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The combination of TransFort with Microsoft's authentication and single sign-on service will allow banks that issue credit cards to use Passport to electronically identify card holders making purchases online.
Passport allows subscribers to enter their name and password once and access other password-protected Web sites and online services that are Microsoft partners without having to sign on each time. More than 200 million Web users are Passport subscribers, according to Microsoft.
Arcot Systems supplies online payment systems for banks and merchants that issue credit cards from Visa and MasterCard as well as providing the software used by Visa for its own Verified by Visa program.
Under the partnership, Passport will be available for Visa and MasterCard issuers using Arcot's system. Besides expanding the services available to Passport subscribers, the deal with Arcot is intended to allow participating credit card issuing banks to save money and resources when developing online credit card services, according to Microsoft.
"This keeps the cost down for the banks and merchants so they don't have to come up with their own authentication system," said Adam Sohn, product manager for .net platform strategy at Microsoft.
Additionally, those card-issuing banks can use their own user name and password systems or smart cards to authenticate cardholders online.
Since Passport's launch last year, Microsoft has come under sustained criticism regarding the level of control of personal information Passport gives the company.
Last week, the European Union announced it would continue investigating Passport after European data protection authorities found that Passport risks breaching European Union privacy laws.
Microsoft already offers a service through Passport called Express Purchase, which allows a user to store their financial information including credit card number, card expiration date and mailing address. Subscribers of Express Purchase can use the service to make electronic-commerce purchases on Web sites that support the technology without having to manually enter personal information.
The deal with Arcot is separate from Express Purchase and serves somewhat of a complementary service, Sohn said. Express Purchase is intended to allow users to quickly enter personal information into a Web site when making a purchase.
Using Passport with Arcot's system allows banks to verify that the user making the purchase is in fact the owner of the credit card. In the scenario with Arcot, a user's credit card information is stored with the credit card issuer rather than with Microsoft.
"They [the card issuing banks] still own all the customer data. Passport just does the authentication," Sohn said.