The promise of SET, as Visa called it last year when the secure electronic transaction protocol was unveiled, has yet to deliver, deterred by glitches and a lack of acceptance. And despite card companies' vigorous protocol support, many

in the analyst community contend that SET may hold little promise at all. "In 1998, it looks like SET is impotent," says Christopher Stevens, senior analyst for electronic commerce at Boston-based Aberdeen Group. "The problem is that even if they get the interoperability problems solved, and even if they do get merchants to start installing the software, they still don't have a good channel or good story for consumers."

With SET criticism taking off, Visa and Mastercard recently bolstered the troops by adding American Express and JCB to the SETCo alliance. The alliance manages the SET root key and spearheads software compliance. It aims to mitigate the industry's chief complaint that different vendors' SET products aren't interoperable.

Another complaint about SET is that transactions take too long to process. Visa officials argue that that will diminish as technology improves. "You cannot look at performance if you don't look at the equipment that's being used to process it," says Steve Herz, svp of Internet commerce at Visa International.

So they built it, but will consumers come? Not likely, says Stevens. "There's been a long-standing trend for users to be perfectly willing to do transactions on the Internet with trusted business partners," he says. It would seem that the wunderkind of Internet commerce,, agrees, since it currently has no plans to implement SET. "There is a massive amount of FUD (fear, uncertainty and doubt) being tossed around to fuel projects like SET, and it makes a lot of sense. You can sell a hell of a lot of software and hardware provided people believe that these problems exist," he adds.

Herz acknowledges that consumer fears of Internet commerce may be easing, but responds, "The point of risk management is recognizing that something could occur and putting in the precautions to minimize the potential."

SET is bound for a slow rollout. So far banks in 30 countries are just implementing Visa SET pilots. "There is an expectation of immediacy that is too high," Herz says.

The Aberdeen Group argues that the long-term viability of SET is intricately tied to smart cards-which would make SET portable-but such card implementation has been pushed off the two-year planning horizon at most banks.


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