*IBM, Equifax Take Piece of E-Commerce PieNEW YORK--In a move to boost e-commerce and give themselves a financial chunk of the resulting transactions, International Business Machines Corp. and Equifax Inc. announced June 8 that they have teamed up to market digital-certification services.
At a press conference here, the two companies cited consumer security fears and the inability of companies to verify identities during online transactions as the two biggest barriers to e-commerce.
"It's important to know that people doing business on the Web are indeed who they say they are," said Thomas Chapman, president and CEO of Equifax. Chapman called his firm's partnership with IBM "a natural extension of our business around the world."
Digital certificates use encryption software to allow companies to verify identities of people who do business with them on the Internet and ensure that no one tampers with data en route to its destination.
Under terms of the alliance, IBM, Armonk, NY, will provide the software and Equifax, Atlanta, will supply remote identity verification services. Equifax also will serve as the third party who issues, renews and revokes digital certificates.
IBM will sell the software to merchants who want to manage their own digital certification systems, but representatives of the two firms predicted that most merchants will opt to buy digital certification as a complete service, which is slated to be available in July. Pricing for the service isn't finalized, they said, but probably will involve a set-up fee and ongoing charges related to transaction volume. Neither company would predict revenue from the alliance but cited analyst estimates that revenue from digital certification services was $50 million last year and will reach $1 billion by 2001.
"Currently, there is no market" for digital certification services, said Chris Gwynn, an analyst with the Yankee Group, Boston. "Sooner or later, all transactions will be done this way. It adds another level of security to the transaction."
Gwynn said the greatest short-term promise for digital certification services lies in business-to-business transactions. For one thing, he said, "it provides an audit trail so you know who placed the order."
Verisign Inc. and GTE Corp. offer digital certification and are the IBM-Equifax alliance's two foremost competitors. Gwynn said, however, that IBM and Equifax gain an immediate advantage because they already are entrenched in banking and health care, two markets that IBM and Equifax representatives mentioned as ripe for the service.
"Look for Verisign and GTE to announce similar relationships," Gwynn said.