Ray Van Eng (08/01/97)                            

Christmas shopping on the Internet with secure electronic transactions (SET)? You bet. Net shops are fun. You just slip in your pajama and shop anywhere you want to shop right in the comfort of your own home. No more looking for a parking space or have some stranger (all right, salespeople) following you like a prey.

For many retailers, the short few weeks leading up to the holiday season could make up more than a third of the annual sale. This year, web merchants can apply for a SET logo, a newly minted insignia from Visa and Mastercard to be displayed at merchant storefronts to booster consumer confidence in buying over this virtual channel.

The two credit card firms say they are setting up a separate company, named SetCo to manage the SET certification process.

As for the financial institutions, they are literally getting a free ride. Visa has announced that it will not charge its member banks transaction fees for purchases made over the Internet using the SET protocol.

This Visa-only initiative applies exclusively to U.S. acquirer banks and Mastercard, the other SET co-creator has yet to respond to Visa's move. In fact, it was only days ago that an official from Mastercard suggested that some banks could actually charge more for SET transactions because they are more safe than the conventional credit card processing mode.

On the other hand, Visa is raising the interchange fee by an average of 5% to 6%. However, this will not come to effect until next April. The interchange is a complex charge structure that affects both the merchant bank and the card issuer. Some industry experts believe that the fee hike is a result of mounting credit card losses and the failure to generate enough profits from convenience users -- those who pay their credit card charges in full each month.

Though the fee elimination for SET might be viewed as a generous gesture from Visa, it remains to be seen whether the acquirers (who has other access fees to take care of) would lower their fees charged to card issuers who will in turn would pass along the expenses to merchants.

On another front, Yahoo, the Internet's most popular search engine has announced that it will work with Visa to put together a shopping directory of 100,000 web retailers and a directory of those merchants who use SET for safe online transactions.

Now with IBM promoting their net.payment SET compliant software -- have you seen their ads lately on CNN and other TV networks? -- Internet shopping may finally be able to declare...Get SET, and Go.