Verifone Inc. said Tuesday that it has won the race to begin full-scale shipping of products that incorporate the MasterCard-Visa Secure Electronic Transaction protocol for Internet payments.

The Redwood City, Calif., transaction automation company, which created an Internet commerce division in 1995 and had been close to the credit card industry security project for much of the time since, also disclosed the names of 11 major banks and processing companies that are adopting its technology.

"It was strategically important to be first," said George Hoyem, vice president and general manager of the Internet commerce division.

Verifone has been in a race with other SET technology supporters, notably International Business Machines Corp. (see page 13), to move from the testing and demonstration stage to "full production" with the SET 1.0 specification.

Mr. Hoyem called the first shipments "a watershed event" that will finally begin to get consumers, merchants, and bankers accustomed to the idea that Internet ordering and paying can be more secure and private than many conventional transactions.

"We are shipping products and people want it," Mr. Hoyem said. "We have been in a 'science fair' mode. This will get the SET market into production and out of pilot mode."

Verifone, IBM, and other vendors, processors, and banks have been declaring numerous SET "firsts" since late last year. IBM was involved in the first completely secure on-line transaction between a cardholder and a merchant Dec. 30 in the Danish PBS payment network. Verifone had a hand in earlier, if less momentous, advances by its customer Wells Fargo Bank.

Tandem Computers Inc. bid for a piece of history in September when it said with partner GlobeSet Inc. that it was first with an SET 1.0 system. But access was limited to an "early adopter" group and the rest of the market will have to wait until early next year.

In the long run, most of these claims will probably fade into the background as SET's true adoption rate becomes apparent and the suppliers step up their sales efforts. MasterCard and Visa have kept the standards process open to encourage competition and thereby stimulate acceptance, but they are running at least a year behind their original timetable to institutionalize credit cards on the Net.

Technical complications and delays have not prevented the vendors from jockeying for position, and Verifone was not just focused on getting to the SET 1.0 starting gate first. With its vGate software for financial institutions and processors, VPos for on-line merchants, and vWallet for consumers, Verifone wants to "dominate" the field, Mr. Hoyem said.

Verifone set out to get half of the crucial banking-gateway part of the business, he said, and "we think we're over 50%" on the basis of the number of financial institutions and merchants-more than 200 and one million, respectively-the company says it reaches through its customer agreements so far.

"In the U.S. alone we have access through banking relationships to 500,000 merchants," Mr. Hoyem said, adding that Verifone's open-standards approach and close relationships with retailers and merchant-card processors give it a leg up on IBM.

The processor signings include First USA Paymentech in the United States, Sistema 4B in Spain, GZS in Germany, SSB in Italy, Nets in Singapore, and First Data Resources Ltd., First Data Corp.'s United Kingdom subsidiary.

Sistema 4B, the leading Spanish bank processor, represents 38 institutions and will be the first to implement the vGate 4.0 version that includes SET 1.0.

Individual banks committed to or installing Verifone systems include Bank of America and Wells Fargo in the United States, Royal Bank of Canada, Sumitomo Bank of Japan, Caja Rural de Almeria in Spain, and Garanti Bank of Turkey.

Verifone also expects to spread its impact by embedding VPos with SET and other enhancements in merchant servers available from Microsoft Corp., Netscape Communications Corp., Open Market Inc., and Oracle Corp. The SET 1.0 products have passed compatibility testing with GTE Corp. and Verisign Inc., leading providers of the digital certification technology crucial to authenticating parties to an Internet transaction.

Verifone's acquisition in June by Hewlett-Packard Co. and those organizations' SET marketing initiative with Microsoft were instrumental in achieving global reach, Mr. Hoyem said.

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