Verifone Inc. has brought the Japanese computer and electronics giant NEC Corp. into its SET alliance.

NEC will help Verifone develop and market Internet payment products for the Japanese market based on the Secure Electronic Transactions standard sponsored by MasterCard and Visa and championed by Verifone and other technology providers.

NEC is one of an elite group of Japanese corporations that have been participating in a government-sponsored electronic commerce infrastructure project. The group has required modifications to the SET protocol specific to the Japanese market.

Verifone, a Hewlett-Packard Co. subsidiary, planned to announce Tuesday it will work with NEC on adding these extensions, known as the Japanese Payment Options, to SET software. The Japanese product will be known as SET 1.0/JPO.

Japan thus poses challenges to companies that want to profit from the global Internet phenomenon while also accommodating local peculiarities.

"We wanted to go in with a local partner that understands the uniqueness of the Japanese market," said George Hoyem, vice president and general manager of Verifone's Internet commerce division in Menlo Park, Calif.

If the NEC distribution arrangement lives up to its promise, Verifone said it expects to take advantage of NEC's web of relationships through the extended corporate families known as keiretsu; tap into a single-country electronic commerce market that researchers say could be bigger than all European countries' within three years; and offer systems based on open standards compatible with other commerce products around the world.

Building on an existing agreement with Microsoft Corp., Verifone's VPos merchant software with JPO extensions will be integrated with Microsoft's Site Server in Japan.

That combination plus "NEC's market expertise provide all of the necessary elements to unleash the Japan market potential," said Koichi Kato, a senior group manager with Microsoft Co. Ltd. in Japan.

"Japan represents a huge market potential for on-line merchants, and that should be of interest on the banking side as well," Mr. Hoyem said last week. "Verifone will ensure compatibility of JPO versions of its consumer systems (virtual wallets) in Japan with SET systems in the rest of the world. That way, the Japanese consumer won't be locked out."

Sumitomo Credit Services, a bank transaction processing affiliate that has a close relationship with Verifone and 1.7 million merchant customers, is expected to be the first to deploy SET/JPO products.

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