Web Informant #91, 10 November 1997
All SET, With No Place To Go


I've written about eCommerce before and had an opportunity to talk to Stephanie Denny (Stephanie@dc3.com). She has worked in the banking and credit card industry for 26 years, with experience in both the acquiring and issuing sides of the business and recently managed e-commerce projects for Bank of America's Credit Card Group as VP & Director of Marketing Communications. Take it away Stephanie.

Even with the latest hype from MasterCard and Visa, I really doubt that secure electronic transactions (SET) finally have arrived. SET is still far from a real working solution with few actual customers and acquiring banks.

The real issue is that SET only solves part of the eCommerce equation. There is a big gap yet to be closed between the PC-based software that enables electronic transactions and the back-end operations and mainframe systems development required for the banks to support all this. These systems are not easily or quickly modified.

Certainly, business-to-business transactions on the Internet are on the increase. However, it will take years for consumer transactions to become commonplace on a large scale. Like the introduction of credit cards and ATMs, it will take a long time for the general public to understand the technology and get comfortable with it. The concept of digital signatures and key pairs is still foreign to most people, and not easily understood. This is precisely the problem for SET.

SET solves one thing well: it removes the bank from having to verify the purchaser since the purchaser uses a secure electronic certificate. But these certificates carry some big baggage:

The more steps required for consumers to make a purchase, the less likely they will be to try it -- especially when things are working just fine without SET. For people who purchase today on the Internet, the convenience of a plain-old secure browser using SSL encryption outweighs any perceived risk.

Many of the senior banking executives who make decisions on large-dollar investments don't really understand the Internet, e-wallets or digital certificates. What incentive do they have to fund a system that will do nothing for their bottom line in the near future? It will take years to see the return on that investment. These days, that's a hard sell in the credit card business.

SET isn't the only solution to eCommerce. It will take so long to implement that someone with a better idea will surely come along. There's room for competition, and partnerships have already been formed that combine technology with transaction settlement expertise.

For example, the Microsoft/First Data Corp. partnership consolidates the resources of the world's largest software developer with one of the world's largest transaction processors. Already they have announced the introduction of electronic banking and bill payment products for early 1998; and together they have the horsepower to develop an independent eCommerce payment system that could rival MasterCard or Visa. It would not necessarily be limited to just credit and debit cards, or even involve cards at all. What's to prevent them from asking for people's account numbers (any type of account, anywhere); and simply providing the settlement services? They own all the pieces of the puzzle to do this.

Ultimately, the evolution will be toward a single "account" for everything; and the expertise of these two giants may well be the catalyst that changes the industry as we know it today.

Self-promotion and site keeping dep't

Thanks, Stephanie. As usual, I have been writing for various publications. I want to call your attention to the following article that appears in this month's Datamation. Entitled, Road map to the extranet, it is a close examination of the things that Coopers' Tax News Network did right in creating their extranet for tax accountants. I think you'll find it interesting.

And my first article for PC Magazine is entitled, The makings of a successful storefront, it is a quick review of some of the things to look for.

David Strom
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