IBM Corp. (IBM) and top consumer credit agency Equifax Inc. (EFX), pledging to make the Internet a trustworthy place to do business, will announce Monday a system to ensure online customers are who they claim to be, executives said.
The executives said they have agreed to an alliance in which Equifax will act an independent verifier of computer-user identities for companies using IBM's Internet commerce system.
The system would allow companies to trade purchase orders, lawyers to exchange contracts, and consumers to conduct home banking and make credit-card purchases via the Internet, while going a long way toward eliminating the potential for fraud.
Irving Wladawsky-Berger, general manager of IBM's Internet division, said in an interview late last week that the system will give business customers the same level of confidence online as they have face-to-face in the physical world.
"It's the equivalent of shaking hands, looking people in the eye, and knowing you have a deal," Wladawsky-Berger said.
As part of a series of announcements, Armonk, N.Y.-based IBM will introduce Vault, a complete set of technologies and services that establishes computer users' identities and enables them to encode and transmit information securely over networks.
Equifax, based in Atlanta, will handle verification services for corporate customers, performing a series of checks and counterchecks comparable to those for a bank safe deposit box, in which dual keys are used to secure valuables, even from bank employees.
"The essence is to ensure that people are who they say they are," said Equifax's chief executive, Thomas Chapman.
IBM will offer the Vault system beginning next month. The Equifax service, built around Vault, will be offered to North American customers in the third quarter, and expand to other continents eventually, the companies said.
Vault supplements an existing IBM system for securing credit-card transactions over the Internet which has been available for a year, officials said.
Importantly for Equifax, the partnership takes the company's existing business of managing very confidential financial information for retailers, banks, and other financial institutions online.
For IBM, the deal lets the company remain focused on its technology and computer systems installation businesses while leaving customer verification -- which involves complex issues of privacy and security -- to Equifax.
IBM and Equifax are not alone in seeking to solve financial security issues on the Internet, which has had the reputation of being an untamed Wild West filled with masked bandits, snake-oil salesmen, and other fraudulent operators.
Rivals in the digitial security business include VeriSign, GTE, Canada's Northern Telecom, and Microsoft. Banks and other credit information suppliers, such as First Data Corp., are also staking out the territory.
But analysts say the IBM-Equifax alliance represents the broadest security and identification system announced so far and predict the plan has a good chance of succeeding.
"Equifax is the a leader in verifying credit in the physical world," said Cheryl Ball, an analyst with the Boston industry research firm Cahners In-Stat Group. "Businesses already understand how to use Equifax services. This is a simple extension."
Still, it will probably be some time before bankers and retailers accept customer verification via the wide-open Internet with the same confidence they now use private electronic networks to perform credit checks.
To start with, state laws must be amended to give the "digital signatures" at the heart of the IBM system the same legally binding status as ink-and-paper contracts.
The IBM-Equifax alliance grew out of a close partnership begun in 1993, when IBM's computer services business began managing many of Equifax's back-office computer operations.
