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Firms work together on payment standard

A consortium of computer and credit-card companies on Monday will unveil a standard for e-wallets, which could ease the process of paying for online purchases.

A consortium of blue-chip credit-card and computer companies Monday is slated to announce the latest industrywide effort to make paying for online purchases easier for consumers, CNET News.com has learned.

Sources close to the initiative identify Visa U.S.A., MasterCard, American Express, Microsoft, IBM, and Sun Microsystems as participants, along with at least nine Web merchants, including Nordstrom, Dell Computer, online software store Beyond.com, video store Reel.com, and Omaha Steaks. Additional partners are still being added.

The companies are expected to unveil a plan to create a standard for electronic wallets--software that contains credit card numbers, e-cash, other forms of payment, and digital certificates. Digital certificates are electronic credentials that vouch for the identity of a user.

Normally e-wallets reside on the consumer's PC, but so-called server wallets allow buyers to keep that data stored on their bank's server.

Visa, which is spearheading the initiative, declined to comment on Monday's announcement. However, Steve Ryan, Visa's senior vice president of emerging technologies, said the e-wallet effort is the first in a series of e-commerce initiatives by firms in the alliance.

This is not industry's first stab at boosting Internet commerce, and earlier efforts have not all succeeded. This time, however, the effort involves three key constituencies--banks, computer suppliers, and Web retailers--that each could gain financially if the effort succeeds. However, it remains to be seen whether the e-wallet specification, despite early backing, will be widely embraced.

For merchants, a single e-wallet protocol will enable them to set up a standard way to receive payments, rather than customizing that process for each e-wallet vendor.

For consumers, it's designed to simplify the process of filling out forms online to make purchases. They can fill out the information once in their wallet, then have it transferred automatically to a merchant when they make a purchase.

According to Jupiter Communications, 27 percent of consumers have at some time abandoned items they put into a "shopping basket" at a Web storefront because they found filling out forms too difficult.

To help recoup those potential lost sales, companies are planning to propose an Electronic Commerce Modeling Language or ECML, as a universal format that describes how to present key elements in electronic wallets. The specification is slated to be published Monday on the ECML Web site.

The ECML also helps tackle privacy concerns and supports at least two security protocols for online payments, SSL and SET. SSL, for Secure Sockets Layer, is the most commonly used method to encrypt credit card transactions over the Net.

SET, for Secure Electronic Payments, is a format pushed by Visa and MasterCard as a more secure method of payments, but it hasn't taken off yet. However, it could get a boost if electronic wallets are standardized, because SET requires buyers to have both an e-wallet and a digital ID to make payments.