Server-side wallets provide assurance against merchant fraud because they use certificates to verify the identity of allparties. Whenaparty makes a transaction, it presents its certificate to the other parties involved. A certificate is an attachment to an electronic message used to verify the identity of the party and to provide the receiver with the means to encode a reply. Furthermore, the cardholder's sensitive data is typically housed at a financial institution, so there's an extra sense of security because financial environmentsgenerally providethe highest degree of security. But even though wallets provide easy shopping online, adoption hasn't been widespread.
Standards are pivotal to the success of digital wallets.
Last month, major vendors, including Microsoft Corp., Sun Microsystems Inc. and America Online Inc., announced their endorsement of a new standardcalledEMCL,or E-Commerce Modeling Language, to give Web merchants a standardized way to collect electronic data for shipping, billing and payment. Paul Hagen, an analyst at Forrester Research Inc. in Cambridge, Mass., says he believes that this standard will help with the adoption of wallets. Some time next year, digital wallets will be integrated into browsers and other platforms, and then we'll see a gradual uptake in the wallets. Probably by 2001 we'll see a good percentage in use. At the end of the purchase, the consumer is prompted to sign up for a free digital wallet service by entering a user name and password so the user can have future access to the wallet.