Microsoft Corp. has solidified its support for three transaction- related technical standards in a move that may be a prelude to deeper involvement in smart cards and Internet commerce.

Microsoft submitted its digital wallet software for certification under SET, the Secure Electronic Transaction standard sponsored by MasterCard and Visa.

The Redmond, Wash., software giant also said it will make such products as Windows NT and Internet Explorer compatible with FIPS 140-1 and Fortezza, key federal cryptographic standards that could promote the commercial spread of security tokens-potentially smart cards-for electronic authentication of parties to a transaction.

Taking previously stated commitments to SET and Fortezza to new levels, Microsoft is improving the utility and flexibility of its software.

It is essentially bidding for more electronic commerce and federal government business.

The company's aim is "product security and quality in a heterogeneous environment," said Pete Hayes, general manager, Microsoft Federal Systems. "We are committed ... to bring the best standards-based implementations to market."

But some observers have been waiting for Microsoft to drop another smart card shoe, perhaps becoming an issuer faster than banks and other U.S. laggards. Concerned about software piracy, Microsoft might use chip cards to authenticate authorized users.

The company's chairman, Bill Gates, has publicly endorsed smart cards.

Microsoft has also been in the forefront of PC/SC and BioAPI, efforts to standardize personal computer linkages to smart cards and biometric identification, respectively.

Mitchell Grooms, co-founder of Secured Information Technology Inc., a Los Angeles-based developer of advanced authentication concepts, said these are all building blocks for digital distribution, data security, and privacy protection.

SET is not yet linked with smart cards, but Microsoft is as capable as any vendor of making that happen.

For its Fortezza commitment, which is combined with the Secure Sockets Layer protocol that predated SET, Microsoft teamed with Spyrus of San Jose, Calif., maker of Fortezza and Lynks security cards.

Like Microsoft, Spyrus contributed to the development of SET and takes a keen interest in smart cards.

Spyrus recently acquired rights to a sophisticated handheld card reader from a subsidiary of Oki Electronic Industry Co. of Japan.

The Microsoft-Fortezza connection clears a path to secure "electronic data interchange, workflow, and remote access applications," said Spyrus president Sue Pontius.

Microsoft is the 19th company to have virtual commerce software compliance-tested by SET Secure Electronic Transaction LLC, the certifying body known as SETCo.

"With the participation of an industry leader like Microsoft, we are all-the-more closer to establishing SET as the global standard for on-line commerce," said MasterCard International senior vice president Arthur Kranzley.

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