AT&T plans to trial smart cards for electronic payments over the Internet, using Mondex International's electronic cash system.
The trial will be the first implementation of the Internet Open Trading Protocols, which spell out handling of invoices, receipts, delivery refunds, and other facets of electronic commerce. AT&T, Mondex, and Hewlett-Packard. developed the protocols and plan to publish them in the second quarter of this year, with an eye towards their adoption as standards. The protocols, which are designed to work with other Internet payment systems besides Mondex's, are complementary to the SET (Secure Electronic Transactions) secure credit card payment protocol.
AT&T plans to integrate the Mondex system with its SecureBuy Service, a secure payment offering, officials say. HP and OpenMarket Inc. are both working with AT&T on the project. AT&T plans to begin testing the Mondex system in the middle of this year. If the trial is successful, AT&T expects to incorporate the system with SecureBuy early in the first half of next year and will call its card the AT&T Universal Card.
Mondex chip cards store electronic cash. Under AT&T's planned system, customers will make Web payments by swiping their card through a reader attached to a PC's serial port, according to an AT&T spokesman. Since the payment does not have to be verified by a financial institution, Mondex cards can cost-effectively be used for large transactions as well as transactions under US$10, or "micropayments," the spokesman said.
However, banks may charge for downloading electronic cash to a card and for uploading electronic cash from a merchant, says Janet Crane, president and CEO of Mondex.
A group of financial institutions plan to deploy Mondex solutions before the end of the year, Mondex officials say. Those institutions include: Wells Fargo Bank of California, Chase Manhattan Bank, Michigan National Bank and credit card companies Discovery and Mastercard.
AT&T also announced an alliance with Wells Fargo whereby AT&T will use Wells Fargo to clear credit card payments made through its SecureBuy Service and Wells Fargo will refer its merchants to AT&T's service.
Meanwhile, keyboards that include smart card readers will be available from Microsoft, HP and Gemplus by the end of the year.
Mondex says fears surrounding the use of Mondex cards for money laundering or illegal transactions have been addressed by limiting to $1000 the amount of cash that can be downloaded to a card at a time. In addition, the cards will be fully auditable as a record of the time, place and amount of the transaction. The information will be maintained by the issuing bank.
Mondex is gaining widespread acceptance, according to Debra Rossi, senior vice president of electronic payment solutions at Wells Fargo. "There are a number of companies that we are talking to that don't like to use cash," she says. For instance, San Francisco's BART (Bay Area Rapid Transit) system is considering using Mondex as a ticketing system for its customers, Rossi says.