Tech Industry

MS, HP, VeriFone deal for e-commerce

The companies announce a turnkey system based on the SET protocol to allow banks and merchants to handle credit card payments over the Internet.

Microsoft (MSFT), Hewlett-Packard (HWP), and HP's prospective acquisition VeriFone (VFI) announced today a turnkey system based on the SET protocol for banks and merchants that want to handle credit card payments over the Internet.

As previously reported by CNET's NEWS.COM, the companies plan to smooth merchants and financial institutions' way onto the Net by providing a complete set-up including HP's hardware, VeriFone's Internet payments software, and Microsoft's Web storefront software. The system will be sold mostly by HP's sales force, according to analysts briefed on the announcement.

VeriFone chairman Hatim Tyabi said in a release that under the deal, " SET (Secure Electronic Transactions) will now be available for large-scale distribution to merchants consumers worldwide. Our relationship with these leading vendors will finally help realize the commercial potential of the Internet."

The new partnership appears directed against IBM (IBM), which already has a similar suite of e-commerce offerings for banks and merchants.

The new alliance means "a bank can get a single system, more or less, and buy it through HP," said an analyst briefed on the offering, which the partner companies billed as "the first end-to-end integrated joint initiative supporting the SET standard." Once they have the system in place, the banks can distribute Internet commerce software to their merchant and customers.

The package includes VeriFone's vPOS software, the "cash register" for Web storefronts; VeriFone's vGATE software, for banks and financial institutions that accept credit card payments from Internet merchants; Microsoft's recently released "Wallet" that lets consumers make payments over the Net using the SET protocol; Microsoft's merchant server software for Web storefronts, released today as Site Server, Enterprise Edition; and HP's 9000 series of hardware servers.

"This offering is definitely attractive with those three names," said an analyst. "They are very heavy hitters and all have the lion's share [of the market] for their respective product offerings.

"This is just copying the way credit card transaction systems are sold in the physical world, primarily through a bank or financial institution," the analyst added.

Sources suggest that other companies can be expected to join the team to fill holes in the product offering.

For example, one missing piece is a certificate authority to issue "digital IDs" that verify the identity of merchants and banks, as required by the SET protocol for protecting the security of credit card payments over the Net.

The 1.0 version of SET is due to be published May 31 by its sponsors, Visa International and MasterCard International, but the final specification has been circulated to the 40 to 50 technology companies that have promised SET-compliant software, including Microsoft.

MasterCard senior vice-president Steve Mott called today's announcement "another strong signal to the marketplace that support for the SET solution is growing."