Hewlett-Packard Co. and its Verifone division have brought yet another high-tech ally into their electronic commerce axis.
They said Electronic Data Systems Corp. will be combining its computer service and outsourcing capability with HP-Verifone technology to improve financial institutions' ability to handle secure on-line payments.
Pilot testing of the program, EDS ReadySET, is to begin next week, with full availability scheduled for January.
Verifone has been banking on such alliances in hopes of eventually dominating the electronic commerce infrastructure. Its cooperation with Hewlett-Packard was a precursor to their June merger. Verifone also has cultivated close relationships with, among others, Microsoft Corp., Oracle Corp., and now the $14 billion giant of data processing services.
EDS ReadySET, with Verifone Internet transaction software and Hewlett- Packard server equipment, is designed so that a bank and its merchant customers can enter the electronic commerce realm quickly and without significant capital investments and maintenance burdens.
EDS officials said the formula will appeal to banks of all sizes around the world. Verifone has especially emphasized the lowering of cost barriers to smaller institutions.
"Internet commerce had been open only to an elite group," said George Hoyem, vice president and general manager of Verifone's Internet commerce division in Menlo Park, Calif. "Now every bank and financial institution on the planet can afford to get in the game."
"With this offering we can reduce the risk, cost, and time associated with Internet payment capabilities and support the financial institution's need for a single, stand-alone Internet processing source," said Paul Rudolph, EDS president of electronic markets.
Like other technology leaders, EDS has attached major strategic importance to e-commerce. Mr. Rudolph said it is a logical extension of such EDS businesses as point of sale processing, merchant accounting, financial institution servicing, and Web hosting.
Mr. Hoyem described ReadySET-the capitals are for Secure Electronic Transaction, the MasterCard-Visa protocol for Internet payments-as a "private-label gateway service" for financial institutions to support their merchants' on-line business. He said the offering complements Verifone and Hewlett-Packard's direct sales to big banks and processors.
Just last week, Mr. Hoyem proclaimed a victory of sorts as Verifone became the first company to ship products complying with the "full production" SET 1.0 version. Its customers include Bank of America, Wells Fargo Bank, Royal Bank of Canada, and processors First USA Paymentech and Sistema 4B of Spain.
In contrast to those building and maintaining sophisticated in-house capabilities, ReadySET customers would get on the Net by paying a relatively low entry fee to EDS, plus transaction charges.
The service company would support a client bank with Verifone's VGate Internet gateway software, and the processing would be integrated with existing credit card settlement systems.
"SET is not a slam-dunk operation," said Chuck Wilson, EDS' POS services manager. "We are hoping to remove that complexity on behalf of our customer base."
Mr. Hoyem said the EDS deal is a major endorsement. It is "not just a buy-sell relationship," he said. "We will go together around the world and help EDS market and sell private-label gateway services to banks.
"Verifone's SET leadership, scalability, and global reach similar to our own were important to us," said Mr. Wilson. Mr. Rudolph added that EDS has long worked with HP and viewed its Verifone connection as "best of breed" for the tasks at hand.