Mastercard pipped Visa to the post in implementing standards for secure electronic commerce. Together with IBM and Danish Payment Systems (PBS), it became the first credit card vendor to create a secure online transaction system based on the Secure Electronic Transaction (SET) standard.
A consortium including Mastercard, Visa, Netscape and Microsoft has been working on the security standard throughout 1996 and the comprehensive SET specification was released for the first time in June last year. Based on advanced encryption technology, the specification includes, among other elements, digital signatures that electronically confirm the identity of each party to the transaction.
The Mastercard pilot system will use IBM?s Netcommerce Payment software suite and will include three merchants and 500 of PBS?s top 1,000 customers. It is slated to become fully operational in the middle of January, at least three months before the first SET-based systems are introduced by Visa.
A spokesperson for Visa International admitted that Mastercard had won the race for the first payment, but added that Visa was planning a far larger European pilot of SET-based transaction processing systems in the spring. ?The pilot will involve 38 Visa members in 16 European countries but full commercial roll-out of the scheme is not expected to begin until early 1998? he said.
During the Mastercard trial PBS will issue each customer with an 'electronic wallet' containing digital certificates that verify a customer?s identity. The system scrambles the credit card numbers so they cannot be read when they are sent across the Internet. When a purchase is made the transaction is encoded and the customer?s certificate included. The merchant?s software accepts and processes the coded payment request without revealing the customer?s credit card details and forwards the information to PBS? gateway site.
?Each year, PBS processes more than 300 million card transactions in Denmark alone,? said Per Ladegaard, the company's chief executive. ?For us, staying out of the Internet would mean staying out of future business.? Mastercard expects its system to be widely available in 40 to 50 countries by the end of 1997.
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