For the last two years, Hypercom Corp. pridefully steered clear of the World Wide Web.
While its archrival in point of sale systems, Verifone Inc., tried to mark that virtual territory as its own, Hypercom executives scoffed at their larger competitor, saying it was overcommitting itself to the Internet too early in the game.
But Hypercom has an Internet strategy, after all.
Despite approaching the Web payments race in a more tortoise-like fashion, the Phoenix-based company is now saying it is ready for the flurry of activity expected to result from the bank credit card associations' Secure Electronic Transactions protocol.
In mid-July, Hypercom announced an alliance with GlobeSet Inc., a software company closely associated with the MasterCard-Visa effort to standardize card payments on the Web.
GlobeSet, one of several electronic commerce companies backed by Bankers Trust New York Corp.'s BT Ventures, made an exclusive reseller agreement with Hypercom to disseminate the GlobeSet Payment System.
The companies said they are ready to put their package deal up against Verifone's or anyone else's. George Wallner, Hypercom's chairman and chief technology officer, said two of his customers in Latin America will soon launch a test of the system.
"Our strategy is to be able to offer products that support our customers' activities across the whole spectrum," Mr. Wallner said in an interview. "Internet transactions will be on that spectrum."
That reasoning is similar to what Verifone chief executive officer Hatim Tyabji has been articulating since before his company acquired Enterprise Integration Technologies, a pioneering Internet technology provider, in 1995. That deal created the nucleus of Verifone's Internet commerce division, which aimed to replicate in virtual-world payments the convenience, certainty, and security associated with Verifone's trademark gray card-authorization boxes at retail counters.
Although Internet commerce as yet generates a small fraction of Verifone's $500 million of annual revenue, the division's prospective importance was a major attraction to Hewlett-Packard Co., which bought Verifone in June for $1.3 billion. They augmented an already powerful electronic commerce juggernaut by forming an alliance with Microsoft Corp. focused on global SET deployment.
Hypercom, with about half Verifone's revenue, and three-year-old GlobeSet are talking as if they can muscle their way into the big time.
"One has to be an absolute specialist to do the best job," said Mr. Wallner, explaining the choice of GlobeSet. He called its product "technically excellent" and stressed its flexibility and compatibility with any type of card or merchant computer server.
Michael Cation, chairman and chief executive officer of GlobeSet, Austin, Tex., said the two companies have complementary systems, clients, and geographical representation-which helps explain their initial SET application in Latin America, where Hypercom is particularly strong.
"GlobeSet has software, Hypercom has customers and distribution channels," Mr. Cation said. "Their Pinnacle products sit very well with ours. I'd like to say there was a grand plan behind this, but sometimes you get lucky."
Aside from BT Ventures, GlobeSet got funding from Tandem Computers Inc., which Mr. Cation said contributed to the compatibility with Hypercom. Tandem and its Atalla division have been influential in Internet security developments, and GlobeSet has been able to draw on their "intellectual property," Mr. Cation said.
He added that people who used to work for Tandem and Applied Communications Inc., a Tandem-based transaction processing system vendor, now roam the halls of Hypercom, enhancing the GlobeSet-Hypercom relationship.
Mr. Wallner praised GlobeSet for addressing the complexities of SET. The protocol requires numerous, complex computer calculations that can slow a merchant server and degrade customer service.
Mr. Cation described some of the benchmarking results on GlobeSet software as "eye-popping" relative to the slower throughput in competing SET programs.
"Existing systems' performance is unimpressive," Mr. Wallner said. "SET was designed by committee, and committees don't design efficient systems."
He criticized Verifone and others for getting locked into "crazy decisions."
"We had so much to learn about electronic commerce-information is starting to surface now that no one thought of three or six months ago," Mr. Wallner said. "It would have been irresponsible for us to sell anything to any of our customers" before some of the more recent advances.
"The state of the art in credit cards on the Internet is pilot programs," Mr. Cation said. "There hasn't been a lot of focus yet on scaling those up to real-world processing loads," which is where GlobeSet claims an advantage.
"This new relationship obviously expands the competitive market supporting SET and electronic commerce in general," said Steve Mott, senior vice president of electronic commerce-new ventures, MasterCard International. "We have had a constructive relationship with GlobeSet and believe the addition of Hypercom's worldwide influence will create a global solution of value to our member banks."