Mastercard Online

[John Young <jya@pipeline.com>]

   The New York Times 
   January 10, 1995, D2. 
 
 
   Mastercard to Develop On-Line Standard 
 
 
   By Saul Hansell 
 
   Joining a stampede of companies that hope to profit from 
   shopping on computer networks, Mastercard International 
   said yesterday that it would develop standards for its 
   cards to be used on the Internet. 
 
   Mastercard, an association of banks that is based in New 
   York, said it would use the technology developed by the 
   Netscape Communications Corporation of Mountain View, 
   Calif., a specialist in software for the Internet, the 
   global web of computer networks. 
 
   The Internet allows a company to make information on its 
   products available to millions of computer users around the 
   world. Increasingly, companies would like to consummate 
   sales using the Internet as well, but the open nature of 
   the network may allow credit card numbers to be stolen. 
 
   "The problem with the Internet is there is no privacy and 
   no security," said Edward J. Hogan, a senior vice president 
   of Mastercard. 
 
   The Mastercard plan is one of several attempts to translate 
   credit card numbers into a code before they are sent to 
   merchants selling goods over the network and then on to the 
   credit card companies. 
 
   Visa International has said it will develop its own 
   encryption system with the Microsoft Corporation. Microsoft 
   has hinted that it may charge a fee for every transaction 
   using its system, though the details have not been 
   announced. Netscape and Mastercard say their transaction 
   standards will be openly published and free for other 
   companies to use. 
 
   Netscape's main business is selling software that allows 
   companies to publish information on the Internet. To expand 
   the market, it gives away or sells for a very small fee 
   software that allows people to view nformation on the 
   Internet. 
 
   The company has already included a component to encrypt 
   credit card numbers with its current version. The first 
   merchants to allow purchases using that feature will be 
   part of an electronic shopping service to be introduced by 
   the MCI Communications Corporation later this month. 
 
   The initial Netscape credit card system allows customers to 
   use any brand of card. It did not involve the cooperation 
   of credit card companies, but rather used existing rules 
   that related to mail and telephone card orders. 
 
   The agreement with Mastercard will for the first time allow 
   purchases on the Internet with automatic teller machine or 
   debit cards, which withdraw money from checking accounts. 
 
   Mastercard will likely agree to absorb the losses from 
   fraud on the system. Under the existing Netscape system, 
   merchants selling goods are liable if fraudulent card 
   numbers are used, as are companies that sell goods by mail 
   or telephone. 
 
   The debit card access and the fraud guarantee are expected 
   to be available by the fall. 
 
   End