Let us assume that a customer has an account with a bank.
The registration procedure has two steps: a registration with a bank and
a registration with a merchant.
First, the customer
generates a random number 
, chooses a secret p, and calculates
a hash C := H(n,b) of her name n and date of birth b.
If the combination
of n and b is not sufficient to identify a customer from others, one may
add more detailed information.
The customer writes , B, and C on a diskette
for private use, say 
, and writes C and 
on a
different diskette for registration, say 
. Then she sends
to the bank B with her account number a, e.g. by registered mail or
personal delivery to a branch of the bank.
When the diskette is received, the bank makes a link between the customer's
account and 
, and sends an acknowledgement with a
random 
back to the customer. The customer stores on her
private diskette . This is the registration procedure with the bank.
The registration procedure with the merchant is as follows:
The customer generates a random number 
, stores it on her private
diskette , and then sends the merchant a diskette 
containing C and 
in the same way as
in the above procedure.
Then the merchant registers the customer's information on his database, and
sends an acknowledgement with a unique merchant secret 
back to the
customer. is a uniquely issued value for each customer, and
will be used for verification of the merchant in transactions by a bank.
The customer stores on , calculates 
,
and sends 
with the merchant name M to the bank.
Then the bank constructs 
with and , and
adds and M to the customer's information.
In this procedure, since we have not assumed secure communication paths between
the customer and the merchant/bank, we used physical transfer of shared secrets
by diskette. If a secure path is available such as
SSL/TLS [DA97] or SSH [Ylö96],
we can replace diskette transfer by such a path.
As a further alternative, the customer can send 
to the merchant in a
physical transaction between her smartcard and the merchant terminal.
Thus the customer can establish a relationship with a merchant either when she is on the merchant's premises, or when she has a secure link to the merchant, or when the bank is on-line. At the same time, the customer could establish a payment limit for the merchant (though we omit the details).
In some cases like closed user group services, the merchant needs to authenticate the customer's eligibility for the service. During the registration procedure, the merchant can request appropriate information such as a membership, age, etc., for the verification and provide classified services in the transaction procedure up to customers' eligibility.
