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Microsoft unveils e-wallet service

Retail heavyweights including Barnes & Noble, Costco, and are expected to adopt the online wallet service for MSN Passport.

Microsoft has launched an online wallet service for MSN Passport, its Web registration service, and a list of retail heavyweights including Barnes & Noble, Costco, and are expected to adopt the technology.

The e-wallet is the latest addition to Passport, a universal log-in technology introduced by Microsoft in July. Passport allows users to sign in once to gain access to multiple Web sites using the technology.

The release comes at a time when online retailers are gearing up for the holiday shopping season. Research firm Jupiter Communications projects online holiday sales will reach up to $6 billion this year.

To date, Microsoft has signed on a total of 50 retailers--including, Expedia,, and use the e-wallet service.

Online wallets try to make Internet shopping easier by letting consumers register once to shop at multiple retail outlets. Typically, online shoppers are required to enter their names, shipping address, and credit card number before a site lets them make a purchase. The process can be cumbersome if consumers intend to shop at many different sites; but e-wallets aim to streamline the process.

Microsoft's Internet rivals America Online and Yahoo already have e-wallets that work within their services. But Microsoft is trying to step outside of its MSN Web services and recruit other retailers. America Online also is considering recruiting other retailers for its AOL Quick Checkout wallet.

The catch is this: E-wallets are only effective if many online retailers adopt them. So Microsoft is trying to get as many retailers to sign up for Passport with the possible goal of creating an e-wallet standard, said Barry Parr, an analyst at research firm International Data Corporation.

"My belief is that ultimately [Microsoft] wants to take a percentage of every transaction," said Parr.

Parr added that online wallets could become as ubiquitous as credit cards. He said Visa holds clout over retailers because of its widespread use among consumers. If Passport is successful, it could become as important as Visa among brick-and-mortar retailers.

"If eighty percent of consumers want to use your e-wallet, what kind of clout does that give you?" Parr asked.