Cyber shopping, in which records, holidays and groceries can be bought through personal computers, may move from vision to reality following news that a secure system of payment is now available, according to a new report.
Nervousness over the security of such transactions has dampened enthusiasm for electronic commerce, although many big retailers have already launched virtual shopping malls on the World Wide Web, linked to personal computers across the world by telephone lines.
"The Secure Electronic Transaction (SET) standard that Visa and MasterCard are introducing will become the dominant means by which consumers make secure purchases over the Internet during the next five years," SRI Consulting, an independent high-tech consulting group, said in a study.
Visa provides credit card facilities through 21,000 member financial institutions for nearly 600 million people. MasterCard, with slightly more member financial institutions worldwide, generated business worth more than $550 billion (£383 billion) last year.
Launching SET on Monday, Visa and MasterCard said the system was a global standard allowing secure payments over open networks like the Internet. Card holders and merchants can use special codes and software for authentication.
Would-be cyber shoppers call up an Internet site which can include a range of different stores, and click the computer mouse on the symbol for the store they want to browse. Currently, if they want to buy, credit card details have to be transmitted across public telephone wires.
Analysts say consumer security concerns are illogical. People in restaurants and stores eagerly proffer credit cards to complete strangers in the form of waiters and shop staff, and the cards often disappear from sight for minutes on end.
High technology consultancies say the business floodgates will open soon. SET will be gradually introduced across Europe. When banks are happy with the system, already approved by the Bank of Ireland, clients who wish to buy and sell over the Internet are allocated a special number. When they call up Web sites labelled as SET approved, they use the number. Charges are included in the overall monthly credit card bill.
The technology was developed with partners which included GTE, International Business Machines Corp, Microsoft Corp, and Netscape Communications Corp.
"The SET consortium has undertaken a huge task to replicate in the virtual world the trust system which exists in the payment system in the physical world today," said Mr Steven Herz, senior vice-president, Internet Commerce at Visa International.
SRI said the Visa/MasterCard system has a host of advantages over competing systems.
"Besides the clout of its many sponsors, SET has links to existing processing systems, millions of credit card accounts, and a greater ability to distribute marketing costs and fraud risks widely," SRI programme manager David Tee said.
The opposition will have a hard time fighting for market share.
"Electronic currencies, such as those offered by DigiCash, Millicent, Mondex and CyberCash, will have to battle for niche applications that SET-based solutions leave unserved," Mr Tee said.
"These niche applications will involve purchases below five dollars, an amount currently not cost-effective for credit card systems to handle," Mr Tee said.
Estimates of the value of this business agree on one thing: it will be huge.
Last year Visa said electronic commerce world-wide would be worth between $7 billion and $32 billion by 2000. SRI said today this would be worth more than $10 billion by 2001.
And in a report released this week, International Data Corp said Internet commerce in Europe alone, valued at $349 million at the end of 1996, would hit about $26 billion by 2001.
