Passport Express Purchase, a Web-based service that makes it easier for consumers to share information such as credit card numbers with participating e-commerce sites, will be discontinued in Mar. 2003. A similar service, MSN Wallet, will take its place, but third-party sites will have to become MSN merchant partners to implement it. The move makes it more difficult for partners to participate in the service and reflects an overall shift in Microsoft's Internet strategy.

Microsoft is also making other changes to Passport, such as requiring a valid e-mail address in order to sign up and making it easier for users to cancel their accounts.

Express Purchase Out; MSN Wallet In

Express Purchase (EP) is one of two services with the Passport name. It enables users to store their shipping address, billing address, and credit card number in a database at Microsoft, then post this information to participating e-commerce sites without having to retype it at each site. Better known is the other Passport service, Single Sign-In (SSI), which is used to authenticate users to Web sites and online services. EP uses SSI to authenticate users, but otherwise the two services have no connection. (For details about both services, see "A Closer Look at Passport" on page 12 of the Oct. 2001 Update.)

MSN Wallet, which will come online in Nov. 2002, will not share any data or technology with EP, and current EP users will have to sign up for MSN Wallet separately. Moreover, only about 15 third-party Web sites (including Kmart, OfficeMax, and Nordstrom) will support MSN Wallet at launch, compared with the more than 60 that honor EP today.

Goal: Attract Partners, Users to MSN

MSN Wallet is designed to attract MSN merchant partners, who pay for placement on MSN shopping sites such as eShop, and to attract users to these partners by enforcing a consistent shopping experience among merchant sites.

Unlike EP, which almost any e-commerce site was allowed to implement, only MSN merchant partners will be able to implement MSN Wallet on their sites. To attract these partners, MSN Wallet will offer better centralized logging of customers' shopping activity than EP did and will provide promotional and cross-selling opportunities that EP lacked, such as the ability to accept gift certificates and coupons.

Microsoft will also oversee the design and implementation of MSN Wallet at all partner sites to ensure a consistent user experience. For example, users will have to enter only their Passport ID to make a purchase on any MSN Wallet site. With EP, in contrast, participating sites could force users to enter a site-specific password as well as their Passport ID.

Business, Politics Undermine EP

The company is making the change for both business and political reasons.

The business case for EP has fallen away as Microsoft's Internet strategy has changed. Microsoft does not charge third-party e-commerce sites to implement EP, but the company hoped that the convenience of EP would convince users to sign up for a Passport account, eventually leading them to fee-based services which the company planned to roll out later. However, the company has since scaled back its plans for fee-based hosted services, so there's no clear business reason to drive users to get a Passport ID. (See "Hosted Services Becoming Lower Priority".)

MSN Wallet has a much narrower and better-defined goal: to increase the profitability of MSN shopping sites by attracting more merchant partners and customers.

Canceling EP could also help reduce public confusion about Passport, which in turn could lighten pressure from regulators. When SSI and EP both shared the Passport brand name, privacy advocates worried that Microsoft would eventually use Passport to collect transaction fees on every e-commerce purchase a Passport user made, or that Microsoft would sell information collected by EP to third parties for marketing purposes. These concerns were enough to motivate the U.S. Federal Trade Commission (FTC) to investigate Passport and impose restrictions on it for the next 20 years. (See "FTC Resolves Passport Complaint" on page 33 of the Sept. 2002 Update.) By separating its authentication service (Passport SSI) from its e-commerce posting service (MSN Wallet), Microsoft could avoid these problems in the future.

Other Passport Changes

In Sept. 2002, Microsoft will begin to roll out Passport 2.5, the latest version of SSI. The new version will feature the following changes (not all of which will be implemented immediately):

Valid e-mail address required. New Passport SSI users will have to use a valid e-mail address when they sign up for the service. (Microsoft will send a confirmation message to the e-mail address before issuing the Passport ID.) This prevents users from signing up with somebody else's e-mail address and could provide third-party sites with better information about users (if the user opts to share their e-mail address with participating sites).

Security changes. Passport will include several features to improve security, such as a shorter URL for the sign-in page that will make it easier for users to notice if they are being redirected to a password-sniffing "spoof" page, such as "pasport.net."

Cancellation, changes easier. Users will be able to cancel a Passport SSI account online instead of having to phone a customer support representative. In addition, users who accidentally sign up for a Kids' Passport SSI account (typically by entering the current date in the field that asks for their birth date) will be able to change it to a regular SSI account by entering a credit card number. Both moves reduce Microsoft's support costs.