Electric money deal brings digital economy closer

It could be the breakthrough the cashless information society has been waiting for - a way to safely send money as a stream of digits over the Internet to pay for shopping or data.

In a deal announced last night, the computer firm Hewlett-Packard and the software company RSA will start exporting software offering "strong encryption" of computer data.

In simple terms, it means credit card information, and even little packets of "electronic money", can be sent over the Internet without the risk of a third party intercepting and using it. That means a digital economy, in which people "pay per view" for access to individual pages on the World Wide Web, becomes possible.

Although European companies have already had similar classes of encryption available, the US has banned companies from exporting such programs. It has meant that international digital commerce has been stifled, because users of the Internet could not entirely trust that their information was not being intercepted and decoded.

Encryption programmes use mathematical formulae to scramble information, such as electronic mail messages or credit card numbers, to render them unreadable to computer users without a password or "software key" that can unlock the coded material. Keys less than 56 binary digits long are regarded as comparatively easily cracked. "Strong" encryption consists of keys 128 or more bits long, which could take years or decades to crack using conventional computers.

Under existing US security laws dating from the Cold War era, programs using "strong encryption" have been classed with munitions - and banned from export. Even "weak encryption" programs are banned from resale to countries including Cuba, Haiti, Syria, Libya, Iraq, Iran, North Korea or Yugoslavia.

American software companies have protested that the ban prevents them selling programs to countries which would like to use them. Until now, the US government has contended that it cannot allow the export of these programs because it needs to be able to intercept terrorists' messages.

The importance to Internet commerce of having the same encryption standard available both inside and outside the US is clear from a poll published yesterday, which showed that an estimated 35 million adults in the US have used the Internet. The poll, by Louis Harris and Associates, showed that the number had grown from 27 million at the beginning of the year.

On current estimates, that constitutes about half the total number of people in the world with access to the Internet.