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Payment standard to ease online shopping

A consortium of blue chip companies unveil the latest industry-wide effort to ease the check-out hassle for consumers shopping online.

A new consortium of blue chip credit-card and computer companies today unveiled the latest industry-wide effort to ease the check-out hassle for consumers shopping online.

Confirming a plan first reported by CNET News.com, the assortment of industry heavyweights unveiled a strategy to create a standard for electronic wallets--software that contains credit card numbers, e-cash, other forms of payment, and digital certificates, which are electronic credentials that vouch for the identity of a user.

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.

Companies participating in the plan include: America Online, Visa U.S.A., Compaq>,MasterCard, American Express, CyberCash, Microsoft, IBM, and Sun Microsystems, along with Web merchants, including Nordstrom, Dell Computer, online software store Beyond.com, video store Reel.com, and Omaha Steaks.

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. Consumers will be able to fill out their information once in their wallet, then have it transferred automatically to a merchant when they make a purchase. E-wallets are designed to simplify the process of filling out forms online to make purchases.

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, said the e-wallet effort is the first in a series of e-commerce initiatives by firms in the alliance.

However, it remains to be seen whether the e-wallet specification, despite early backing, will be widely embraced. 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, are proposing 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 today 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.

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