Visa moves to link chip cards, SET

Seeking to boost the use of smart cards in Internet commerce, Visa said today that it's turning over its work on a "Chip Electronic Commerce Standard" to a standards group that includes MasterCard and EuroPay, Mastercard's European affiliate.

Visa's specification builds on two existing protocols, the Secure Electronic Transaction (SET version 1.0) standard for secure credit card payments on the Internet and the EMV standard (EMV '96) for use of smart cards, also called chip cards.

EMV (Europay-MasterCard-Visa) is a smart card standards working group that expects to release a final standard late the year. The cooperation began in December 1996.

MasterCard owns a controlling interest in Mondex, a smart card payment system. MasterCard and Mondex are promoting an operating system called MULTOS (multiapplication operating system) for smart cards that would allow the cards to be used for multiple functions. Officials of Mondex and MasterCard were not available today to comment on Visa's action.

Chip cards are more popular in the Europe and Asia than in the United States. Software developers outside the United States have urged that chip cards be integrated into the SET credit card protocol.

Visa will contribute its work to EMV and make it available to vendors, financial institutions, and others in the payment-card industry.

Banks are eager to replace magnetic-stripe cards, used on most U.S. credit cards, to smart cards, similar pieces of plastic that have a chip embedded, said Janet Pruitt, Visa senior vice president for electronic commerce. Chip cards are more versatile and can be used for multiple purposes, including electronic cash, loyalty programs, and "digital certificates" required for credit card transactions over the Net.

Pruitt said trials for using chip cards in e-commerce will be launched this year in Japan, France, and the United Kingdom.

Chip cards are regarded as a more secure means of authentication--verifying the identity of a cardholder--than software-only schemes like SET.

In the next three years, Pruitt said, Visa believes smart card readers will be built into PCs, Internet TV devices, cellular phones, and other devices. The card companies want to be ready to utilize smart cards for purchases when that happens.

Pruitt said the work on chip card standard for electronic commerce is designed to complement efforts for making chip cards work with PCs and other devices.