Consumers cut the fat from digital wallets

RESPONDING TO WEAK consumer demand for bandwidth intensive e-commerce with "fat clients", vendors are lightening the load on digital wallets and moving away from the controversial Secure Electronic Transactions (SET) standard.

Microsoft has abandoned its client-side wallet application, and dropped support for SET, in favour of a server-based solution to authenticating Web buyers which is integrated with its Hotmail free email service.

Meanwhile, its competitors in the e-commerce merchant server space, IBM and Creative Digital Technology, are taking an each way bet with "fat" wallets which are necessary to keep the SET infrastructure safe, but they are also including the option to change to less secure but more workable transaction security.

Harvey Sanchez, senior marketing manager at Microsoft’s consumer and commerce group, said the company’s new Passport service was built on its failed experiences with client-side wallet software. The previous product, which had been at its fourth version, had been machine-specific and only available through the Internet Explorer browser.

"We know that for consumers, a digital wallet is difficult to adopt, so we are moving to a server-side wallet," said Mr Sanchez.

Passport is completely server based and available through both version 3 browsers, providing a "single sign on" where users can type in their Hotmail username and password to authenticate their identity at participating sites. Merchants pay an annual fee of between $780 (US$500) and $31,250 (US$20,000) depending on their traffic levels.

Mr Sanchez confirmed that Passport was not SET-compliant, but said that Microsoft was "currently evaluating it for version 2 of the Passport service."

He said Passport was the first in a number of "megaservices" which e-commerce providers would be able to tie together to enable rich content, like an "impulse buying banner" which would automatically deliver personal details to an online buying form when a user performed a clickthrough.

"Consumers will be more engaged and they will be able to do more. The process for buying on the Web now is cumbersome and hard, especially for consumers," he said.

Australian e-commerce vendor Creative Digital Technology used the Sydney Internet World 99 show in August to launch ActiveWallet, which will compete directly with IBM’s product with similar features like Electronic Commerce Markup Language (ECML) support and SET certification.

Bahram Boutorabi, CEO of CDT, said when the product was launched under two credit card vendors’ brands next year, consumers would be able to choose a Webserver-based solution, or a 750KB downloadable client which would enable extra services like electronic bill payments.

"While the wallet might sit on the client, their information sits on the server. We’ve taken the approach of not forcing people to use one or the other server-or client-based solutions," he said.

Mr Boutorabi questioned Microsoft’s message that Passport would mean a "single sign on" to multiple sites, saying that consumers would have to maintain Hotmail accounts in addition to their normal ISP email.

"We cannot trust Microsoft on privacy. That’s a full stop from my point of view. If I had personal details to send, I wouldn’t send them to Microsoft," he said.


Contents of three wallets
Wallet SET ECML Server/Client
Microsoft Passport No Yes Server
IBM Digital Wallet Yes Yes Client
CDT ActiveWallet Yes Yes Choice of either


"Hotmail has proven to be not reliable, it has been created outside Microsoft. Passport is only storage for personal details. Our approach to the wallet is completely different, ours is a personal finance management system." ActiveWallet takes its interface cue from real-life wallets, so that consumers can "drag-and-drop" icons of credit cards on to Web sites to populate fields with the relevant information.

All three wallets support the ECML specification for standard data entry fields on merchant Web sites, which was announced in June by a consortium including IBM, Microsoft, SETCo, American Express, Mastercard, CyberCash, America Online, Sun and Visa.

For its part, IBM has updated its existing Consumer Wallet product to version 2.1, featuring support for emerging e-commerce standards.

The new version of the wallet is intended to "reduce the buyer abandonment rate", according to Brod Brennan, e-commerce segment manager at IBM Australia.

Although the software has been certified by SETCo, IBM is not being religious about integrating with the SET framework, as the Wallet can recognise and support merchants which are using Secure Sockets Layer (SSL) encryption for simpler transactions.

However, a proprietary feature in the Wallet 2.1 called ProBuyer can automatically select the highest level of security offered by that merchant.

The IBM Consumer Wallet requires 7MB of disk space, and only runs on Windows 95 or NT with browser compatibility with Netscape Navigator 2.0 or later and Microsoft Internet Explorer 3.0 or later.

Mr Brennan said products like the IBM Wallet would "remove debate and technological impediments" to electronic commerce.

"Mastercard, Visa and the SETCo people are still our partners, and they have all continued to push the same message. SET is a viable standard, and there is no change to that position. What SET needs is education and momentum," said Mr Brennan.

IBM has formed its own consortium behind the Wallet product, and will work with Mastercard to rebrand the IBM Wallet on behalf of banks which are in the club, Mr Brennan said.

The release of an open standards-based wallet product fleshes out IBM’s e-commerce portfolio, said Mr Brennan, which includes the Net.Commerce merchant server and the recently released Commerce Integrator package.


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