share of the Internet commerce market this Christmas season and beyond has put a digital wallet on its must-have list.

If only consumers felt the same way and went to Santa with their own wish for wallets, then the banks might really be on to something. Their best hope, for the moment, seems to be that by the time people are deep into their on-line gift shopping, they will begin to understand and appreciate what a wallet is.

For now, it still requires explanation, and the more that this is required, the harder it will be to sell.

At bottom, it is a piece of software that emulates on the computer screen what shoppers do in a retail store when they want to make a payment choice. Containing and transmitting both payment and shipping information, it is supposed to eliminate the hassle of filling out multiple pages of order forms.

"One-click shopping," which various electronic commerce sites and vendors promote, is a simple and compelling refinement of a digital wallet. In many of those cases, consumers have previously -- in the process of registration -- made a "default" payment choice.

At stake for banks and others are brand identity, customer loyalty, and the desire to be "top of mind." Those that want to issue wallets see them as something akin to a portal, a way of "owning the customer" to the extent that is possible.

"Despite certain barriers to consumer adoption, electronic wallets could catalyze an inflection in portable consumer identity that would give consumers a new measure of control over their personal data," David Card, senior analyst of Jupiter Communications in New York, said at a conference in June.

He put digital wallets in the context of "a new paradigm in user-interface design catalyzed by electronic programming guides and, at long last, interactive television."

Red Herring magazine this week put electronic wallets within the broader trend of "the Web gets personal," No. 3 on its list of top 10 technology trends for 2000. (The top two were "clicks and mortar" strategies and business-to-business commerce exchanges.) The magazine predicted wallets will "become commonplace," as will "infomediaries" and the consolidation of Web portals with "big media."

In fact, the wallet notion has been kicking around for about half a decade, and something useful may finally be emerging from the ferment. Banks are pairing off with wallet vendors. American Express Co. is expected this month to reveal details of the wallet it is delivering with its Blue smart card.

Some of the best companies and minds in the payments and technology businesses -- MasterCard and Visa, their member banks and competitors, Internet innovators like Microsoft and Netscape, traditional powers like International Business Machines Corp., and upstart software companies like Trintech and Brodia -- have made impressive strides in both a technical and marketing sense. In many instances, the focus is on keeping banks and their brand names at the center of process.

"If it is not commerce-enabling through banks, then we question the long-term value proposition," said Ron Martinez, president and chief executive officer of Brodia, which has developed close ties with several top credit card banks.

"Bank brands still represent the most trust in terms of financial matters, and the wallet is the manifestation of the credit card on the Web," said Arthur Kranzley, senior vice president of e-commerce and emerging technologies at MasterCard International, which has formed an alliance with IBM to distribute wallets as widely as they can.

But this wallet business appears to be even more complicated than the typical push and pull of Internet technologies with their continual iterations and revisions. Accommodating merchants' varying information needs and formats has occupied much of the technologists' attention, and standardization efforts, though significant and widely supported, have turned out to be no panacea.

There is even disagreement about what a digital wallet is -- what information it should contain, where it should be stored, and how it should work in a "mechanical" sense.

"It takes a while in any high-tech field to figure out what the platform -- in this case the Internet -- is capable of," Mr. Martinez said. "In a case like this, there are going to be more bad ideas than good ideas. We have to improve the signal-to-noise ratio."

To Brodia, a basic payment wallet -- what Mr. Martinez calls a "form-filler" -- is not enough. The San Francisco company, formerly Transactor Networks and fueled by $40 million in venture capital, banks on the more broadly defined portal-like concept of a "consumer shopping hub."

Many vendors, notably Globeset Inc., which quietly stays in the background while customers use its technology to trumpet their brands, offer to deliver just about any level of simplicity or sophistication that anybody will call for.

There is even an anti-wallet, which might be the description of a proposal put forward by the cryptologist David Chaum. The inventor of digital cash for Internet, an idea before its time, Mr. Chaum would establish an intermediary Web site where a cardholder who might be wary of doing business on-line could get an authorized, one-time card number to complete a transaction with any merchant.

Meanwhile, "e-tailers" from Amazon.com on down continue to go their merry way with their own one-click techniques that help keep repeat visitors hooked. And wherever e-commerce infrastructures emerge, Microsoft Corp. is there, and so is America Online Inc. with its Netscape Communications subsidiary -- with embedded wallet technology, of course.

"We don't think banks are going to be factors in the whole wallet business," said Bill Doyle, an electronic commerce and financial services analyst at Forrester Research Inc. in Cambridge, Mass. "The winners in wallets will be AOL, which already has the credit card numbers of 18 million members, and Amazon, which has eight million shoppers and will capitalize on their one-click advantage."

Banks' best bet is to "make it really easy for consumers to put them at the top of the wallet, and for the wallet managers -- the AOLs, the Amazons -- to work with them."

John McGuire, president and CEO of Trintech Group of San Mateo, Calif., which recently raised $60 million in an initial public stock offering, warned that on-line retailers that register credit card numbers "disintermediate the banks, because that cardholder doesn't see the brand of that card or bank again. It becomes a transparent vehicle for payment, which is good for the retailer."

Trintech has had a close relationship with Visa, which is "working very hard to help our member banks implement bank-branded wallet distribution programs," said Steve Ryan, senior vice president of technology in the eVisa division.

"I don't believe consumers look at portals and shopping destinations in the same way as the trusted financial brands that they have known and are accustomed to," he said. "I don't think those (nonbank) companies are going to morph themselves into that role. Banks are banks, they're banks for a reason, and people are always going to look to banks" on the Internet or elsewhere.

None of the nonbank Internet companies "can sell what we have -- safety, security, and privacy," said an executive at one big bank that is preparing to release a wallet.

Within a couple of weeks, Visa expects to make a splashy digital wallet announcement involving "multiple vendors and multiple banks," Mr. Ryan said.

"Some (banks) are looking to provide basic form-filling capabilities, some are looking to tie in merchant offers, some are trying to blend in on-line banking capabilities," Mr. Ryan added.

"It's safe to say that today's wallets are primarily payment-focused -- that's something that's easy to grasp and capture and build functionality around," he said. "But I think they'll go down an evolutionary path that will build portal material around them." They can be "a place with access into on-line banking applications, a place where people get their news feeds, a personal portal with a financial spin to it."

Philip G. Heasley, president and chief operating officer U.S. Bancorp in Minneapolis and chairman of the Visa U.S.A. board, called the digital wallet a "bridging product" to a time when "we at the bank will give you your own personalized Web page, and it will have all the kinds of stuff you want to do." That is "where you're generating your payments, versus carrying a wallet around."

The view at MasterCard is similar. Mr. Kranzley said the wallet "represents a mini-portal or console that enables a bank to build and enhance their customer relationship." Possible add-ons could include discounts and special offers from merchants, or Internet links to an on-line banking Web page.

People like Mr. McGuire, Mr. Kranzley, and their partners and competitors at IBM, Microsoft, Netscape, American Express, and the rest have been around this block numerous times, dating back to the original designs for SET, the Secure Electronic Transaction protocol for Internet payments. SET has struggled to gain acceptance, but it posited a wallet on the consumer's desktop. That may have made an already difficult standard harder to swallow, but it was a start.

Mr. Ryan said that when Visa began working on wallets two years ago, the prevailing technical paradigm was the cumbersome "fat client" -- a consumer would have to download wallet software from a Web site.

Mr. McGuire recalled that Trintech's first wallet, four megabytes in size, took 40 minutes to load. Two million were sold and "I can count 20 that are being used today." Mr. McGuire now declares that "the wallet is dead." Taking a different tack from Mr. Chaum's anti-wallet, Trintech is pushing a "digital credit card," Mr. McGuire said. "When you're presented with the payment page, you simply drag and drop."

Citibank last month introduced such a virtual card only for Internet use, and it is expected to come out soon with a full wallet offering.

Storage of personal information on remote servers scares some people for security and privacy reasons, which could be an opening for financial service companies to capitalize on their high levels of customer trust. Timothy Lee, vice president of corporate development at Brodia and a former member of American Express' Blue card and e-wallet team, said advances in security technology address any concerns, and they mesh well with evolving consumer preferences.

"People are ready for on-line banking and brokerage, and in the same way they are ready for on-line wallets," Mr. Lee said.

In June, an all-star roster of card and electronic commerce companies announced agreement on an open standard to streamline form-filling, the Electronic Commerce Modeling Language, or ECML.That was important as an "operability standard that allows wallets to work seamlessly with merchant servers with minimal impact to" a merchant's Web site, said Mr. Ryan of Visa.

Mr. Martinez of Brodia, an ECML supporter along with Trintech, AOL, Cybercash Inc., and others, said its major contribution so far has been to "legitimize the category of consumer commerce enablers." Adoption of the standard will take longer than one Christmas season, forcing these companies to tweak their software to work with as many on-line stores as possible. Brodia, for example, is compatible with 800; Globeset gave the number 1,000 in a recent product release. Microsoft's Passport has only about 50.

Mr. Martinez urges skepticism about big advertised numbers. Accuracy is a wallet's stock in trade, and a failure to deliver will turn consumers off. Though there is a concentration of commerce among relatively few Web merchants, their total number is climbing into millions and today's wallets therefore lack universality.

"You don't want your consumers to have a bad experience right out of the box," said Nancy Goldberg, executive vice president at Cybercash in Reston, Va., which claims to have invented the wallet in 1995. "You really do not want the early adopters here to fall on their faces."

"I wish I could say the wallet space is getting simpler, but it's not," Ms. Goldberg said. Her company has yet to see more than scattered consumer usage.

Among the active promoters is NextCard Inc. of San Francisco, which markets Visa cards primarily as tools for Internet commerce. Superseding an earlier agreement with Launchpad Technologies Inc. of San Diego and its eWallet, NextCard announced a program in October with Gator.com. This San Mateo, Calif., start-up gives away wallet-style software through its Web site. Customers get a Gator icon on their desktop, which usually pops up on its own in conjunction with a merchant order form.

Under the NextCard system -- which the company calls a "concierge" to distinguish it from a wallet -- "all of the data resides on the customer's desktop," said Shripriya Mahesh, director of e-commerce at the card company. "We found that our customers are much happier knowing that the data is stored encrypted on their own computer."

Mr. Lee at Brodia, which similarly cobrands, leaves an icon on the PC, and programs its payment screen to pop up at the right moment, argued that a "downloaded client is the wrong path" if the objective is to deliver a comprehensive shopping hub. Brodia, by avoiding that pitfall, is "six to nine months ahead of the competition," he claimed.

As for the merchants, they have yet to see a business case, according to Elaine Rubin, chairman of Shop.org, a 250-member association of Internet retailers. The big problem is that standards are lacking, she said, and in that area, "merchants aren't going to take the lead."

"Wallets will eventually happen," but the current debates are mostly over "moot points," said Bob Lozano, CEO of Paylinx Corp., a St. Louis-based developer of integrated payment systems for merchants. "Right now it looks like there is no money to be made from wallets, so a standard has to happen." Until there is a "critical mass" that makes one feasible, retailers will be content to stand by.

"Amazon already has a wallet," Mr. Lozano said. "What's the problem?"

Though Beyond.com, Dell Computer Corp., Fashionmall.com, and other Net sellers expressed support for ECML, the prevailing retailer attitude is to "sit back and say, 'What is the consumer accepting?' " Ms. Rubin said.

For the 1999 holiday season, "it's all about credit cards," she said, "and it's all about the traditional way you accept credit cards on the Internet."

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