A secure SMS protocol for implementing digital cash system

We propose a digital cash system suitable for low value transactions and a secure SMS protocol based on EC-MQV key agreement protocol and AES encryption algorithm to operate the proposed digital cash system. The key security aspects of the protocol are resilience to SIM cloning, SIM swapping attacks and possible message tampering using a GSM ghost base station. It further provides for 2 factor authentication by using IMSI number as proof of “what you have?” and a user provided password as proof of “what you know?”. The total cost of executing a financial transaction is 2 SMS messages. We use the proposed protocol to implement a digital cash system. We strongly believe such a low cost secure digital cash system can be a boon to extend financial services to people who are left out of regular banking services due to the high cost of providing the same through existing banking and payment solutions. The low communication cost associated with each financial transaction makes it financially viable for handling low value transactions. The proposed protocol was implemented for both android and J2ME mobile phones with an easy to use interface wherein any individual with number literacy can operate. This makes it easy to deploy in less developed economies where literacy is often a challenge.