using an asynchronous HTTP POST request.  The request is controlled by
the merchant's JavaScript and not by the wallet. This ensures that the
merchant is in full control of the communication between the
merchant's server and the client-side scripts interacting with the
merchant's server.  The interactions with the wallet are thus purely
local interactions within the browser.  Upon receipt of the payment
information, the merchant confirms the payment with the exchange,
marks the payment as received, and notifies the JavaScript on the
client side of the result.

\begin{itemize}
\item If the payment fails on the network, the request is typically
 retried.  How often the client retries automatically before informing
 the user of the network issue is up to the merchant.  If the network
 % FIXME this (above) could be ambiguous because the network failure
 % can happen between the wallet and the merchant without the merchant
 % getting any (failing) request, so the merchant cannot count how much
 % times a payment has failed.
 % CG: Well, the merchant can do that counting *client-side*. The retries
 % will be controlled by the JS on the client side, which is provided
 % by the merchant initially.
 failure persists and is between the customer and the merchant, the wallet
 will try to recover control over the coins at the exchange by
 effectively spending the coins first using Taler's
 % FIXME(dold):  Do we properly introduce/discuss refreshing before?
 refresh protocol.  In this case, later deposits by the merchant
 will simply fail.  If the merchant already succeeded with the payment
 before the network failure, the customer can either retry the
 operation via the transaction history, or demand a refund (see
 below).  Handling these errors does not require the customer to give
 up his privacy.
\item If the payment fails due to the exchange
 claiming that the request was invalid, the diagnostics created by the
 exchange are passed to the wallet for inspection.  The wallet then
 decides whether the exchange was correct, and can then inform the
 user about a fraudulent or buggy exchange.  At this time, it allows
 the user to export the relevant cryptographic data to be used in
 court.  If the exchange's proofs were correct and coins were
 double-spent, the wallet informs the user that its database must have
 % FIXME what about giving an example of an out-of-date DB?  Put in
 % this way, it appears that Taler has viable ways to fail. In other
 % words, that it's normal to get such a failure. Instead, that failure
 % can occur due to coins not spent for *years* (or some other corner case),
 % that saves Taler from being "blamed"
 been out-of-date, updates the database and allows the user to retry
 the transaction.
\item If the payment succeeded, the JavaScript on the
 client side triggers effectively a ``reload'' of the fulfillment
 page, triggering case (B) detailed below.
\end{itemize}

{\bf (B)} Upon subsequent visits, the server detects that the payment
has already been processed and directly generates a fulfillment page
either confirming the payment, or---in the case of payments for a
digital article---transmits the digital artifact to the client.

\subsection{Bookmarks and deep links}

Taler's architecture also enables smooth use of payment
URIs on the contemporary Web.  In particular, we need to consider the
possibility that a user may bookmark the fulfillment page, or forward
a link to the fulfillment page to another user.

The given design supports {\em bookmarking}. If the merchant's
session management is still tracking the user when he returns via the
bookmark, the page generation detects that the user has already paid
and serves the final fulfillment page.  If the session has been lost,
the merchant will generate a fulfillment page asking for payment.  In
this case, the wallet will detect that it has already paid this
contract via a unique identifier in the contract, and will
automatically re-play the payment.  The merchant confirms that this
customer already paid, and generates the final fullfilment page that the
user has previously payed for (and seen).  All this still appears as
instantaneous to the user as it merely adds a few extra network round trips.

In contrast, if the customer sends a link to the fulfillment page to
another user, thereby possibly sharing a {\em deep link} into the
merchant's shop, the other customer's wallet will fail to find an
existing payment.  Consequently, the fulfillment page will not receive
the payment details and instead provide the user with the proposed
contract which contains a description of the item previously bought by
the other user. The recipient of the link can then decide to also
purchase the item.

The design, in particular POSTing the coins asyn\-chro\-nous\-ly from
JavaScript, also ensures that the user can freely navigate with
the back and forward buttons.  As all requests from all HTTP(S)
URIs ever seen by the user in the browser are fetched via HTTP
GET, they can be bookmarked, shared and safely reloaded.  For
caching, the merchant needs to ensure that the fulfillment
page generated in case (A) is not cached by the browser,
and in case (B) is not cached in the network.

As an aside, the different pages of the merchant have clear
delineations: the shopping pages conclude by proposing a contract, and
the fulfillment page begins with processing an accepted contract.  It is thus
possible for these pages to be managed by separate parties. The
control of the fulfillment page over the transmission of the payment
information minimizes the need for exceptions to handle cross-origin
resource sharing~\cite{rfc6454,cors}.

% FIXME: for the above: add figures with code samples!
% \smallskip

\subsection{Giving change and refunds} % FIXME: maybe leave out change entirely?

An important technical difference between Taler and previous
transaction systems based on blind signing is that Taler is able to
provide unlinkable change and refunds.  From the user's point of view,
obtaining change is automatic and handled by the wallet, i.e., if the
user has a single coin worth \EUR{5} and wants to spend \EUR{2}, the
wallet may request three \EUR{1} coins in change. Critically, the
change giving process is completely hidden from the user.
In fact, the graphical user
interface does not offer a way to inspect the denominations of the
various coins in the wallet, it only shows the total amount available
in each denomination.  Expanding the views to show details may show
the exchange providers and fee structure, but not the cryptographic
coins.  Consequently, the major cryptographic advances of Taler are
invisible to the user.

Taler's refresh protocol~\cite{talercrypto} also allows merchants to
give refunds to customers. For this, the merchant merely has to send a
signed message to the exchange confirming the refund, and notify the
customer's wallet that the respective transaction was refunded.  This
can even be done with anonymous customers, as refunds are given as
additional change to the owner of the coins that were originally spent
to pay for the refunded transaction.

Taler's refresh protocol ensures unlinkability for both change and
refunds, thereby assuring that the user has key conveniences of other
payment systems while maintaining the security standard of an
anonymous payment system.

% Alternative version:
%An important technical difference between Taler and previous
%transaction systems based on blind signing is that in Taler coins
%consist of a public-private key pair with the blind signature on the
%public key, so that coins themselves can be used to anonymously sign
%the purchase contract.
%
%An important technical difference between Taler and previous
%transaction systems based on blind signing is that Taler coins
%consist of a public-private key pair with the blind signature on the
%public key, so that coins themselves can be used to anonymously sign
%the purchase contract.
%
%In general, these coins exceed the cost of the contract, so the wallet
%may specify that only a fraction of a coin be spent, leaving some
%residual value on the partially spent coin as ``change''.
%
%As the merchant received only a signature of the coin, not private
%or symmetric key material, merchants can refund anonymous coins by
%asking the mint to restore a part of the coin's original value,
%and notifying the customer's wallet to refresh the coin.
%
%Spending Taler coins reveals nothing about a customer per se.
%Yet, any coins that hold value after being involved in a purchase or
%a refund operation cannot be considered anonymous anymore because a
%merchant, and possibly the exchange, has now seen them and could
%link them that previous transaction.  At best, these tainted coins
%are only pseudononymous, similar to Bitcoin accounts.
%
%To maintain anonymity, a Taler wallet automatically performs a
%{\em refresh} operation with the mint API to both replace tainted
%coins with new freshly anonymized coins and to exchange old coins
%before their denomination's expiration date.  We view refreshing
%partially spent coins as analogous to giving change in cash
%transactions, but refreshing refunded coins allows Taler merchants
%to refund anonymous customers.  Cash transactions have these options,
%but credit cards require customer identification for both operations.
% Is this true?
% no comment around randomizing the serial numbers on bills



\subsection{Usability for merchants}

Payment system security is not only a concern for
customers, but also for merchants.  For consumers, existing schemes
may be inconvenient and not provide privacy, but remembering to
protect a physical token (e.g. the card) and to guard a secret
(e.g. the PIN) is relatively straightforward.  In contrast, merchants
are expected to securely handle sensitive customer payment data on
networked computing devices.  However, securing computer systems---and
especially payment systems that represent substantial value---is a
hard challenge, as evidenced by large-scale break-ins with millions of
consumer card records being illicitly copied~\cite{target}.

Taler simplifies the deployment of a secure payment system for
merchants. The high-level cryptographic design provides the first
major advantage, as merchants never receive sensitive payment-related
customer information.  Thus, they do not have to be subjected to
costly audits or certified hardware, as is commonly the case for
processing card payments~\cite{pcidss}. In fact, the exchange does not
need to have a formal business relationship with the merchant at all.
According to our design, the exchange's contract with the state
regulator or auditor and the customers ought to state that it must
honor all (legal and valid) deposits it receives.  Hence, a merchant
supplying a valid deposit request should be able to enforce this in
court without a prior direct business agreement with the exchange.
This dramatically simplifies setting up a shop to the point that the
respective software only needs to be provided with the merchant's wire
transfer routing information to become operational.

Figure~\ref{listing:presence} shows how easy it is for a Web site to
detect the presence of a Taler wallet.  The payment process requires a
few cryptographic operations on the side of the merchant, such as
signing a contract and verifying the customer's and the exchange's
signatures.  The merchant also needs to store transaction data, in
particular so that the store can match sales with incoming wire
transfers from the exchange.  Taler simplifies this for merchants by
providing a generic payment processing {\em backend} for the Web
shops.

\begin{figure*}[t!]
\begin{center}
\begin{tikzpicture}[
  font=\sffamily,
  every matrix/.style={ampersand replacement=\&,column sep=2cm,row sep=2cm},
  source/.style={draw,thick,rounded corners,fill=green!20,inner sep=.3cm},
  process/.style={draw,thick,circle,fill=blue!20},
  sink/.style={source,fill=green!20},
  datastore/.style={draw,very thick,shape=datastore,inner sep=.3cm},
  dots/.style={gray,scale=2},
  to/.style={->,>=stealth',shorten >=1pt,semithick,font=\sffamily\footnotesize},
  every node/.style={align=center}]

  % Position the nodes using a matrix layout
  \matrix{
    \node[source] (wallet) {Wallet};
      \& \node[process] (browser) {Browser};
      \& \node[process] (shop) {Web shop};
      \& \node[sink] (backend) {Taler backend}; \\
  };

  % Draw the arrows between the nodes and label them.
  \draw[to] (browser) to[bend right=50] node[midway,above] {(4) signed contract}
      node[midway,below] {(signal)} (wallet);
  \draw[to] (wallet) to[bend right=50] node[midway,above] {(signal)}
      node[midway,below] {(5) signed coins} (browser);
  \draw[<->] (browser) -- node[midway,above] {(3,6) custom}
      node[midway,below] {(HTTP(S))} (shop);
  \draw[to] (shop) to[bend right=50] node[midway,above] {(HTTP(S))}
      node[midway,below] {(1) proposed contract / (7) signed coins} (backend);
  \draw[to] (backend) to[bend right=50] node[midway,above] {(2) signed contract / (8) confirmation}
      node[midway,below] {(HTTP(S))} (shop);
\end{tikzpicture}
\end{center}
 \caption{Both the customer's client and the merchant's server
          execute sensitive cryptographic operations in a
          secured background/backend that is protected against direct access.
          Interactions with the Taler exchange from the wallet background
          to withdraw coins and the Taler backend
          to deposit coins are not shown.
          Existing system security mechanisms
          are used to isolate the cryptographic components (boxes) from
          the complex rendering logic (circles), hence the communication
          is restricted to JavaScript signals or HTTP(S), respectively.}
 \label{fig:frobearch}
\end{figure*}

Figure~\ref{fig:frobearch} shows how the secure payment components
interact with the existing Web shop logic.  First, the Web shop
frontend is responsible for constructing the shopping cart.  For this,
the shop frontend generates the usual Web pages, which are transmitted
to the customer's browser.  Once the order has been constructed, the
shop frontend provides a {\em proposed contract} in JSON format to the
payment backend, which signs it and returns it to the frontend.  The
frontend then transfers the signed contract over the network, and
passes it to the wallet (sample code for this is shown in
Figure~\ref{listing:contract}).

Instead of adding any cryptographic logic to the merchant frontend,
the generic Taler merchant backend allows the implementor to delegate
coin handling to the payment backend, which validates the coins,
deposits them at the exchange, and finally validates and persists the
receipt from the exchange.  The merchant backend then communicates the
result of the transaction to the front\-end, which is then responsible
for executing the business logic to fulfill the order.  As a result of
this setup (Figure~\ref{fig:frobearch}), the cryptographic details
of the Taler protocol do not have to be re-implemented by each
merchant.  Instead, existing Web shops implemented in a multitude of
programming languages can straightforwardly add support for Taler by:
{\bf (0)} detecting in the browser that Taler is available; {\bf (1)}
upon request, generating a contract in JSON based on the shopping
cart; {\bf (2)} allowing the backend to sign the contract before
sending it to the client; {\bf (7)} passing coins received in payment
for a contract to the backend; and, {\bf (8)} executing fulfillment
business logic if the backend confirms the validity of the payment.

To setup a Taler backend, the merchant only needs to configure the
wire transfer routing details, such as the merchant's IBAN number.
Ideally, the merchant might also want to obtain a certificate for the
public key generated by the backend for improved authentication.
Otherwise, the customer's authentication of the Web shop simply
continues to rely upon HTTPS/X.509.


\section{Discussion}

We will now discuss how customer's may experience relevant operational
risks and failure modes of Taler, and relate them to failure modes
in existing systems.

% \smallskip
\subsection{Security risks}

In Taler, customers incur the risk of wallet loss or theft.  We
believe customers can manage this risk effectively because they manage
similar risks of losing cash in a physical wallet.  Unlike physical
wallets, Taler's wallet could be backed up to secure against loss of a
device.

Taler's contracts provide a degree of protection for customers,
because they are signed by the merchant and retained by the wallet.
While they mirror the paper receipts that customers receive in
physical stores, Taler's cryptographically signed contracts ought to
carry more weight in courts than typical paper receipts.

Point-of-sale systems providing printed receipts have been compromised
in the past by merchants to embezzle sales
taxes.~\cite{munichicecream} With Taler, the merchant still generates
a receipt for the customer, however, the record for the tax
authorities ultimately is anchored with the exchange's wire transfer
to the merchant.  Using the subject of the wire transfer, the state
can trace the payments and request the merchant provide
cryptographically matching contracts.  Thus, this type of tax
fraud is no longer possible, which is why we call Taler {\em
taxable}.  The mere threat of the state sometimes tracing transactions
and contracts back to the merchant also makes Taler unsuitable for
illegal activities.

The exchange operator is obviously crucial for risk management in
Taler, as the exchange operator holds the customer's funds in a
reserve in escrow until the respective deposit request arrives\footnote{As
previously said, this {\it deposit request} is aimed to translate {\it coins}
into real money and it's accomplished by a merchant after successfully
receiving coins by a wallet. In other words, it is the way merchants get
real money on their bank accounts}. To ensure that the exchange operator
does not embezzle these funds, Taler expects exchange operators to be
regularly audited by an independent auditor\footnote{Auditors are typically
run by financial regulatory bodies of states}.  The auditor can then verify that the incoming and outgoing
transactions, and the current balance of the exchange matches the logs
with the cryptographically secured transaction records.


% \smallskip
\subsection{Failure modes}

There are several failure modes the user of a Taler wallet may
encounter:

\begin{itemize}
\item
As Taler supports multiple exchanges, there is a chance that a
merchant might not support any exchange where the customer withdrew
coins from.  We mitigate this problem by allowing merchants to
support all exchanges audited by a particular auditor.  We believe
this a reasonable approach, because auditors and merchants must
operate with a particular legal and financial framework anyways.  We
note that a similar failure mode exists with credit cards where not
all merchants accept all issuers, which is often the case internationally.

\item
Restoring the Taler wallet state from previous backups, or copying the
wallet state to a new machine may cause honest users to attempt to
double spend coins, as the wallet does not know when coins are spent
between backup and recovery.  In this case, the exchange provides
cryptographic proof to the wallet that the coins were previously spent so the
wallet can verify that the exchange and the merchant are behaving honestly.

% FIXME FIXME: the following paragraph seems to describe a scenario where the
% wallet lost coins due to a restore from backup and then ask for refresh
% of lost coins: but how does the wallet know lost coins' public keys?
% CG: I don't understand the problem.
%
% Also in this paragraph: how can a payment end in-flight due to insufficient
% funds? If the payment has been started by the wallet, then no 'insufficient
% funds' may occur, otherwise the wallet would not have started the payment.
%
% CG: Yes, as I explain if the Wallet isn't aware that some coins were
% already spent (I make a backup, spend coins, restore backup, try to
% spend again), then this may happen.
%
% A way to fix that could be to better define 'internal invariants' ..
%
% CG: The internal invariant is exactly the one you fell upon:
% That the wallet knows which coins have been spent!
\item
There could be insufficient funds in the Taler wallet when making a
payment.  Usually the wallet can trivially check this before beginning
a transaction, but when double-spending is detected this may also
happen after the wallet already initiated the payment. This would
usually only happen if the wallet is unaware of a backup operation
voiding its internal invariants.  If a payment fails in-flight due to
insufficient funds, the wallet can use Taler's refresh protocol to
obtain a refund for those coins that were not actually double-spent,
and then explain to the user that the balance was inaccurate due to
inconsistencies, and insufficient for payment.
For the user, this failure mode appears equivalent to an insufficient
balance or credit line when paying with debit or credit cards.
\end{itemize}

\subsection{Comparison}

The different payment systems discussed make use of different security
technologies, which has an impact on their usability and the
assurances they can provide.  Except for Bitcoin, all payment systems
described involve an authentication step.
% FIXME alternative for the following sentence:
% With Taler, the authentication is implicit when withdrawing, since
% the user has to login into his bank's Web portal in the first place,
% and no further authentication is required during the whole payment
% experience.
% CG: Not exactly, as the authentication to the bank is still
% a very explicit authentication step. It's just more natural.
With Taler, the authentication itself is straightforward, as the customer is
at the time visiting the Web portal of the bank, and the authentication is
with the bank (Figure~\ref{fig:taler-withdraw}).  With PayPal, the
shop redirects the customer to the PayPal portal (step 5 in
Figure~\ref{fig:paypal}) after the user selects PayPal as the payment
method. The customer then provides the proof of payment to the
merchant.  Again, this is reasonably natural.  The 3DS workflow
(Figure~\ref{fig:cc3ds}) has to deal with a multitude of banks and
their different implementations, and not just a single provider.
Hence, the interactions are more complicated as the merchant needs to
additionally perform a lookup in the card scheme directory and verify
availability of the bank (steps 8 to 12).

The key difference between Taler and 3DS or PayPal is that
in Taler, authentication is done ahead of time.
After authenticating once to withdraw digital coins, the customer can
perform many micropayments without having to re-authenticate.  While
this simplifies the process of the individual purchase, it shifts the
mental overhead to an earlier time, and thus requires some planning,
especially given that the digital wallet is likely to only contain a
% FIXME line below: which 'funds'? Coins or real money? (If they are
% coins, recall that the wallet withdraw all the coins from a fresh
% reserve, so there is no 'fraction' of user's available funds; at
% least in the current implementation)
% I originally wrote ``wealth'' or ``net value'', but given that
% most customers are in debt today, that makes little sense, so
% I changed it to ``available funds'', but I meant _all_ the money
% he has.
small fraction of the customer's available funds.  As a result, Taler
improves usability if the customer is able to withdraw funds once to
then facilitate many micropayments while Taler is likely less usable
if for each transaction the customer first visits the bank to withdraw
funds.  This is deliberate, as Taler can only achieve reasonable
privacy for customers if they keep a balance in their wallet,
which breaks the association between withdrawal and deposit.
% FIXME the sentence above can be in contrast with how the exchange
% actually deposits funds to merchants, that is through 'aggregate
% deposits' that may add unpredictable delays (but that doesn't affect
% this article too much)
% CG: I think mentioning aggregation here would distract.

Bitcoin's payment process (Figure~\ref{fig:bitcoin}) resembles that of
Taler in one interesting point, namely that the wallet is given
details about the contract the user enters (steps 7 to 11).
However, in contrast to Taler, Bitcoin wallets are expected
to fetch the ``invoice'' from the merchant. In Taler, the browser
provides the Taler wallet with the proposed contract directly.  In
PayPal and 3DS, the user is left without a cryptographically secured
receipt.

Card-based payments (including 3DS) and PayPal also extensively rely
on TLS for security.  The customer is expected to verify that their
connections to the various Web sites are properly authenticated using
X.509, and to know that it is fine to provide their bank account
credentials to the legitimate
\url{verifiedbyvisa.com}.\footnote{The search query
``verifiedbyvisa.com legit'' is so common that, when we entered
``verifiedbyvisa'' into a search engine, it was the suggested
auto-completion.}  However, relying on users understanding their
browser's indications of the security context is inherently
problematic.  Taler addresses this challenge by ensuring that digital
coins are only accessible from wallet-generated pages. As such
there is no risk of Web pages mimicking the look of the respective
page, as they would still not obtain access to the digital coins.

Once the payment process nears its completion, merchants need to have
some assurance that the contract is valid.  In Taler, merchants
obtain a non-repudiable confirmation of the payment.  With 3DS and
PayPal, the confirmation may be disputed later (e.g. in case of
fraud), or accounts may be frozen arbitrarily~\cite{diaspora2011}.
Payments in cash require the merchant to assume the risk of receiving
counterfeit money.
% FIXME what about (for the following sentence): merchants should care
% about maintaining change and depositing the money earned
% CG: No, it's not optional, ``should'' doesn't come into the equation
% here. It's a mandatory business expense.
Furthermore, merchants have the cost of maintaining change and depositing
the money earned.  With Bitcoin, there is no definitive time until a
payment can be said to be confirmed (step 19, Figure~\ref{fig:bitcoin}),
leaving merchants in a bit of a tricky situation.

Addressing the scalability problems of Bitcoin in the style of BOLT
introduces semi-centralized intermediaries, similar to Taler's use of
exchanges.  We expect a Taler exchange operating in BTC to offer
stronger security to all parties and stronger anonymity to customers,
as well as being vastly cheaper to operate and more compatible with
existing financial regulations.


\section{Future work}

This paper has focused on how Taler would work for Web payments.
However, the underlying cryptography should work just as well for
other domains.  In particular, we plan to adapt Taler for NFC and
peer-to-peer payments in the future.

\subsection{NFC payments}

We have so far focused on how Taler could be used for Web payments;
however, Taler can in theory also be used over other protocols, such
as near field communication (NFC).  Here, the user would hold his
NFC-enabled device running a wallet application near an NFC terminal
to obtain the contract and confirm the payment on his device, which
would then transfer the coins and obtain a receipt.  A native NFC
application would be less restricted in its interaction with the
point-of-sale system compared to a browser extension, and the security
of the communication channel is also comparable. Thus, running
Taler over NFC is largely a simplification of the existing process.

In particular, there are no significant new concerns arising from an
NFC device possibly losing contact with a point-of-sale system, as for
Web payments, Taler already only employs idempotent operations to
ensure coins are never lost, and that transactions adequately persist
even in the case of network or endpoint failures.  As a result, the
NFC system can simply use the same transaction models to replay
transmissions once contact with the point-of-sale system is
reestablished.


\subsection{Peer-to-peer payments}

Peer-to-peer payments are in principle possible with Taler as well;
however, we need to distinguish two types of peer-to-peer payments.

First, there is the {\em sharing} of coins among entities that
mutually trust each other, for example within a family.  Here, all
users have to do is to export and import electronic coins over a
secure channel, such as encrypted e-mail or via NFC.  For NFC, the
situation is straightforward because we presumably do not have to worry
about man-in-the-middle attacks, while secure communication over the
Internet is likely to remain a significant usability challenge.  We
note that sharing coins by copying the respective private keys across
devices is not taxable: the exchange is not involved, no contracts are
signed, and no records for taxation are created.  However, the
involved entities must trust each other, because after copying a private
key both parties could spend the coins, but only the first transaction
will succeed.  Given this crucial limitation
inherent in sharing keys, we consider it ethically acceptable that
sharing is not taxable.

Second, there is the {\em transactional} mutually exclusive transfer
of ownership.  This requires the receiving party to have a {\em
reserve} with an exchange, and the exchanges would have to support
wire transfers among them.  If taxability is desired, the {\em
reserve} would still need to be tied to a particular citizen's
identity for tax purposes, and thus require similar identification
protocols as commonly used for establishing a bank account.  As such, in
terms of institutions, one would expect this setup to be offered most
easily by traditional banks.

In terms of usability, transactional
transfers are just as easy as sharing when performed over NFC, but
more user friendly when performed over the Internet as they do not
require a secure communication channel: the Taler protocol is by
design still safe to use even if the communication is made over an
unencrypted channel. Only the authenticity of the proposed contract
needs to be assured.



\section{Conclusion}

Customers and merchants should be able to easily adapt their existing
mental models and technical infrastructure to Taler.  In contrast,
Bitcoin's payment models fail to match common expectations be it in
terms of performance, durability, security, or privacy.  Minimizing
the need to authenticate to pay fundamentally improves security
and usability.

% FIXME (following paragraph): it's never said that the Taler wallet
% keeps any 'receipt' of transaction -- maybe here we want to say 'contract'
% instead of 'receipt'?
% CG: I'd say on the customer side, the signed contract is a receipt.
% That should be intuitive.
We expect that electronic wallets that automatically collect digitally
signed receipts for transactions will become commonplace.  A key
question for the future is thus whether this data collection will be
done on behalf of the citizens and under their control, or on behalf
of the Reich of big data corporations.

We encourage readers to try our prototype for Taler
at \url{https://demo.taler.net/}, and to ponder why the billion dollar
e-commerce industry still relies mostly on TLS for security given
that usability, security and privacy can clearly {\em all} be improved
simultaneously using a modern payment protocol.

% These APIs are all RESTful in the modern sense because that greatly
% simplify integrating Taler with web shops and browsers.

\section*{Acknowledgements}

This work benefits from the financial support of the Brittany Region
(ARED 9178) and a grant from the Renewable Freedom Foundation.  We
thank Neal Walfield for comments on an earlier draft of the paper.

\bibliographystyle{splncs03}
\bibliography{ui,btc,taler,rfc}



\end{document}







% \smallskip
\subsection{Anonymity}

We strongly recommend that the user use Tor Browser to protect their
% FIXME wasn't the use of Tor discouraged to login into personal things?
IP address, both initially when withdrawing coins and later during
purchases.

There are lingering risks that anonymous coins can be correlated to
customers using additional information.

After withdrawing coins, customer should usually wait before spending
them, as spending them immediately ....
% wallet determines coin denominations







Wallet provides isolation
  Near copy from EXIST proposal?
- Limits user risk
- Nearly eliminates risk for merchant and exchange
  - lower transaction fees
- Reserves simplify things

Denomination choice
- Anonymity refresh protocol
- Withdraw automates like ATMs

Browser extension
- RESTful vs Bitcoin, OpenCoin, etc.
  - Retrying RESTful transactions always works
- minimizing dialog
- see & pay ??
- TBB integration
  - Needed anyways
- Other browser integration?
  - Is it wise?  Ok if not worried about anonymity  Taler is still better
  - Is tor2web worse?
- W3C

Autopay?  pat payment recognition?
- dangerous?
- high charges
- good for funny money

NFC













% \smallskip
\subsection{Risks}

A Taler exchange's need not face significant financial risks beyond
the risk of losing a denomination signing key.  Exchanges can limit that
risk by carefully tracking how much they issue in each denomination.
Taler merchant's risks are limited primarily by depositing coins
quickly and stating contracts accurately.