IBM develops new privacy software for online payment transactions

IBM Corp. is developing software that allows online purchasers to hide or make anonymous their personal web information used in making online purchases, such as credit card account numbers and dates of birth. Unlike other identity management systems that transmit parts of a user`s true identity, systems built using IBM’s Identity Mixer software will help protect user privacy by sharing only pseudonyms, so real identity information can never be intercepted or exposed, according to IBM.

The software, which IBM is calling Identity Mixer and developing in a Zurich research laboratory, will enable consumers to purchase goods and services on the Internet without disclosing personal information. IBM says the software, which will be marketed under its Tivoli software brand, allows people to purchase books or clothing without revealing their credit card number. Identity Mixer will enable shoppers and merchants to confirm a user`s spending limit without sharing their bank account balance or provide proof of age without disclosing their date of birth.

Unlike other identity management systems that transmit parts of a user`s true identity, systems built using Identity Mixer software will help protect user privacy by sharing only pseudonyms, so real identity information can never be intercepted or exposed, according to IBM.

As consumers hand over personal details in exchange for downloading music or subscribing to online newsletters, they leave a data trail behind that reveals pieces of information about the size, frequency and source of their online purchases that can be traced back to the user, IBM says. Identity Mixer software eliminates the trail by using artificial identity information, known as pseudonyms, to make online transactions anonymous. For example, the software allows people to purchase books or clothing without revealing their credit card number, the company says.

“When people don`t have to disclose their personal information on the web, the risk of identity theft is dramatically reduced," says John Clippinger, senior fellow at the Berkman Center for Internet and Society at Harvard Law School. "The ability to `anonymize` transactions using Identity Mixer has the potential to bolster consumer confidence, opening digital floodgates to new forms of Internet commerce."

Identity Mixer works by allowing a computer user that has the software to get an anonymous digital credential, or voucher, from a trusted third party, like a bank or government agency such as at a state department of motor vehicles. A bank would provide a credential containing a credit card number and expiration date, and when an online purchase is made, the Identity Mixer software digitally seals the information by transforming the credential so the user can send it to the online merchant. By using sophisticated cryptographic algorithms, the Identity Mixer software acts as the middleman confirming bank authorization for the purchase -- so the real credit card numbers are never revealed to the merchant. The next time a purchase is made, a new encrypted credential would be used, according to IBM.

IBM has yet to publish pricing for Identity Mixer.