MASTERCARD TO TEST IBM DIGITAL WALLET;

[amp@pobox.com]

Date: Mon, 28 Oct 1996 09:35:00 -0500 (EST) 

MASTERCARD TO TEST IBM DIGITAL WALLET;
Software Will Open Market to Electronic Commerce

     MasterCard International Inc. this week expects to begin testing
its digital wallet developed by IBM Corp.  and will offer some of its
customers incentives to use the product.
     The move is expected to advance widespread acceptance of
electronic commerce and increase opportunities for Internet service
providers (ISPs) and software developers looking to capitalize on
what analysts say will be a huge market.
     The digital wallet, containing a digital ID card, should be
available to the mass market in the second half to end of 1997, said
Steve Mott, senior vice president of electronic commerce/new ventures
at MasterCard.
     After the IBM test, MasterCard will work with another set of
vendors and continue testing through the first half of '97, he said.
The other vendors probably will be CyberCash Inc., Netscape
Communications Corp., VeriFone Inc., Fujitsu, and Open Market, Mott
said.
     In the first quarter of '97, testing will involve five to 10
merchants and 1,000 card holders, he said.
     The IBM digital wallet, part of IBM's CommercePOINT family of
products, is used with Netscape Navigator and incorporates the SET
(Secure Electronic Transaction) protocol.
     Mott said MasterCard wants to seed the market with the IBM
product. "They're going to be our guinea pigs," he said.
     In the next few weeks, Mott said, MasterCard will announce
agreements with U.S. banks, but declined to name them.
     Next month, MasterCard expects to release from its Web site the
SET Reference Implementation Code, which will show developers how to
build SET applications, he said. The implementation code, being
developed by Terisa Systems Inc., offers "an unambiguous application
of the code" to be used to build interoperable software, he said.
     SET will make credit card transactions more secure because it
provides confidentiality for payment information, insures integrity
for transmitted data and provides authentication.
     Ken Mohr, product marketing manager at Terisa Systems, said Visa
International Inc. and MasterCard are reviewing the first beta
version of the implementation code. The company is scheduled to
deliver the second beta version next month, he said.
     Terisa Systems hopes the second beta will be the last version
and that Visa and MasterCard will accept the implementation code in
the first quarter of '97, Mohr said.

Visa Testing in Europe

     Visa also is moving forward with efforts to implement SET. Last
week, it announced a pilot launch in Europe involving 38 Visa members
in 16 countries. A number of banks will be able to offer secure
electronic commerce within six months; full implementation of the
project will begin in the first quarter of 1998.
     "Electronic commerce will be global in nature, so it is
important we begin work on an international basis," Visa EU President
Hans van der Velde said in a prepared release.
     "SET is now robust enough to go to the single worldwide market
offered by the Internet and other networks," he said.
     Some vendors already have SET-ready products available. VeriFone
has its Internet Payment Solution that includes vPOS, vGATE and
vWallet to cover the three parts of an electronic transaction.
     Wells Fargo Bank is one of VeriFone's initial customers. The
bank is implementing vPOS and expects to launch the service to
merchants in mid-November, spokeswoman Janet Otsuki said.
     CyberCash has a Secure Internet Payment System with a CyberCash
Wallet, Secure Merchant Payment System and CyberCash Gateway Servers.
The system has been operational since April 1995.
     GTE has CyberTrust, which provides digital certificates that are
issued over the Internet to consumers with credit cards, Internet
merchants and institutions processing transactions.
     Terisa Systems is working on an as-yet-unnamed product to
implement SET into its SecureWeb Toolkit. A beta version will be
ready by year's end, Mohr said.
     Michael Goulde, an analyst with the Patricia Seybold Group,
predicted that the SET protocol will greatly lessen the perceived
risk of doing retail business over the Internet in 12 to 18 months.
     But, in a report written this month, he cautioned that there are
barriers to electronic commerce. "Consumers won't install the
software until it is seen as providing benefits, there won't be
benefits until merchants support SET, and merchants won't support SET
until consumers have the software.
     "This vicious cycle probably won't be broken unless Microsoft
provides SET-compliant software as an integral part of Windows in
1997," Goulde said.
     James Miller, a research scientist at the World Wide Web
Consortium (W3C), predicted SET won't be widely available until
Christmas '97. He said consumers will take to electronic commerce
when one or two large companies figure out that security isn't such a
huge issue for consumers and go ahead with electronic commerce.
     In the meantime, W3C and CommerceNet have completed
specifications for the Joint Electronic Payments Initiative (JEPI).
JEPI provides a universal payment platform to allow merchants and
consumers to do business over the Internet using different forms of
payment.
     The SET protocol was scheduled to be included in the first phase
of JEPI, but work on SET was not completed in time, said Daniel
Dardailler, JEPI project manager. A second phase should begin by the
end of the year, and several companies, including VeriFone, have
agreed to participate, he said.
     The second phase, which is not publicly available, will set out
to validate the Universal Payment Preamble (UPP) logic put forward in
the first phase and add more payment systems, such as SET, and
micropayments, such as CyberCoin, Ecash and Digital Millicent,
Dardailler said.
     JEPI is a standard mechanism for Web clients and servers to
negotiate payment instrument, protocol and transport between one
another. It has two parts -- Protocol Extensions Protocol (PEP), an
extension layer that sits on top of http, and UPP, which identifies
the appropriate payment methodology. More information is available at
(http://www.w3.org/pub/WWW/Payments).
     For more information, contact MasterCard at (914) 249-4606, IBM
at (914) 766-1162 or Terisa Systems at (415) 919-1776.


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------------------------
Name: amp
E-mail: amp@pobox.com
Date: 10/28/96
Time: 23:03:26
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