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Smart standards for e-commerce

Three big bank card organizations begin to update their standard for integrating smart cards into Internet commerce application.

Three big bank card organizations today said they will begin to update their standard for integrating smart cards into Internet commerce applications.

Europay International, MasterCard International, and Visa International will create a specification so their smart-card standard, Europay-MasterCard-Visa (EMV '96), can be integrated with the Secure Electronic Transactions (SET) specification, which allows credit card numbers to be sent securely across the Net.

SET is expected to be finalized in the second quarter of 1997. Secure applications that conform to the spec are due in the third quarter.

The EMV standard is designed so that consumers can use smart cards to pay for small purchases in the physical world with cash value that is stored on the card. The EMV '96 standard was finalized in July, updating work that had been underway since 1994.

Combining the two specs would mean consumers could download money onto smart cards by telephone, PC, or bank ATM, then spend the funds either on or offline, said Scott Smith, an analyst at Jupiter Communications.

"This puts in place a critical connection between two very similar technologies," Smith said. "It widens the market for payment online. Things are snapping into place sooner than we would have expected."

The new smart-cards-for-the Net specification is expected to be available for comment by third quarter of 1997. It will take advantage of the smart card's ability to authenticate users' identities as well as store cryptographic keys and digital certificates.

"When EMV was conceived, it didn't take into account Internet technologies or public key-private key encryption," said David Weisman, a director at Forrester Research. "They need to update EMV to handle new Internet technologies that are coming out."

Weisman also said the EMV group should pull Microsoft and Netscape Communications into the smart-card standards work, because both are pushing smart card technology.

Last week Microsoft, Hewlett-Packard, and a group of smart-card manufacturers announced a PC/SC standard so smart cards can work with personal computers. A group within Netscape's security coalition also is focusing on smart cards.

Europay, owned by European banks, has had close relations with MasterCard for many years; they jointly market a Eurocard/MasterCard bank card through 7,000 banks in Europe. MasterCard recently bought 51 percent of Mondex International, a popular system that uses smart cards.