The most recent corporate alliance in the evolving world of electronic commerce may ease some bankers' fears about running financial transactions over the Internet.
Verifone's announcement that it would join Netscape Communications Corp. to build a system for consumer payments over the global web of computer networks is one of the few such efforts to include a technology company with close ties to the banking industry.
Verifone, based in Redwood City, Calif., is a leading provider of transaction processing systems and has extensive experience in securing on- line financial transactions. Netscape is one of the most prominent makers of Internet software.
"Our goal is to give merchants the same 'plug and play' payment access on the Internet that they have come to expect in their retail stores," said Hatim A. Tyabji, chairman, president, and chief executive officer of Verifone.
The deal was heralded as a potent partnership that draws software and hardware strength from two market leaders. Observers said the arrangement also offers encouragement to banks concerned about the future of Internet- based payments.
"Verifone is a well-known payment entity, and this could assuage both customer and bank concerns," said Adam Schoenfeld, a consultant for Jupiter Communications Co. of New York City. Verifone "is not some Johnny-come- lately in this game."
Gary Arlen, a consultant based in Bethesda, Md., expressed a similar sentiment, saying that its extensive experience with banks would "give Verifone a leg up on the other cyber-payment wannabes."
David Van L. Taylor, an executive vice president at the Bank Administration Institute, said he believes the alliance would "strengthen the hands of the banking industry" in on-line payments.
To be sure, bankers are not ignoring other electronic payment enterprises that have sprung up to meet the rising demand for a system to accept payments on-line.
Recent start-ups like First Virtual Holdings Inc., Digicash Inc., and Cybercash Inc. - a company created by the founder of Verifone, William Melton - have found willing bank partners to at least pilot their systems.
But industry response to the Verifone-Netscape alliance indicate that bankers are somewhat more encouraged by the familiarity and experience Verifone offers.
Richard Crone, a senior vice president and co-director for electronic banking at Home Savings of America, a unit of H.F. Ahmanson & Co., credited the terminal maker with creating the first infrastructure for electronic commerce, in a loose definition of the term.
Pairing with Netscape, a new but comparable force in Internet software, creates a payment powerhouse.
"This is a situation where two plus two will equal far more than four," Mr. Crone said.
"When two players like this come together, it gives you some optimism that this is going to become safe and successful," said Chris Sontag, a vice president at Star Banc Corp., Cincinnati.
Nonetheless, onlookers were quick to caution that Verifone and Netscape are far from having the game sewn up. And on-line security is not a puzzle easily solved.
Mr. Crone of Home Savings said Verifone still needs to prove it can "translate a device-dependent company to one that is software-based and platform-independent."
To that end, Verifone's purchase of a stake in Cybercash Inc. and its acquisition of Enterprise Integration Technologies are steps definitely in the right direction, he added.
"It could be a one-two punch for the marketplace, but it's still a wide- open playing field," Mr. Crone said.
