Payments Group Plans to Ride Wave Made by New Microsoft OS

In coming months, software colossus Microsoft Corp. will be reaping bushels of publicity about Microsoft Windows Vista, the newest version of the world's leading desktop operating system that's scheduled for release early next year. Along for the ride, and with a novel approach to the electronic payments business, is a 2-year-old Denver-based software firm, IP Commerce Inc. IP Commerce's software, IP Payments Framework (IPPF), which manages payment services and related accounting tasks, will work with the new operating system when users install Vista and download related code. IPPF will provide the company's seven payment-industry partners with a way to directly reach business customers. The partners include Chase Paymentech Solutions LLC, the nation's largest merchant acquirer, along with PayPal Inc.; biometric technology provider Pay by Touch Payment Solutions; business-to-business e-commerce services provider Internet Commerce Corp.; BankServ Inc., a provider of ACH, Check 21, and related services; finance company CIT Group Inc.; and CashEdge Inc., a provider of online-banking software. These companies are members of what IP Commerce calls its PASS Consortium, for Payments as a Secure Service. The group's aim is to expand payment services over the Internet using Vista as the basic platform as well as the most secure Payment Applications Best Practices (PABB)-compliant applications. Through IPPF, PASS partners will able to send messages to and receive messages from users of Vista's small-business edition, dubbed Windows Vista Business, through so-called “gadgets,” or desktop-based graphical images. Unlike typical icons, gadgets are not merely tools to open an application. They instead provide a direct link between the consortium member and the Vista desktop. The process works like e-mail without the need for addresses. “Those icons are going to be Web-service-enabled,” says Alfred “Chip” Kahn IV, IP Commerce's founder and chief executive. “It allows two-way messaging.” Chase Paymentech, for example, could solicit business customers to open payment card merchant accounts. If the Vista user responded affirmatively through the gadget, Chase Paymentech could start the underwriting process immediately. Or, if the business user has a PayPal account, the software could provide for immediate account update notifications. PASS partners will license IPPF or run it on a hosted basis. To activate the system, merchants will need to download what IP Commerce calls PASS applications when they visit the Vista small-business center. The company is working out other distribution channels as well for this code, for which there is no charge to users. IP Commerce is looking to bring more providers into its consortium. Kahn expects to announce another merchant processor soon, though Chase Paymentech “will reap first-mover advantages,” he says. And even though IP Commerce obviously has close ties with Microsoft, maker of the Microsoft Money financial-management program, Kahn says PASS works with most financial-management applications, including Intuit Inc.'s QuickBooks accounting application for small businesses. “We are more of a platform approach, we are agnostic to the applications,” he says. Privately held IP Commerce now has 45 employees and has gone through three rounds of venture-capital funding, according to Kahn.