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Microsoft tries to get SET

The giant is back on the Secure Electronic Transactions protocol bandwagon, seeking to get its Net transaction software certified by SETco.

Microsoft is jumping back onto the SET bandwagon.

The software giant seeks to get its "wallet" software for secure credit card payments over the Internet certified by SETco, which oversees the Secure Electronic Transactions protocol.

SET sponsors MasterCard and Visa heralded Microsoft's interest, which could breathe new life into SET if the company markets it widely.

"With the participation of an industry leader like Microsoft, we are all the more closer to establishing SET as an industry standard for online commerce," MasterCard's Art Kranzley, senior vice president of e-commerce, said in a statement.

Microsoft now ships a software wallet in Internet Explorer 4.0 and Windows 98, but it has done little to publicize the feature. But that wallet is not SET-compliant, so users will need to upgrade to make SET transactions once Microsoft's version is approved.

The SET protocol has been pushed by Visa and MasterCard, on behalf of banks, as the best way to pay with credit cards on the Net. However, the protocol is complex, and in the 15 months since it was finalized, it has primarily been used in trials mostly outside the U.S.

Most Internet card payments today are made under the Secure Sockets Layer (SSL) protocol directly between merchants and buyers. SET requires special software for buyers, sellers, and banks plus a digital certificate to vouch for the identity of each party.

Microsoft was an early partner with Visa until the two credit rivals' efforts to standardize card payments were merged, but Redmond has been largely absent from public SET activities for several years.

"There is no change here per se. We are making public what we have been doing all along," said Jonathan Weinstein, Microsoft's lead manager for e-commerce products. "The reality is that we've been in [SET] early and never left."

At least one observer disagrees. "Microsoft has not actively supported SET," said Scott Smith, e-commerce analyst for Current Analysis, who sees today's announcement as "a hedge into the SET market" to keep other vendors off balance.

"I don't see it as any great push forward for SET," he added. "Microsoft throwing out a wallet without any clear indication of its intentions doesn't to me indicate any great boost to the protocol. It's SETco's way to tout a large name."

Microsoft's public return to SET comes after four vendors--Trintech, GlobeSet, Spyrus/Terisa, and VeriFone--have had SET wallets certified. IBM's wallet is "pending approval," and another eight vendors have submitted wallets for certification, according to SETco's status matrix.

Microsoft's wallet software--which contains payment options, shipping information, and digital IDs--resides on the user's PC. GlobeSet and CyberCash use "server-based" wallets that have stirred controversy among SET developers, but SETco executives say server wallets are acceptable.

Unlike most other vendors, Microsoft is creating SET wallet software only, rather than a suite of software for merchants and banks. But Microsoft's Rebekkah Kumar said the company has begun interoperability testing with other vendors, including GlobeSet, Cybercash, IBM, Trintech, VeriSign, and CyberTrust.

Weinstein added Microsoft's strategy is to be "payment agnostic," supporting any protocol that could become a standard. "We think SET is on that list. It's not a standard today, but clearly but has the potential to be a standard."