February 21, 1996 3:00 p.m.
Oracle rolls out Net payment system
By Maria Seminerio and Jim Kerstetter
The planned creation of an integrated end-to-end Internet payment system
announced today by Oracle Corp. and VeriFone Inc. could be the last piece of
the electronic commerce puzzle, ushering in a boom in consumer Internet buying
over the next five years, analysts predicted.
The two companies, both of Redwood City, Calif., said they will collaborate
to develop the system, touted as the first payment-capable World-Wide Web
server on the market, for shipment by the third quarter of this year.
The alliance would combine Oracle's WebServer 2.0 with Verifone's secure
payment software. Using the new product, businesses and banks could offer an
open, online payment system to handle Internet transactions. For banks, in
particular, the new package means they won't have to change from their current
systems in order to go online.
"If we expect the financial comunity to change ... to accomodate payments
from the Internet, we are going to be waiting for a long time," said Roger
Bertman, vice president and general manager for ETI/Internet Commerce at
Initially, the companies plan to offer two modules, officials said. The first
would use VeriFone's basic merchant payment capabilities, which allow
businesses to use Web servers for Internet credit-card processing in real
time. A more enhanced module will include functions such as transaction
reporting. Down the line, VeriFone hopes to add other options such as
electronic cash and electronic checks.
Oracle WebServer 2.0 supports the SSL (Secure Sockets Layer) 2.0 security
standard for encrypting data between the Web browser and Web server. The
server also provides authentication to prevent unauthorized access to Web
server content and integrates with the Oracle7 database's security features.
In addition, Verifone's Pay Window, which gives transaction options such as
using different credit cards, will be incorporated into the free Oracle
PowerBrowser. The companies said they will also release an Internet gateway
for electronic comerce, a key component to link computer systems at major
corporations to the Internet. The gateway will support all standard software
supplied by Internet commerce providers, such as the standard proposed by
Mastercard International Inc. and Visa International Inc.
Following the recent announcement of a secure electronic transaction standard
by MasterCard and Visa, the development of the Oracle/VeriFone system marks a
significant step forward for electronic commerce, said Scott Smith, an
electronic commerce analyst with Jupiter Communications, of New York.
"Lots of little makeshift solutions have been knitted together from various
technologies within the past year," Smith said, "but lately big-name companies
have been stepping in."
"The big deal with this is that it puts the whole chain into place, or begins
to," he said.
The VeriFone system already controls credit-card processing, and the
MasterCard/Visa standard for encrypted transactions will provide security,
What will link the pieces together are the browsers available from Microsoft
Corp. and Netscape Communications Corp., providing front-end access, and the
new VeriFone/Oracle system, "taking care of the back end," he said.
"The Oracle/VeriFone Internet Gateway would be designed to support all
standard compliant software supplied by Internet commerce providers, such as
the SET standard proposed by MasterCard and Visa," the companies said in a
VeriFone "has a lock on that market" of linkages between merchants and banks,
Smith said, with 60 percent of the electronic swipe-box market.
"VeriFone is one of the few companies that can bring this solution to the
market," Smith said.
Consumers should see the system up and running by the holiday season, he predicted.
If consumers warm up to the idea of Internet purchasing as some analysts
believe they will, it means nothing but good times ahead for retailers, said
Gibbs Moody, an analyst on enterprise software and electronic commerce for
First Albany Corp. in San Francisco.
"This is an attempt to make the electronic commerce portion of the Internet
more palatable to consumers," Moody said.
"If the consumer [electronic purchasing] market is $4 billion today and we
look out five years, with current Internet users becoming more comfortable
with low-end EDI [electronic data interchange], we could be talking about a
$10 or $12 billion market after five years," Moody said.
The companies said they will offer payment modules with two levels of
capability. The first system would use VeriFone's basic merchant-payment
capabilities, enabling merchants to use Web servers for Internet credit-card
processing, automatic authorization of transactions, and account credits.
An enhanced system, for more complex merchant requirements, would include
extensive administrative functions such as transaction reporting.
Eventually the system would allow vendors to add options such as electronic
cash, electronic checks, smart cards, and debit cards, company officials said.
No information is yet available on pricing, said officials with the companies.