Microsoft is the third major Web server vendor to work with VeriFone on software to build Internet storefronts. In January Netscape Communications signed an alliance with VeriFone; so did Oracle, in February. With these partnerships, VeriFone hopes to parlay its good reputation with conservative, security-conscious banks, credit card companies, and merchants into dominating the Internet transactions market--duplicating in cyberspace its ubiquity in the real world. VeriFone terminals authorize most debit and credit card purchases at retail stores.
VeriFone considers the Microsoft deal its most significant to date because it is, well, Microsoft. The relationship with the software giant announced Monday is more comprehensive than those outlined with Netscape or Oracle.
Microsoft will build Verifone's vPOS software into its Merchant System software, which recently went into beta testing, to handle credit card transactions for Web merchants and connect retailers to the secure, private networks that handle bank card transactions.
"We view Microsoft as a very important relationship for us because ultimately merchants out there know the name Microsoft," said Patrick McGill, VeriFone's VP of Internet marketing and channel development.
Still, if Microsoft is the single largest partner, the relationships with other vendors cement VeriFone's position as the de facto standard-bearer for credit card transaction technology.
VeriFone already resells Netscape's Merchant System software, bundling its vPOS with Netscape's servers and applications, and is now working with Netscape to build vGATE, a gateway for banks and credit card processors that links the Internet to private financial networks.
Like the Microsoft arrangement, Oracle will ship VeriFone's vPOS with its Web Server 2.0 this fall, said Karen White, Oracle's senior VP of business development. VeriFone's software for banks, vGATE, runs on top of Oracle's database, and VeriFone already resells Oracle software and databases.
VeriFone needs to be successful in locking up the most important players behind the scenes as competition in the consumer front heats up. Like VeriFone, a host of companies are developing secure "wallet" software to give consumers a safe place to keep credit card numbers, digital IDs, electronic cash, micropayments, and other forms of bankable tender.
VeriFone intends to market its wallet through banks, which could then distribute it to customers under the bank's brand name. But the company will face stiff competition from outfits such as CyberCash, which already licenses its wallet to banks. (VeriFone owns 10.1 percent of CyberCash, but VeriFone CEO Hatim Tyabji recently quit CyberCash's board of directors, citing potential competitive conflicts.)
And making things perhaps even more complicated, both Netscape and Microsoft also plan to build wallets into their Web browsers.