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1. It loads the S file and selects a nonce (n) i.e. n = S[0]
2. It invalidates the nonce by deleting it from the S file (prevents replay attacks)
3. It creates a message by concatenating the amount and the nonce i.e. m = v || n
4. It creates an enciphered text (e1) i.e. e1 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
5. It converts the enciphered text to base 10 and sends it (via SMS) to the user's mobile phone
6. It deducts the amount from the user's server-side balance

1. It loads the S file and selects a nonce (n) i.e. n = S[i] where i = 0
2. It creates a message by concatenating the amount and the nonce i.e. m = v || n
3. It creates an enciphered text (e2) i.e. e2 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
4. If e1 != e2, it repeats steps (1)-(3) whilst incrementing (i) up to 20 times (to allow for drift). If a match does not exist, if outputs an error message and quits
5. If e1 == e2, it accepts the value as a credit to the user's client-side balance
6. Finally, it invalidates all the nonces tried in step (1) by deleting them from the S file

1. It loads the S file and selects a nonce (n) i.e. n = S[0]
2. It invalidates the nonce by deleting it from the S file (prevents replay attacks)
3. It creates a message by concatenating the amount and the nonce i.e. m = v || n
4. It creates an enciphered text (e1) i.e. e1 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
5. It converts the enciphered text to base 10 and sends it (via SMS) to the user's mobile phone
6. It deducts the amount from the user's server-side balance

1. It loads the S file and selects a nonce (n) i.e. n = S[i] where i = 0
2. It creates a message by concatenating the amount and the nonce i.e. m = v || n
3. It creates an enciphered text (e2) i.e. e2 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
4. If e1 != e2, it repeats steps (1)-(3) whilst incrementing (i) up to 20 times (to allow for drift). If a match does not exist, if outputs an error message and quits
5. If e1 == e2, it accepts the value as a credit to the user's client-side balance
6. Finally, it invalidates all the nonces tried in step (1) by deleting them from the S file

It must have been a late night but I seem to have come back to my senses and jettisoned the poorly thought out, home-made crypto idea.

1. Generate a unique shared symmetric key (K)
2. Generate a TAN (Transaction Authentication Number) File (S)
3. Copy K and S into the server's database and the device's secure element

1. It loads the S file and selects a nonce (n) i.e. n = S[0]
2. It invalidates the nonce by deleting it from the S file (prevents replay attacks)
3. It creates a message by concatenating the amount and the nonce i.e. m = v || n
4. It creates an enciphered text (e1) i.e. e1 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
5. It converts the encipher to base 10 sends it to the linked mobile phone
6. It deducts the amount from the server-side balance

1. It loads the S file and selects a nonce (n) i.e. n = S[i] where i = 0
2. It creates a message by concatenating the amount and the nonce i.e. m = v || n
3. It creates an enciphered text (e2) i.e. e2 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
4. If e1 != e2, it repeats steps (1)-(3) whilst incrementing (i) up to 20 times (to allow for drift). If a match does not exist, if outputs an error message and quits
5. If e1 == e2, it accepts the value as a credit to the client-side balance
6. Finally, it invalidates all the nonces tried in step (1) by deleting them from the S file

It must have been a long day and a late night and after reading all the great responses (i.e. sanity checks) below, I seem to have come back to my senses and jettisoned the poorly thought out, home-made crypto idea. :)

1. Generate a unique shared symmetric key (K)
2. Generate a TAN (Transaction Authentication Number) File (S)
3. Copy K and S into the server's database and the smart card's secure element

1. It loads the S file and selects a nonce (n) i.e. n = S[0]
2. It invalidates the nonce by deleting it from the S file (prevents replay attacks)
3. It creates a message by concatenating the amount and the nonce i.e. m = v || n
4. It creates an enciphered text (e1) i.e. e1 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
5. It converts the enciphered text to base 10 and sends it (via SMS) to the user's mobile phone
6. It deducts the amount from the user's server-side balance

1. It loads the S file and selects a nonce (n) i.e. n = S[i] where i = 0
2. It creates a message by concatenating the amount and the nonce i.e. m = v || n
3. It creates an enciphered text (e2) i.e. e2 = H(K,m) where H = "HMAC-SHA-1" or "CBC-MAC-Y" i.e ISO/IEC 9791-1 Algorithm 3
4. If e1 != e2, it repeats steps (1)-(3) whilst incrementing (i) up to 20 times (to allow for drift). If a match does not exist, if outputs an error message and quits
5. If e1 == e2, it accepts the value as a credit to the user's client-side balance
6. Finally, it invalidates all the nonces tried in step (1) by deleting them from the S file

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- - - EDIT (24-Apr-2013 14:45pm GMT) - - -