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VeriFone furthers online payments

The Hewlett-Packard subsidiary announces partnerships with NEC and Northern Telecom to further its strategy in Net payments and smart cards.

3 min read
Advancing its online payments initiatives on two fronts, VeriFone is tapping international partners to further its strategy in Internet payments and smart cards.

Tomorrow VeriFone, now a subsidiary of Hewlett Packard (HWP), will announce that it is linking with NEC to tailor its Internet payment software for the Japanese market.

The company said today it is partnering with Canada's Northern Telcom (NT) to create screen phones with smart-card readers built in.

The NEC alliance is designed to open Japan's market for VeriFone software for banks, merchants, and consumers to handle charge card transactions securely over the Internet.

NEC is working with Japan's powerful Ministry of International Trade and Industry (MITI) and other Japanese vendors to adapt the Secure Electronic Transactions (SET) protocol for the Japanese market, said George Hoyem, vice president of VeriFone's Internet commerce division. SET is a protocol for secure credit card purchases over the Internet.

"Because of market access issues in Japan, we felt it was important to be a part of what is unfolding [on SET]," Hoyem said. "We have a major initiative under way in joint distribution and development partnerships with NEC."

"Merchants want to sell to Japanese consumers. We will make all our products around the world compatible and interoperable with Japanese implementations," Hoyem added. That includes building support for Japan Payment Options (JPO) into SET software for merchants, consumers, and banks no matter where they are located.

The NEC alliance positions HP-VeriFone with a strong partner that can sell into Japan's complex market, something Hoyem thinks will boost VeriFone against its chief SET rival, IBM.

VeriFone's screen-phone deal with Nortel, which may produce a commercial product by mid-1998, marks another step by VeriFone to get its smart-card technology embedded into multiple consumer devices. VeriFone last year announced its "Personal ATM," a device for consumers to conduct online transactions and download electronic cash onto a smart card.

"Two companies that are leaders in their respective industries are coming together to marry electronic payments with telephony infrastructure," said John Menzel, director of business development for VeriFone's consumer systems division. The deal lets VeriFone supplement its strong relationships with banks by adding Nortel's close links with phone carriers.

Smart cards are plastic cards, similar to bank charge cards, with a chip embedded. That means they can be used for multiple functions including e-cash, frequent-user programs, medical data, and government benefits.

VeriFone and Nortel intend to build smart-card functions into future Nortel phone network switches, pay phones, Internet phones, and perhaps caller-ID devices, Menzel said.

Next year, VeriFone expects to announce other partnerships for smart-card-enabled cellular phones, pagers, and TV set-top boxes, Menzel added.

HP already ships some PCs with keyboards equipped with smart-card readers, and HP's supplier, Keytronic, will likely market similar keyboards to other manufacturers.

With VeriFone's VeriSmart system, most functions are installed on the server. That means new features and services can be added easily to devices equipped with smart-card readers without requiring changes on the consumer device.

VeriFone's deal with Nortel makes Nortel's PowerTouch screen phones VeriFone's strategic partner in the screen phone space. About 1 million PowerTouch screens already in use in North America can be retrofitted for smart cards by replacing a cartridge with one that includes a smart-card reader, VeriFone said.

Consumer trials using the PowerTouch phone are planned for early next year, probably with a telephone company and probably involving multiple uses of a smart card, Menzel indicated.