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Microsoft's deal with Arcot, which provides online payment systems for Visa and Mastercard, will see banks authenticate online transactions by letting users type in their Passport user name and password.
The Seattle giant is keen to prove that Passport is trustworthy and the Arcot link will help strengthen this, Microsoft believes. The new arrangement will allow users' credit card details to be authenticated with the issuing bank, effectively putting a credit card issuer behind the Passport identity.
Liberty Alliance unveiled the first set of standards for its single sign-on architecture this week. More than 40 companies have joined the consortium, including Sun Microsystems, GM (General Motors), AOL Time Warner, Nokia, Cisco and eBay.
Sun has said it will be able to implement the alliance's proposed standards in its software within weeks of the announcement being made.
Where the alliance is a truly federated system capable of being spread across a large number of trusted companies and trading systems, Passport hinges on Microsoft as the pivotal point of trust.
Microsoft stores users' personal details and lets them surf the Internet and use the stored data when transacting with participating Passport-enabled sites. This means that forms can be filled in automatically without the Passport holder having to enter the same details, such as name or credit card number, at every site.
Although security concerns have been voiced about the system, Gartner analysts estimate the service has 14 million members.