The New York Times January 10, 1995, D2. Mastercard to Develop On-Line Standard By Saul Hansell Joining a stampede of companies that hope to profit from shopping on computer networks, Mastercard International said yesterday that it would develop standards for its cards to be used on the Internet. Mastercard, an association of banks that is based in New York, said it would use the technology developed by the Netscape Communications Corporation of Mountain View, Calif., a specialist in software for the Internet, the global web of computer networks. The Internet allows a company to make information on its products available to millions of computer users around the world. Increasingly, companies would like to consummate sales using the Internet as well, but the open nature of the network may allow credit card numbers to be stolen. "The problem with the Internet is there is no privacy and no security," said Edward J. Hogan, a senior vice president of Mastercard. The Mastercard plan is one of several attempts to translate credit card numbers into a code before they are sent to merchants selling goods over the network and then on to the credit card companies. Visa International has said it will develop its own encryption system with the Microsoft Corporation. Microsoft has hinted that it may charge a fee for every transaction using its system, though the details have not been announced. Netscape and Mastercard say their transaction standards will be openly published and free for other companies to use. Netscape's main business is selling software that allows companies to publish information on the Internet. To expand the market, it gives away or sells for a very small fee software that allows people to view nformation on the Internet. The company has already included a component to encrypt credit card numbers with its current version. The first merchants to allow purchases using that feature will be part of an electronic shopping service to be introduced by the MCI Communications Corporation later this month. The initial Netscape credit card system allows customers to use any brand of card. It did not involve the cooperation of credit card companies, but rather used existing rules that related to mail and telephone card orders. The agreement with Mastercard will for the first time allow purchases on the Internet with automatic teller machine or debit cards, which withdraw money from checking accounts. Mastercard will likely agree to absorb the losses from fraud on the system. Under the existing Netscape system, merchants selling goods are liable if fraudulent card numbers are used, as are companies that sell goods by mail or telephone. The debit card access and the fraud guarantee are expected to be available by the fall. End