At a London launch party last month, Mondex International renewed its call for an Internet payments standard.

The party marked the introduction of SmartAxis, an on-line sales system for digital goods.

For the last two years Mondex has been championing the proposed Open Trading Protocol payments standard with an impressive list of allies, including British Telecom, Hewlett-Packard Co., Sun Microsystems Inc., and AT&T (now Citibank) Universal Card Services.

In SmartAxis, the product of a joint venture of several European telecommunications companies, Mondex sees its vision of electronic cash coming to fruition in the form of on-line micropayments, initiated with smart cards and without regard to currency, brand, or other impediments.

Mondex and its protocol allies support the "open standards" principle that all competing products or systems need some basic degree of interoperability. The Internet Engineering Task Force found their case compelling enough to agree last summer to take on the project, now known as IOTP, for Internet Open Trading Protocol.

Citing a projection that there will be 653 million Internet users worldwide by 2001, Mondex senior business development manager Owain Powell- Jones said, "The need for a single, global protocol for virtual payments is becoming increasingly pressing if e-commerce is to realize its full potential."

The supporting group does not yet include Visa International, a habitual antagonist of Mondex and Mondex's 51% owner, MasterCard International. IOTP probably needs at least tacit Visa acceptance; Mondex officials would not talk about attempts to smooth over differences, hinting that they are at a sensitive stage.

IOTP is described as complementary to other standards that MasterCard and Visa have agreed on: SET, the Secure Electronic Transactions protocol for the Internet, and EMV, the Europay-MasterCard-Visa convention for smart card acceptance in terminals. IOTP would accommodate a range of payment choices by Internet purchasers.

Mondex underscored its backing for IOTP at the SmartAxis launch because the two companies share that aspiration.

They have been collaborating since Unisource - a venture of KPN Telecom of the Netherlands, Telia of Sweden, and others - started its micropayments project in 1996. In March 1997, they demonstrated the first Mondex Internet transactions using a GSM cell phone.

National Westminster Bank of London, the institution that invented Mondex, worked on the United Kingdom implementation of SmartAxis. It expects to have 200 cardholders using the system within the next couple of months.

Natwest was also involved in a wireless banking pilot using the Nokia 9000 Communicator in late 1997.

Julian Wilson, chief executive officer of SmartAxis, which is based in Amsterdam and was officially spun out from Unisource as of December, said:

"There are two trends that dominate the world of information technology: the migration of entertainment and telephony networks to Internet protocols, and the proliferation of smart cards for identification and cash replacement.

"SmartAxis integrates these two trends to provide an efficient and true micropayment service for digital goods, and the Mondex purse scheme offers an ideal and commercial product for this service."

SmartAxis' focus on sales of digital goods over the Internet "plays to our strengths," Mr. Powell-Jones said.

Though Mr. Wilson expressed partiality toward Mondex, he also lauded IOTP and necessarily subscribes to openness. That has gotten at least an indirect lever into the Visa camp.

Banksys, the Belgian payment services cooperative and originator of the Proton electronic purse system, worked on a Belgian franc version of SmartAxis. Banksys is now a co-owner, with Visa International and others, of Proton World International, a key exponent of Visa's Java language-based smart card strategy, which competes with MasterCard-Mondex.

SmartAxis also developed, on its own, a euro-denominated alternative called e-Axis.

The company portrays itself as smart-card-friendly, bridging the likes of Mondex and Proton with e-commerce enabling systems typified by those of Open Market Inc., another SmartAxis partner.

"The service will offer the e-merchant an alternative or complement to the increasingly difficult subscription or advertising-supported business models," SmartAxis said in announcing the availability of a prototype at its Web site,

"The system offers the vendor an option to sell low-value digital services-in the short term, the hire of a game, software, or music track," the company said. Longer-term possibilities would be "any pay-as-you-go service, e.g. videos or telephony."

Mondex, Proton, KPN Telecom's Chipper card, and many other smart card programs offer loyalty-point options, and these are integral to SmartAxis.

"To SmartAxis," the company explains at its Web site, "a loyalty scheme based on a smart card is just one more soft currency... A prepaid card like the telephone cards issued by KPN, Telia, or British Telecom could be thought of as another currency scheme."

"We work with SmartAxis, but we agree the system should be open and neutral," said Mr. Powell-Jones of Mondex in London. The SmartAxis Internet payment system is "an acknowledgement of our core values and tenets," including "easy access by both consumers and merchants, low marginal costs, cross-border, and multi-channel."

Mondex development director David Burdett, who is based in San Francisco, said the IOTP version 1.0 specification has advanced significantly since last August under the Internet Engineering Task Force's auspices.

An electronic commerce project coordinated by the Japanese Ministry of International Trade and Industry plans to use IOTP along with SET this fall. SIZ, the German savings banks association and a major participant in the Geldkarte electronic purse program, is said to be planning an IOTP pilot.

Mr. Burdett said Mondex is keenly tracking an Organization for Economic Cooperation and Development technical advisory group that is looking into trading protocols for tax collections and other transactions, for which IOTP seems well suited.

Mondex International said its French member, Credit Mutuel, will be the first bank to make a full commercial introduction of electronic euros on smart cards.

The Paris institution, the largest merchant-acquiring bank and second- largest credit card issuer in France, expects to issue the first euro- denominated Mondex cards in June. The total would rise to 50,000 by yearend and at least two million by the end of 2000.

Plans are to allow secure network access and Internet micropayments in addition to conventional, physical shopping opportunities, with the new European currency sitting alongside others on Mondex chips.

Credit Mutuel will rely on Hitachi of Japan for infrastructure modifications and its One Box Solution, which allows for transfers of Mondex value between the bank and various client devices.

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