This marks the first step towards providing Japanese consumers with access to secure, global Internet shopping. In combination with other Visa SET pilots already underway in Singapore, Taiwan and across Europe, Visa is already well on the way to creating a secure global electronic commerce marketplace which will enable Japanese Visa cardholders to make secure electronic purchases from on-line merchants around the world and Visa cardholders from elsewhere to make secure electronic purchases from Japanese merchants.

Smart Commerce Japan is the first SET pilot to use multiple software vendors, which include IBM, Netscape and CyberCash. Testing of the interoperability of different software and technologies in an SET environment is an essential part of the evolution of Secure Electronic Commerce which will ensure that SET will be able to operate seamlessly on a global scale regardless of the technology providers involved as long as they conform to the SET standard.

The pilot is the first to use Visa's payment gateway, created in co-operation with IBM, enabling Visa Member banks to enter electronic commerce cost effectively as they will not need to invest in creating their own payment gateway infrastructure. Toshiba integrates the Internet mall system which was developed in cooperating with Netscape Communications Corp. Toshiba is also working with CyberCash, Inc. to provide technology to enable secure financial transactions on the Internet. CyberCash will provide the electronic wallet and merchant Cash Register payment technology.

Smart Commerce Japan will also test the full scope of chip-based payment systems in both the real and virtual worlds, making it the world's first SET pilot utilizing integrated circuit card for use in Secure Electronic Commerce.

"We have taken chip-based payment systems and Secure Electronic Commerce to the next logical level, merging the specifications of the two technologies into one all-encompassing product using Visa's recently released Chip Electronic Commerce Standard," said Hitoshi Kondo, Vice President, Visa International Asia-Pacific.

The Chip Electronic Commerce Standard is compliant with the EMV standard for globalchip card interoperability and the Secure Electronic Transaction (SET) protocol. Visa has contributed this standard to the Europay, MasterCard, Visa consortium to ensure global interoperability of all chip cards which will provide the same benefits for chip cards in the electronic, on-line environment.

The Hankyu Persona Visa card which is being issued in the Smart Commerce Japan pilot will also feature the credit function on the chip, following the rules of Visa's Chip Card Payment Service (CCPS) to ensure the full security and functionality of the chip is
recognized through the entire transaction process.

The Smart Commerce Japan pilot also will be among the first projects worldwide to use SET version 1.0, the globally released specification for the development of Secure Electronic Commerce software and applications developed by a wide range of payment and technology industry representatives.

By utilizing the Chip Electronic Commerce Standard, Secure Electronic Commerce becomes completely portable, enabling cardholders to make secure on-line purchases from home, work, Internet kiosks or any other on-line access point.

In the initial phase of Smart Commerce Japan, 200 employees of Visa, Toshiba and Hankyu are utilising the SET protocol for Internet shopping. In phase two, to be launched in October, 5,000 Visa chip cards will be issued to the general public. Of these cardholders, 1,000 will be provided with integrated circuit chip card reader-writers to attach to their personal computers for chip-based Secure Electronic Commerce. The other cardholders will be able to make chip-based Secure Electronic purchases at 30 kiosks located throughout the Kobe and Osaka, Japan area and purchase from home using the SET protocol at their computer.

In phase three of the project, which will take place in December 1997, a limited test of Visa Cash over the Internet will be conducted. This will be the second test of Visa Cash as an Internet micro-payments mechanism following the test recently announced by Visa and Bank of America.

Smart Commerce Japan is recognized and supported by Japan's Ministry of International Trade and Industry (MITI). The infrastructure established and knowledge gained from Smart Commerce Japan will provide the foundation for future Visa chip card projects and the basis for a longer-term plan to migrate the domestic payments market in Japan from magnetic stripe to chip technology. The prime drivers for Japan's migration to a chip-based payments system are the prevention of fraud losses from magnetic stripe-based cards and the ability to offer new services to cardholders, such as stored value and loyalty programmes.

Visa is the dominant payment brand in Japan, with 57.7 million cards on issue and payment volume of US$48.8 billion in the year ended 31 March, 1997. Visa and its Member financial institutions posted strong growth in the Asia-Pacific region in the year ended 31 March, 1997 with Visa payment volume of US$176.1 billion. This comprises US$122.4 billion in card sales volume, growth of 29.6 per cent over the previous year, and US$53.7 billion in commercial funds transfers, as reported by Member banks in China. Visa is the most widely used card in the Asia-Pacific region where over 104.1 million Visa cards have been issued.

Visa is the preferred payment brand and the largest consumer payment System worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders and the global economy.

Visa's nearly 600 million cards are accepted at more than 14 million worldwide locations, including more than 355,000 ATMs in the Visa Global ATM Network