MasterCard will use its majority ownership of the Mondex electronic cash system to push even harder for acceptance of the Secure Electronic Transactions protocol, said MasterCard International senior vice president Steve Mott.

The Purchase, N.Y.-based bank card association has been noticeably aggressive in its advocacy of SET, making a point of demonstrating the Internet security system late last year ahead of its competitors.

MasterCard made its first big SET proclamation Dec. 30, working with International Business Machines Corp. to complete a secure card payment over the Internet for the Danish payment system PBS.

But it is a big jump from that sort of "single-vendor" demonstration to an open system that truly replicates the payment choices available at conventional points of sale.

That helps explain why Mr. Mott, who focuses on SET as part of his electronic commerce responsibilities, has at least 13 projects around the world using the protocol in some way.

One of those projects took a "huge leap forward," MasterCard announced last week, when SET entered a final, beta testing stage in Japan as part of UC Card Co.'s Cybernet project, which also involves several of that nation's biggest banks and technology companies as well as Netscape Communications Corp.

Merchants have set up shop in the UC Cybermall, and the company expects more than 100,000 cardholders to be participating by June.

Visa International's regional organizations also are juggling numerous projects, but their public statements have reflected a more measured approach. Visa officials have been quoted as saying SET is unlikely to be fully implemented this year, contradicting some of the more hopeful statements by vendors with an interest in this market, such as digital certification providers GTE Corp. and Verisign Inc.

Mr. Mott conceded there are philosophical differences, suggesting MasterCard prefers to err on the side of speed for the sake of learning, understanding, and proselytizing.

"We don't have the luxury of working on an optimal, association solution," he said in a recent interview.

"The more aggressive we are with experiments and the more countries we cover, the more the message gets out."

Meanwhile, Mr. Mott noted, there is growing interest in both banking and security circles for hardware-based methods of securing transactions, perhaps using plastic cards for encryption keys and digital signatures. And he is in intent on looking at transactions in their broader, more complicated sense-the "negotiation and fulfillment aspects" that go beyond mere funds transfers.

In addressing what Mr. Mott called the "payment piece," SET alone is quite complicated, requiring some 26 interactions or operations that can slow a less than high-powered computer to a crawl. Efforts are under way to compress that to eight or nine.

"We can't look at this as just transforming the physical POS world to a digital environment," the MasterCard executive said. "We want to propose standards that will make this work. It has to be convenient or fast enough for the average consumer to want to use it."

Having acquired 51% of Mondex International, the smart card venture that Natwest Group of London spun out to an international banking consortium last summer, MasterCard is in a position to put more of the "pieces of the puzzle" in place for secure on-line transactions, Mr. Mott said.

Mondex was designed not only as a stored-value cash card, but also to allow for transfers of funds between cards, which can occur between cardholders' electronic wallets or over communications media like the Internet.

While SET, a joint effort by MasterCard, Visa, and several technology companies, was designed to extend credit card security and control procedures to cyberspace, Mr. Mott said it will have to be integrated with a broad range of payment types, cards, terminal devices, and networks.

As in the physical world, where technical standards spurred mass acceptance of credit cards, "the market will be driven by the merchants more than by the security itself," Mr. Mott said.

MasterCard, Mondex, and its Mondex-owning partner AT&T Corp. (MasterCard and the telecommunications giant each own 10% of Mondex USA) took steps in recent days to bring secure virtual payment concepts closer to reality.

AT&T is relying on Mondex to incorporate micropayments-purse-like transactions generally under $10-into its SecureBuy Web commerce system. Hewlett-Packard Co. and Open Market Inc. are working with AT&T on system development.

On-line merchant testing is to begin this summer with a market rollout to begin in the first half of next year. It is said to be the first implementation of the Internet Open Trading Protocols that Mondex, AT&T, and Hewlett-Packard expect to publish in the second quarter, addressing "negotiation and fulfillment aspects" like invoices, receipts, and refunds.

Keith Kendrick, senior vice president-smart payments at AT&T Universal Card Services, said, "While Mondex also works for large transactions, it makes sales as low as a few cents commercially viable for merchants."

He said the capability is well suited to consumer downloading of documents or articles, games, and music. "It will enable a whole new class of merchants and create an explosion in on-line goods and services available to consumers," Mr. Kendrick added.

On another front, AT&T announced a strategic alliance with Wells Fargo Bank, itself a pioneering Internet commerce provider. The Wells Fargo & Co. unit was the first bank to join AT&T's Marketing Alliance Program to allow for one-stop Internet assistance to mutual customers. They will kick off their relationship with a cobranded direct mail campaign.

"We can leverage (AT&T's) excellence in managing Web sites and networks with our core competencies in secure Internet processing services to deliver quality payment solutions," said Wells senior vice president Debra Rossi.

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