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New Money For The Net


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New Money for the Net

Blue from American Express makes purchasing on the Web easier

If you think the only way to pay for things is with cash, checks, or credit cards, think again. When Finns get thirsty, they can use their mobile phones to call a number on a soda machine--and put the cost of the drink on their phone bill. In Germany and Austria, online merchants conduct business with "e-cash," an Internet payment system that automatically debits money from consumer bank accounts.

Now, the U.S. is getting its own high-tech payment technology: From American Express Co. comes Blue, a sophisticated credit card that makes Net purchases easier. O.K., so it can't compete with wireless sodas. I took Blue for a test drive, and it has plenty of flaws. Still, it's a better way to buy on the Net than traditional credit cards, and it shows that smart cards have the potential to improve electronic commerce.

In its first few months, Blue is proving popular with the techno-savvy. The no-fee card was launched last September and has about 2 million customers. Blue can be used like any other credit card, but it also has technology designed to simplify purchases on the Web.

Here's how Blue works if you use it as more than a credit card. The card comes with a "reader" that attaches to your PC monitor with sticky tape. You also need to go to American Express' Web site to get a "digital wallet," a piece of software that stores your credit-card information and shipping address. When you want to buy something online, you go to the checkout screen of a Web merchant. Instead of typing in a lot of information, you put your Blue card in the reader, type in a password, and you're done. The digital wallet automatically tells the vendor your credit-card number, its expiration date, and your shipping information.

It's a nifty system with great potential. Amex hasn't said much about its plans for Blue. But a computer chip on the card has the storage capacity for a range of features. Amex can add loyalty programs, seating preferences for plane tickets, or automatic free shipping from favored merchants.

Still, in its current state, Blue has enough snags that it won't stay on my computer for long. The reader has an annoying blinking green light that can't be turned off without shutting down your PC. Every time I boot up my machine, a small Amex wallet window appears on my screen, and I have to close it. Amex frequently prompts me to load updated Blue software, which seems to do nothing. The reader also occupies valuable real estate. It connects to the serial port, which is used by Palm Pilots synched to a PC.

American Express also touts the extra security benefits of Blue. But the card doesn't make shopping online any safer, according to Bruce Schneier, an Internet security expert at Counterpane Internet Security in San Jose, Calif. Sure, using the Blue reader protects your digital wallet from anyone who knows your password but doesn't have the card. Even so, Blue works with or without the reader, just like any credit card. Amex does guarantee that Blue customers won't have to pay for any fraudulent online transactions. Still, all credit-card customers are protected by law from paying any more than $50 for fraudulent transactions.

The bottom line: Blue saves Netizens from having to type in credit-card and shipping information when they shop online. While Blue isn't revolutionizing online shopping, it does simplify a tedious process. There's no reason why this kind of smart technology shouldn't become standard credit-card fare.By Geoffrey Smith, Geoff_smith@ebiz.Businessweek.com


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