Recently Netted...; December 1996; Scientific American Magazine; by Eisenberg; 1 Page(s)
Easy Electronic Charging. By spring, virtual-credit-card-swiping machines are going to become as ubiquitous as the real ones that now sit on checkout counters. The dominant player in Internet credit-card authorization will most likely be VeriFone (http://www.verifone.com/), the company that owns about three quarters of the domestic market for swipe terminals. VeriFone is now offering software that is SET-compliant (from "secure electronic transactions," the protocol worked out by MasterCard, Visa, IBM, Microsoft and others). The program sends the buyer¿s encrypted, digitally signed payment via the Internet to the financial institution, which then sends the approval codes back to the merchant.
Because the software also verifies the digital signature and safeguards against tampering, it is the equivalent of the magnetic strip on a real credit card. The system should reduce the expense of electronic transactions (credit-card purchases by telephone cost the merchants more, to cover the possibility of fraud). According to Fred Kost of VeriFone, Wells Fargo Bank will offer the company¿s point-of-sale software to its merchant customers by year¿s end. The cost will be about $1,500, which is $700 more than the outlay for a physical processor, but banks are expected to discount the devices as they seek to galvanize electronic commerce.