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  1. Technology
April 1, 1996


By CBR Staff Writer

From Multimedia Futures, a sister publication

Successful on-line credit card transactions will bring the Internet into mainstream business. Our sister publication takes a look at the companies offering the service and the merchant systems available. Cybercash’s system is the Secure Internet Payment Service. The first step for a merchant is to set up an account with a bank offering merchant credit card accounts and is happy for him to accept credit card transactions over the Internet. Cybercash has signed up around 20 banks that are prepared to do this. These include Wells Fargo, Norwest, First National Bank of Omaha, First USA, First Union Corp and American Express.

By Abigail Waraker

This step is the same for merchants going via First Data. First Data process for 1,400 banks but said it is up to the individual bank whether it takes Internet transactions. First Data did not have figure for how many of them do, but the list includes Wells Fargo again, Wachovia Bank, US Bank and Bank One. So far so good, but only for US merchants. Neither organization has any non-US banks signed up. We will have non-US banks signed up by the end of this year, said Gregg Gumbinger, director of marketing in the Card Services Group at First Data. In the meantime the merchant could sell in US dollars and process via a US bank, but not in their local currency. Whether they can set up an account with a US bank depends on who the bank is, who the merchant is and the amount of risk the bank wants to undertake for a non-US merchant account. Once he’s got his account, the merchant needs to set up the server. Cybercash’s merchant software is server application independent as long as its running a compatible operating system, such as Sun OS, Solaris, Windows NT. This is suited to companies that already have a Web presence as they can build onto their existing platform. First Data’s system, on the other hand, is only compatible with Netscape’s server applications – the Merchant System, IStore, Publishing System or Community System. So its okay for merchants who haven’t yet got Web presence because they can start with Netscape servers, but not much use for companies who already have servers that aren’t Netscape compatible. To this end First Data has a contract with Cybercash. The contract is for our bank customers who want to offer Cybercash to their merchants because not all merchants have Netscape, Gumbinger said. And First Data is happy for its system to exist side by side with Cybercash’s. We don’t want to disparage Cybercash, he said. First Data’s Netscape-only platform came about because in November 1994 when a leased line was set up between the two organizations so Netscape could offer its customers secure on-line transactions. First Data is now working to make its electronic payment system compatible with other servers, but is not ready to give details. Once the merchant is on-line he needs customers. From the end user’s point of view, there is one main difference between the two on-line payment systems. To pay via the Cybercash system the user first has to download the Cybercash Wallet from the company’s Web site at Then, he fills out a merchant’s order form and selects a payment method. Clicking the Cybercash button automatically activates the Cybercash Wallet application. Once he has highlighted the credit card he wants to use, he hits the final pay button and in twenty seconds or less, receives a receipt for the transaction, or a message saying the credit card was no good. The consumer’s credit card information is stored on his PC and not at Cybercash. It is encrypted by the Cybercash Wallet once the final pay button is hit. The information goes from the PC to the merchant, who cannot see the card information, and then passed to Cybercash. Cybercash passes the information over private lines to the credit card and bank processors for instant authorization and processing. The authorization is sent back to Cybercash, who passes it along to the merchant, from where a receipt is sent back t

o the consumer. Once the credit card has been authorized at the proper financial institutions, the number is no longer passed back, so there is no need for re- encrypting the information. Cybercash uses 1024-bit RSA cryptography in its software and both Cybercash and First Data are working to make their systems compliant with the Visa/Mastercard Secure Electronic Transaction standard when it comes out at the end of the year. If customers buy using the First Data system, they don’t have to download any extra ‘wallet’ software. They simply make a purchase, but don’t have the benefit of the extra encryption provided by the Cybercash Wallet. The credit card details go via the merchant to First Data and the merchant’s bank for authorization. Once the merchant has the customer’s money, the next concern is the how much extra he will have to hand back to the bank in charges. Cybercash said there is no extra charge for merchants using Cybercash. Banks charge the merchant the same percentage of the transaction that they do for any credit card purchase. Cybercash gets a per transaction fee of around 20 to 30 cents from the bank. First Data makes money by charging the banks for its service. The banks signs the merchants and its up to each of them whether they charge the merchant a premium for on-line transactions. Gumbinger said he thought banks would charge a premium for on-line transactions, but said this was up to the banks. Cybercash has had a head start in establishing its system. To date Cybercash has around 40 merchants offering on-line credit card transactions with another 100 waiting to get set up. Cybercash estimates it gets more 10,000 transactions each day. First Data only has two merchants up and running – Netscape and Great Food On-line, based out of Seattle, Washington. Both services are young so which one takes off remains to be seen.

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