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Tech Industry

First U.S. SET trials under way

Two major banks begin testing the SET protocol for secure credit card transactions on the Net.

Two major U.S. banks, Bank of America BAC) and First Union (FTU) today announced they will test the Secure Electronic Transaction protocol for credit card purchases over the Internet.

The pilots are the first in the United States sponsored by Visa, which wrote the SET protocol with MasterCard. However, Wal-Mart is conducting a SET trial using MasterCard and American Express.

Foreign banks have been far more aggressive in launching SET trials than their American rivals. Visa and MasterCard have announced dozens of SET pilots in Canada, Singapore, Taiwan, Japan, Denmark, the Netherlands, Hong Kong, France, South Africa, and Norway.

In fact, Visa announced today the first "transcontinental" SET transaction, allowing German shoppers to buy from two online malls in Singapore. In another global SET development, RSA Data Security said today that Seoul Bank has licensed RSA's SET toolkit for a credit card

Visa and MasterCard have said they expect the current round of SET trials to gradually turn into full-scale deployments. However, widespread use of the SET standard requires that merchants, consumers, and banks get not only SET software but also "digital certificates" that vouch for their identity. And rolling out those elements could take time.

The Bank of America trial will allow 400 to 500 bank employees to purchase plane tickets over the Internet from Alaska Airlines. Alaska Airlines intends to expand the pilot, due to launch by September 1, to selected members of its frequent fliers program.

BofA expects to add five to ten more merchants before the pilot, which will run until November 15. BA Merchant Services, which processes credit card transactions for 100,000-plus merchants, now accepts Internet transactions using Secure Socket Layer (SSL) security measures, the common method on the Net today.

"We are handling them with a fair amount of trepidation. It is truly a fraud-ridden environment and it takes a lot of work to manage that. We are wholeheartedly embracing SET," said Bill Campbell, vice president, BA Merchant services. He expects SET to eliminate "a tremendous amount of fraud" by authenticating the buyer's identity.

In the six-week First Union trial, due to launch this summer, 25 employees of the bank, Visa, and other trial participants will be able to shop at a site created by Capitolnet Marketing, a sports marketing subsidiary of Capitol Broadcasting. First Union is the sixth largest bank holding company in the United States.

The announcements come on the eve of a San Francisco event to promote vendors supporting the SET protocol. At that event, Visa and MasterCard will unveil a new logo for merchant Web sites that can handle SET transactions.

Technology providers for the First Union pilot include Open Market for merchant software, credit card processor Nova Information Systems, and IBM, which will provide "electronic wallet" software for shoppers.

For Bank of America, VeriFone is providing technology.