IEEE Consumer Electronics Magazine - March/April 2020 - 27

& MOBILE

PAYMENT (MP) uses personal smart
devices such as smart phones as the tool to
make payment and receive money, which is
especially attractive in underdeveloped areas
where the majority of people only have access
to the Internet through their phones.
Most existing MP systems depend on a centralized party, e.g., banks and carriers, face the
following challenges.

1) One major obstacle that prevents people in
these areas from fully enjoying the benefits
of MP is the low penetration rate of financial
service. According to the World Bank, 59% of
adults in developing economies do not have
an account at a financial institution.
2) For those who can obtain a bank account, it
is not cheap to use the bank for transactions
processing. Credit companies and banks
charge fees for payment processing. The
electronic payments acquiring/processing
revenue for the U.S. market itself is expected
to achieve $ 14.3 billion.1
3) Using bank-based MP also exposes the
consumers to the potential risk of inflation,
which is especially serious in underdeveloped and developing countries.
The emergence of cryptocurrency using
blockchain provides an alternative way to support MP. A blockchain is a decentralized ledger
that is maintained by all participants, which can
be used to store all transactions information of
the cryptocurrency to prevent double spending
and track ownership. Bitcoin is the first successful cryptocurrency built on top of blockchain,
which was proposed by Nakamoto in 2008.9
Most blockchain-based cryptocurrency systems
have three major benefits: openness, predictable
supply, and lower transaction cost.
Considering the wide adoption of mobile
devices and the advantages of blockchain-based
cryptocurrency, the combination of these two
technologies provides a unique opportunity to
improve the everyday life for people in underdeveloped areas. However, several technique challenges need to be addressed to support
cryptocurrency MP. For example, smart devices
usually have limited storage capacity and cannot
save the whole blockchain, and most public

March/April 2020

blockchains are built using PoW and have relatively high latency. Storage and communication
cost can be reduced using cryptography accumulator14 or trusted full nodes, and we focus on
the reduction of latency in this article.

Our Contributions
In this article, we consider two different scenarios of MP with blockchain-based cryptocurrency: first, the merchant has a traditional bank
account and the bank can facilitate the payment
process; second, neither the payer nor the merchant has a traditional bank account and they
have to work together to finish the payment. We
propose two protocols that can be used to handle MP for these scenarios that allow the user to
better control the payment and are more flexible
for daily use. We also design a framework to help
the financial institution to meet the KYC (know
your customer)/AML (antimoney laundering)
compliance requirements when it is involved in
cryptocurrency payment processing.

BACKGROUND AND CHALLENGES
In this section, we briefly introduce background information that is related to MP, blockchain, and cryptocurrency.

Mobile Payment
MPs cover many types of transactions which
fall into two categories: transactions with a
remote merchant or proximity payments at the
merchant site. There are different ways to implement MP, such as NFC-based MP, using QR code
for payment, and audio signal based approach.
There are many commercial MP products on the
market, including Alipay, Square, Google Wallet,
and Apple Pay. These products may use different
communication channels to finish the payment
but they also share some similarities: first, the
mobile device stores credentials like checking
account and credit card information; second,
the real payment is processed by the bank.
Cryptocurrency Systems
Cryptocurrency, or electronic
developed at least at early 90s.
requirement of all cryptocurrency
prevention of double-spending, i.e.,

cash, was
The basic
systems is
one cannot

IEEE Consumer Electronics Magazine - March/April 2020

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