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Microsoft to open digital wallet

The company will introduce its own version of "wallet" software for electronic commerce firms.

Microsoft (MSFT) will introduce its own version of "wallet" software for electronic commerce, but the company does not intend to compete with Internet payment firms, an executive said today.

"We are creating a wallet that will allow payment companies to plug in their payment systems," said Jonathan Weinstein, Microsoft group product manager. "We are controlling the user's experience and providing architecture that other payment companies can plug in to. If we don't play a role on providing standard consumer software, it's going to take longer for Internet commerce to catch on."

"Wallet" software contains a buyer's payment methods for purchases on the Net, such as credit card numbers, electronic cash, digital IDs, and electronic checks. Weinstein insisted that Microsoft's wallet won't compete with partners VeriFone (VFI) and CyberCash (CYCH), which include wallets as part of their payment solutions.

The wallet news came as Microsoft today issued an update on its Merchant Server software, which was rolled out to much fanfare October 30 but wasn't available to customers until mid-December.

"No one's heard from us for a while," Weinstein said. He pinpointed progress in areas of new customers using Merchant Server, additional firms providing components for Microsoft's software, and overseas financial institutions that now support Merchant Server.

The update included lists of new merchants (Eddie Bauer, longtime Microsoft ally Digital Equipment, and British Telecommunications).

Perhaps because Microsoft had previously emphasized consumer-oriented sites using Merchant Server, the company today pointed to several resellers selling to businesses, Software Spectrum and Inacom. Business-to-business sales are regarded as a high-growth market, and some competitors have tagged Microsoft as best suited for consumer-oriented sales.

Weinstein also pointed to about 30 independent software firms that are now writing components for Merchant Server, boosting Microsoft claims that its offering can become a platform for Internet commerce. Payment companies GC Tech and First Virtual Holdings join Verifone and CyberCash as working with Microsoft.

Others include product configuration firm Calico Technology, accounting software vendor Great Plains Software, and secure packaging firm Portland Software.

Overseas banks and credit card processors now backing Merchant Server include Japan's giant Sumitomo and credit card issuer JCB, and Europe's Banksys and SBS Technologies. Also, Visa Europe has named Merchant Server a reference platform for a pilot of the Secure Electronic Transactions credit-card payment protocol involving more than 38 European banks and businesses this year.

Merchant Server, part of Microsoift's Back Office, is built on software acquired with eShop last June. Weinstein declined to say when a new version will be released.