Don’t hold your breath, but the Secured Electronic Transfer (SET) standard for Internet credit card purchases is almost here. MasterCard, Visa and their partners expect to issue the first SET mark — think of it as the SET seal of approval — by Aug. 31, according to industry execs speaking at a recent Internet payments conference in Berkeley, CA.

SET specs were published in June and in late July, MasterCard and Visa formed a body called SetCo to test, certify and police SET-compliant applications. “But it’s not (happening) nearly as fast as vendors would have you believe, and it’ll be up to you to make sure the pieces work together,” Nick DiGiacomo warned bankers attending a meeting sponsored by the National Automated Clearing House Association (NACHA) and Citation Internet Consulting Group.

DiGiacomo is CEO of Tenth Mountain Systems Inc., which will handle testing with SetCo. Companies that pass will sign a trademark licensing agreement to display the SET logo on their Web site.

Meanwhile, SET pilots continue. Beginning this month, Mellon Bank and MasterCard will issue SET credit cards to Mellon and federal employees to purchase U.S. Savings Bonds and federal surplus merchandise online. Bank of America is slated to conduct a live trial by September.

DiGiacomo urged retail banks to get in on the action by issuing SET-compliant wallets to customers — but don't be surprised when they call with questions, he said. “We recommend setting up informational Web sites to take the offensive,” he said. DiGiacomo’s 10-step SET plan for banks:

1. Learn about it. Give responsibility for setting up a SET program to a staffer, not consultant. “You have to have an internal advocate.”

2. Create plans for marketing, security, roll out, and customer service, and establish criteria for choosing platforms and vendors.

3. Choose a certification authority and get SET software certified through SetCo.

4. Choose a SET server that connects to the Internet, existing banking systems, payment networks.

5. Integrate SET with merchant account balances, statements, payment networks.

6. Select customer electronic-commerce software.

7. Have your SET service tested, preferably by an outside party “so you don’t run into blind spots.”

8. Establish support services such as operations, maintenance and customer service, and make sure systems are in place to meet regulatory, compliance and audit requirements.

9. Participate in a pilot with explicitly stated entrance and exit criteria. Pick “friendly” partners, not Net-heads, as testers. Use results to measure acceptance or resistance to e-commerce in and outside your organization.

10. Keep your SET service updated.

SET was among several Internet payments issues discussed at the first of a series of seminars to be held around the country through October by NACHA and Citation, a Texas-based consulting group.

Other Conference Highlights

Online Bill Pay: Do consumers want to pay their phone bill at the phone company Web site, their gas bill at the gas company site, and so on, or visit one place to pay everything? Checkfree, MECA, Microsoft and BillSite are betting on the latter and building mega-Web sites they’re marketing to telephone companies, utilities and others. But CyberCash VP Richard Crone believes consumers will want to hop from site to site, and utilities will want to stick bills on their own sites so they can sell ad banners. Meanwhile, Internet bill trials continue, and a few pioneers such as National Utility Investors  www.nui.com and Brooklyn Union Gas www.bug.com are already online. Predicted for the future: PointCast type systems that broadcast bills to consumer’s e-mail boxes.

Other Net-Based Debit Transactions: EFunds Corp., a Tustin, CA, online payments company, has outfitted 150 to 200 merchant clients to accept debit payments via the net. Of 100,000 to 150,000 payments processed so far, only 10 haven’t cleared, “so small it’s probably bank error,” said Neil Godfrey, EFunds CEO. According to Godfrey is EFunds is unique in providing merchants with a turnkey system — hardware, software and gateways to banks.

By the Numbers

• 90% of top 50 U.S. banks will offer full-service Internet banking by 1999.
• By 2000, 1,100 banks will offer full-service Internet banking.
• By 2000, 85% of Internet-capable banks will offer DDA accounts.
• Consumers made $1 billion in purchases on the Web in 1996.
• Women now constitute 42% of the Internet population.
• By 2000, consumer and biz-to-biz e-commerce transactions will hit $150 billion.
• Commercial “.com” Web sites jumped to 623,002 in May 1997 from 123,372 the previous year.
• 69% of all billers with five million or more customers will begin building BPM by the end of 1997.

Source: Various speakers at CICG/NACHA Internet Payments Conf.

Micropayments: Digital Equipment Corp.’s Millicent micropayment system should be available to consumers by year’s end, offering script in increments of a tenth of a cent to $5. Companies offering content during a trial phase: Reuters, Music411, Songline Studios and Investors Daily. Digital expects Millicent micropayments to grow to $4 billion in revenue by 2000. That’s counting on 25% of the net population spending 50 cents a day, said Stan Hayami, Digital’s Micro-Commerce Business Mgr.

Net-Based EDI: Lawrence Livermore National Laboratory, a $1 billion government research lab in Livermore, CA, spent 10 months and $60,000 moving its electronic data interchange (EDI) operations to the Internet, working with banking partner Bank of America. Two years later, the lab uses the system to make $15 million in monthly payments to vendors, and 96.3% of payables go out on time. So far, Lawrence Livermore is Bank of America’s only EDI customer using the Net, but the bank’s working to line up new customers, according to BofA EDI Specialist Rett Summerville.

Electronic Postal Service: Add the U.S. Postal Service to the list of players wanting into the e-commerce arena. The USPS is looking for partners for test of a time and date-stamped electronic postmark to begin this fall, with commercial availability in summer 1998. Proposed price: 22 cents per message of 50K or less. Law firms and financial services companies are two top prospects for the services, said Leo Campbell, USPS e-commerce manager. The USPS is also looking into offering electronic P.O. boxes, and hasn’t decided whether it will become a certification authority for digital certificates.

More on Digital Certificates: Market leader VeriSign will issue Class I, II and III digital certificates, to be used in SET transactions. Free Class I certificates verify an e-mail address; Class II cost $19.95 and include name, address, e-mail address authenticated against Equifax or other consumer credit database and verified via snail mail (see also QSpace p. 5). Class III aren’t being issued yet, but will involve some type of in-person identity check, said Bob Pratt, VeriSign Product Line Manager. VeriSign plans to roll out a digital certificate corporate outsourcing service this fall.

NACHA: To help speed up development of Internet payments, NACHA’s Internet Council is participating in a project with Mellon Bank, Bank of America, ABN AMRO, and others to test issuing and honoring digital certificates. A NACHA Internet Council working group is analyzing whether consumers could use the Internet to make direct ACH payments, with or without a signature. “If a consumer could transact with a bank to pay a merchant, it could be more practical and useful than making a payment directly to a merchant they don’t know,” said Leilani W. Doyle, a NACHA Internet Council member and Division Manager, Citation Internet Consulting Group.

Coming Attractions

NACHA and Citation Internet Consulting Group will hold Internet payments conferences in Denver, Chicago, Atlanta and Boston between August and October. Find more information on the NACHA Web site www.nacha.org  or call 703.742.9190.

Contacts: Rett Summerville is EDI Specialist at BofA, 415.436.5488. Leilani W. Doyle is Division Manager at Citation Internet Consulting Group, 713.461.1592, ldoyle@cicg.com . Richard Crone is VP at CyberCash, 415.413.0165 or rcrone@cybercash.com . Stan Hayami is Micro-Commerce Business Manager at Digital, millicent@digital.com . Neil Godfrey is CEO at Efunds, 714.259.5266, info@e-funds.com . Nick DiGiacomo is CEO at Tenth Mountain Systems, 619.458.2655, nick@yourservice.net . At the U.S. Postal Service, Leo Campbell is E-Commerce Manager; Kim Parks is New Business Sales Manager 703.526.2655. Bob Pratt is Product Line Manager at VeriSign, 415.429.3427.

Michelle V. Rafter

Michelle V. Rafter covers the Internet for Reuters, WebWeek, the Los Angeles Times and others. Reach her at mvrafter@deltanet.com .