A major card issuer is preparing to announce its support for Microsoft's new identity security system, Cardspace, in the new year, along with "a major consumer retail site", Microsoft said this week.
The company is also at the early stages of working out how the technology could be used to secure the UK's Government Gateway for tax and VAT filings.
Cardspace, the brainchild of Microsoft's Kim Cameron and others, is the latest proposal from Redmond for how to solve the problem of securing identity online. (It is bundled in Vista, and XP users can get hold of it through the automatic updates.)
Microsoft says the system will do for online credit card fraud what chip and PIN has done for cardholder present fraud. In a country where an estimated five per cent of all online transactions are fraudulent, that could have a significant impact.
Broadly speaking, the idea is to withold any of the details of your personal data - such as your credit card number - from the website you are doing business with, so that you conduct your transaction directly with the ID provider. In addition, the whole transaction takes place on a new desktop.
Microsoft's own motivation for developing the technology is absolutely, but indirectly commercial.
Jerry Fishenden, National Technology Officer for Microsoft UK, explains that around 30 per cent of the company's revenue comes from the business of people doing business online. If consumer confidence fails, he argues, that revenue is threatened. And poorly secured identity is what undermines consumer confidence.
Steve Plank, architectural engineer at Microsoft acknowledges that there is a limit to how much technology can do to solve the problem of secure identity.
"But think about a classic phishing attack: a phishing site wants your username and password. It captures this information, logs on to your bank and empties your account. With cardspace, that no longer happens," he argues.
"Imagine you end up on phisher's site, which asks for a cardspace login. Your user interface pops up, the card was issued by a genuine bank, and you authenticate with them, but the phisher's website gets nothing, because it is outside the whole transaction."
Microsoft sees a scenario in which cardspace-style authentication would reduce fraud rates by such a large degree that credit card issuers would be able to offer merchants a discount for using the technology. Part of this could be passed to the customer as a cash-back incentive.
There are Open Source versions of the technology in the works, and Microsoft says it will make its specifications open, if not the code itself. There are no plans as yet to develop a Mac version, but the team speaking to the media in London said it was something they would flag to the Mac development team. ®