SET aims to reassure Net shoppers

According to an Irish Internet Association survey, 39 per cent of Irish Internet users have bought something online. That is impressive when you consider that Internet transactions have had plenty of negative publicity, primarily focused on credit card security.

The widely-trumpeted worry is that if you send your credit card number over the Web, a wily hacker may intercept it and then go on a shopping spree. While that's possible, it's not probable.

Most people give card details out to complete strangers - a shop assistant, the person taking bookings at the theatre or cinema, a travel agent - and think nothing of it. Still, an Economist article recently revealed that 95 per cent of Americans say they would not give their credit card details out over the Internet.

Visa and MasterCard, not to mention hundreds of thousands of anxious retailers, are hoping that will all change now that they've finished the trials of their encryption system for Internet credit card transactions, called SET (Secure Electronic Transactions).

SET allows a buyer to scramble credit card information by using a software "key"; the recipient then unscrambles the data using another key.

In addition, SET uses "digital certificates", certificates which are issued to each party to a transaction and guarantee the authenticity of each. As a buyer, you need two bits of software, both a digital "wallet" and a certificate. Software for a transaction is held on the buyer's and seller's computers as well as at the trader's bank.

In other words, it's a fairly complex system, which is one reason why it has taken two years for SET to reach the market. Initial trials, which involved 16 European banks, ended in September (Bank of Ireland took the honours as the first European bank to complete a SET transaction), but there are still concerns about interoperability - whether software from different vendors will work together smoothly.

In addition, all the earlier SET certificates in use expired in the middle of November and must be replaced with a newer version. Finally, everyone's waiting while Visa and MasterCard begin certifying software vendors as SET-compliant, according to Mr Conor O'Toole, head of Internet businesses for Bank of Ireland. "In the interim period, each bank moves at its own pace," he said.

Visa and MasterCard have been joined by American Express and the Japanese giant JCB to oversee the implementation of SET. The involvement of the two will give added credibility to SET.

However, Mr O'Toole thinks it will be March before SET's is up and running. Then, merchants and banks across the globe will be hoping that consumer wallets will open wide. For although many Internet users have bought something at least once - International Data Corporation predicts there will be $1 billion in online transactions in 1997 - only 1 per cent of the online audience say they go online specifically to shop.

IDC predicts that could jump to about $30 billion by 2001 ($4 billion of that in Britain). Does Bank of Ireland take those numbers seriously? Well, they have quietly introduced their own Internet service, BOINet (connectivity is actually provided by Telecom Internet), which might seem an odd thing for a bank to do - unless you see the payback coming from something besides those narrow-margin subscription fees. For example, if you view your subscribers as a potential market.

Many Internet service providers (ISPs) initially believed their home subscribers, as an in-built market, would prove an attractive draw to the more lucrative business account market (lucrative as ISPs can sell services and add-on features to businesses). That hasn't happened yet. Perhaps SET will change the picture.