Two fierce rivals in electronic commerce technology are declaring a truce in the interest of promoting Internet payments.
International Business Machines Corp. and Hewlett-Packard Co.'s Verifone subsidiary will be putting their competitive instincts aside on technical matters relating to SET, the MasterCard-Visa Secure Electronic Transaction protocol.
The companies planned to announce Tuesday that they would make their SET systems compatible-a significant step in that either or both are involved in most of the Internet credit card experiments around the world.
They further want to publish their specifications early next year and expect the entire SET community to rally behind them. IBM and Verifone officials described such "interoperability" as a missing link in a complex and protracted standards-setting effort that has not yet generated much public interest.
The companies' intent is to cooperate in areas that do not offer competitive advantages, and thereby "focus on the business rather than the plumbing," said Mark Greene, IBM vice president of Internet payments.
"If this Internet commerce story is a book, we have spent the last three or four years on the first chapter, getting the technology-the plumbing- right," said Mr. Greene. "As we get into Chapter Two, making it mainstream, we want to iron out the remaining technical issues."
The interoperability announcement was to be accompanied by statements of support from MasterCard and Visa, indicating this is an attempt to refine the SET process rather than a grab for control by two powerful vendors.
SET compliance testing sponsored by the bank card associations "gives software a seal of approval but doesn't guarantee that vendors' components interoperate," said George Hoyem, vice president and general manager of the Verifone Internet commerce division.
"There are no degrees of interoperability-either it is or it isn't," Mr. Hoyem said. And such compatibility is not a given in the Internet payment systems built to the SET specification.
Despite the advances in security and privacy embodied in the SET rules and procedures, the authorization and clearing of payments are not nearly as technically seamless as occurs when a credit card is presented at a conventional retail counter.
Karen Epper Hoffman, an analyst at Forrester Research in Cambridge, Mass., who had been briefed on the IBM-Verifone plan, said Monday that the deal is on a par with the convergence this year of two other competitors, Microsoft Corp. and Intuit Inc., behind the OFX home banking protocol.
She said IBM and Verifone are addressing one of the infrastructure deficiencies standing in the way of widespread SET deployment. She suggested the credit card associations also have to add incentives, probably in the form of lower interchange rates, to boost SET.
"The technology companies, more than the associations, are pushing the envelope," Ms. Hoffman said.
Charlie Walton, senior vice president of business development at Certco, a data security company that plays the key SET role of root certificate authority, read into the IBM-Verifone proposal a realization of the immense complexity of the technology and an impatience with getting the testing done.
Mr. Walton also wondered if some SET specialty software companies like GlobeSet Inc., Austin, Tex., might be put off by the big vendors' assertiveness.
But Globeset president and chief executive officer Michael Cation said he welcomes any attempt to assure interoperability. "We support anything any vendor does in this area," he said Monday. "That makes our life easier."
At the same time, he said, GlobeSet would continue to assure that its systems interoperate with any other vendor's, regardless of the IBM- Verifone effort.
IBM and Verifone have been making similar assurances.
"We are already working with eight or nine vendors on interoperability," Mr. Greene of IBM said. "We want to get to one version and get it right ... so we can turn attention to the business case, to explain why it makes sense for merchants, financial institutions, and consumers."