First Virtual Holdings Inc. said it has reached an agreement to have its Internet Payment System bundled into Microsoft Corp.'s Merchant Server software.

While the deal is not exclusive, First Virtual makes the claim that its system is the only one that assures on-line payments security because it avoids transmitting credit card information on the Internet.

First Virtual relies on a combination of electronic mail technology and what it calls VirtualPIN-an alias for a credit card number. Availability with the Microsoft Merchant Server is scheduled for the spring.

"Connecting to First Virtual's technology through Microsoft's Merchant Server will be an important, vital step in creating a successful, interactive Web-based storefront," said First Virtual Holdings chief executive officer Lee Stein.

Rich Tong, vice president for marketing and training in Microsoft's personal and business systems division, said the First Virtual system is "a great fit for our Merchant Server software because it is simple for buyers to use and takes minimal processing power for sellers."

Microsoft joins First Data Corp., First USA Paymentech, and GE Capital Corp. on First Virtual's list of strategic relationships.

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