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SET standard inches forward

Paving the way for the Secure Electronic Transactions protocol for credit card purchases, Visa and Mastercard release code that demonstrates how to write SET software applications.

Secure credit card payments over the Net are inching forward.

Visa and MasterCard, which are finalizing the Secure Electronic Transactions protocol for credit card purchases, said they will release part of the reference implementation code to demonstrate how to write SET software applications. Reference implementations are a standard element in creating new protocols.

"It's a major step in the process because it's a starting point for interoperability;" said James Galvin, director of security and payments for CommerceNet, an industry consortium boosting electronic commerce. Reference implementations are used to expand on a standard, and the SET reference implementation will be used for testing interoperability, he added.

Visa also disclosed that it will launch a SET trial involving smart cards in May or June, called Smart Commerce Japan. It involves testing Visa's version of electronic cash with chip cards for SET transactions over the Net.

The initial release of SET's reference implementation will cover the eight most critical message types used in credit card transactions, but it will only be available inside the United States because of export restrictions on encryption software. A Visa spokesman said efforts to gain export approval were delayed last month because the companies had to begin negotiations anew since encryption now falls under the jurisdiction of the Commerce Department instead of the the State Department.

SET is designed to be a global standard; but its earliest trials are in Europe and Asia, not the United States.

The reference implementation, created for the card associations by secure toolkit company Terisa Systems, was first delivered to Visa and MasterCard in October but has since been updated.

"It took us until this time to get it packaged up right," Visa's Steve Herz, senior vice president of electronic commerce, told CNET. Additional releases are expected within the next month, with the final release in two or three months.

The SET protocol won't be finalized until the second quarter of this year; the reference implementation is in draft form based on the August 1996 update of the spec.

The pace of SET activity has picked up in the last month, noted Allan Schiffman, chief technical officer of Terisa Systems. "Both Visa and Mastercard are putting a lot of effort and man power into SET," he said.

IBM, MasterCard, and Danish Payment Systems announced December 30 they have performed transactions using the latest version of the SET protocol. On December 18, Wells Fargo Bank began SET transactions with its merchants using digital certificates from GTE CyberTrust.

On January 8, IBM and MasterCard announced a global marketing to promote secure credit card payments over the Net by offering MasterCard members a chance to pilot IBM's e-commerce software and services.

IBM now has SET pilots in place with ABN Amro Bank in the Netherlands; Fuji Bank in Japan; AEON Credit Service in Hong Kong; and Danish Payment System.

Visa expects to launch a European trial involving 40 banks in 16 countries by April. It has announced pilots this year in Taiwan, Singapore, and Japan.