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Small banks SET to be paid

EDS's ReadySET service will use SET, VeriFone software, and HP hardware to handle Internet card transactions for financial institutions.

Systems integrator EDS will launch a service in January to process Internet card transactions for financial institutions.

The new ReadySET service will handle card purchases made under the Secure Electronic Transactions (SET) protocol, using "gateway" software from electronic payment specialist VeriFone and hardware from VeriFone parent Hewlett-Packard (HWP).

Both EDS and VeriFone/HP will market the service worldwide, but they appear to have different targets.

Chuck Wilson, of EDS, said, "The Internet is one more channel that we're making available for our customer base; and obviously, we're trying to extend into folks not necessarily doing business today."

EDS has been in the credit card processing business since 1989 and is best known for its systems integration work. The company said the new service is focused on payments, not back-end integration.

With data centers around the world, EDS is positioned to handle payments for financial institutions of any size anywhere, Wilson said.

But George Hoyem, vice president of VeriFone's Internet commerce unit, said HP and VeriFone will market the EDS service to smaller banks and financial institutions that don't want to shell out big bucks. It would cost such companies $250,000 to $1 million to buy their own SET gateway and tie it in to their existing systems.

"Until now, we haven't had a good way to get the little guy into the game cost effectively," Hoyem said.

E-commerce analysts' opinions are also split.

Vernon Keenan, of Zona Research, said, "The typical EDS customer is certainly a regional or national bank. I wouldn't see it targeted at smaller retail organizations, which are very threatened by electronic commerce."

Mildred Wulff, of Jupiter Communications, said, "It's for small banks that wouldn't be able to maintain their SET-ready product, for smaller banks that want to outsource. VeriFone is making sure that it's filling all the holes for financial institutions."

In any case, Keenan calls the announcement "another step in the march of SET toward ubiquity. It should accelerate the acceptance of SET."

SET is a protocol, created by Visa and MasterCard, for secure electronic payments over the Internet. The protocol is being tested in small pilots around the world but isn't expected to be used regularly until next year, largely because it requires banks, merchants, and consumers to have SET software plus a "digital certificate" to vouch for their identity on the Net.