By Whit Andrews, Internet World

Dora McCall was fiddling with her new Internet wallet. She checked its discount section. Could she get a deal on videos she wanted to buy? Indeed she could - $10 off at bigstar.com, a video retailer toiling in the shadow of Amazon.com.

And so McCall, a resident of Maryville, Tenn., and an inveterate Web shopper who has bought goods from more than 20 sites within the space of just a few weeks, exemplifies the opportunity for a new generation of Internet wallets.

"I realize we've become spoiled. I like being spoiled," says the on-line stock trader, shopper, and surfer extraordinaire, who signed on with wallet-maker Gator.com to save repetitive typing at the 100-plus sites she visits in a typical eight-hour surf session. "If somebody comes out with a product that lets me be a little more spoiled, I'm going to have to try it."

McCall is no ingenue who sees the wallet as a gift. She says it's a three-way street where she gets discounts and convenience, Gator gets a finder's fee for delivering her to retailers, and BigStar gets a new customer.

The wallet is growing into a hugely lucrative opportunity for a new generation of Internet start-ups, including Qpass.com, Brodia.com, and McCall's favored Gator, plus a roster of veterans such as IBM's Consumer Wallet (www.ibm.com), Microsoft's Passport (www.passport.com), CyberCash.com, and VeriFone.com.

Their success - and at some point, some kind of wallet must succeed if consumer e-commerce, and even some varieties of business commerce, are to reach their potential - could turn the Internet economy on its head.

On-line wallets store shoppers' credit cards and other identifying information electronically, so buyers don't have to keep filling out various payment forms. Just press a key, and the wallet fills out the forms for you.

McCall credits the wallet with encouraging her to shop in lots of new places instead of the usual spots, because its promotional capability informs her where to find the new stores, and its form filler makes it easier to buy elsewhere.

Wallets also afford consumers a valuable glimpse into their own purchase histories - a privilege until now granted only to big retailers and, to a lesser degree, to credit card giants.

After years of bungled attempts to reach this vision - accompanied by a stubborn lack of interest among consumers who were barely convinced they needed the Internet, much less some kind of digital billfold - wallets are better positioned for success than ever before.

Why? People have proved there's interest in buying on line. E-commerce has exploded, and the focus is now centered on getting customers and keeping their loyalty, not on convincing them to buy in the first place. Perhaps more important is that this time around the wallet-creators are making themselves pretty not for retailers, not for technology vendors, but for consumers.

"I've learned a lesson here," says John McGuire, chief executive officer at Dublin-based Trintech.com, a wallet-maker. In the past three years, the company has developed a variety of features for its wallet. On its most recent try, it is dropping most of them in favor of a simple virtual card, which will perform the task of completing forms for shoppers. Any consumer who wants to activate other features is welcome to do so, but McGuire says the critical thing is just to get people started.

Wallets are now simple digital tokens that are downloaded and stored on a PC. Show the token during a buying process, and a server leaps to your assistance, punching data into the purchase form, and then collecting information about the sale for later recovery.

For consumers, the initial proposition behind the thinking wallet is: Make it easy as can be, and stop filling out those pesky forms. The wallet-makers recognized, from the success of Amazon's 1-Click (an order automation system the giant bookstore is now sharing with merchants under a new name, Amazon Payments), that consumers like freedom from repeatedly keying in all the credit card information, the shipping and billing addresses - and they made that their foot in the door.

The next phase is more interesting: Wallet companies want to use the data they collect on consumers' behalf for everything from maintaining a database of receipts to more complicated ventures like personalized shopping.

"At that instant in time in which the merchant creates an intention to buy, and the consumer starts to grapple with the process, there is a tremendous opportunity," says Chase Franklin, chief executive officer at wallet start-up Qpass.

For example, by keeping in a wallet a list of CDs that have been purchased, a consumer could simply show Ticketmaster her musical tastes and receive notice if an appropriate artist comes to town. Or, with frequent-flier data stored in a wallet, a consumer could just show his account balance to an on-line travel site to see what free vacations he might qualify for. And simply advising a consumer what her husband ordered at Peapod last week will enable her to know what not to get at a convenience store on the way home.

"I need socks every six months. I'm happy to share that information," says Ron Martinez, chief executive officer at Brodia, another wallet start-up. Such information might result in his being offered a deal on socks at the five-month point if they come in a color he likes. Alternatively, a wallet might observe that he buys Sandra Boynton books, and offer information about a sale on them at a site other than the one where he usually shops.

It is this data that is the wallet companies' key asset. Presuming the success of their concept, wallet-makers will have data that far exceeds even the famously rich databases maintained by credit card issuers - which generally get order totals, not itemized receipts.

It also is likely to make retailers hesitant partners. Having spent 20 years blocking credit card companies from gaining access to the detailed receipts - the keys to the customer relationship kingdom - they'd be loath to give that same information to e-wallet start-ups.

It's an issue skymall.com hashed out before deciding to partner with Microsoft to promote its new wallet and, in exchange, receive promotion from Microsoft. Microsoft's wallet, called Passport, contains user profiles gathered from Hotmail and MSN users' behavior.

"If you don't play, you're giving up this promotional opportunity," says Sandy Goldman, vice president for business development at Skymall, explaining the preference for the Microsoft wallet. Skymall hopes that any data on purchases that go to other retailers will be outweighed by what it gets from the wallet when users arrive. "When they come to us, I can bring up the home page based on what Microsoft Passport already knows about them. I can know they're male, 35, and live in Florida, which is extremely important to me."

Many retailers, and portals as well, believe a standardized wallet technology will ensure conveniences without ceding control of purchase data or even brand control to wallet companies. Such a scenario, already in embryo with the Electronic Commerce Modeling Language, would gut the wallet-makers long-term opportunities and preserve retailers' unique relationships with their customers - but it also would deny consumers the ability to develop rich profiles of their behavior that would be useful in multiple places.

"I feel like wallets are one of those things that everybody's going to offer, and you want all that interoperating," says Joe Kraus, senior vice president for content at Excite@Home (www.home.com), which flirted with some walletlike features in its shopping channel during 1998.

The challenge of catching the consumer's eye has wallet start-ups looking for mighty partners to overcome retailer resistance and gain direct access to Internet consumers. On the short list are credit card issuers - it is illustrative to note that NextCard.com has launched its own wallet - and portals. Such partners have the infrastructure, understanding, and relationships in place to make the information more than a murky soup of purchase data. (Meanwhile, just in case retailers don't come around, the wallet makers are structuring their systems so that retailers need not acquiesce in order for the wallet to work.) A search engine, for example, could profit from attaching its brand to a wallet, and from piping special offers and personalized shopping established through its relationship with a given consumer to merchants with whom it has formed alliances.

Of course, wallet makers aren't bashful about developing some of these capabilities themselves. Dash.com, for example, is offering consumers shopping advice at the checkout counter. When they arrive at one merchant and prepare to buy an item, if they have enabled Dash to help them, they are told if they can get a better deal elsewhere. Gator also has capabilities to offer advice to customers. "A smart on-line companion could give you peripheral vision," says Jeff McFadden, former vice president of business development at Excite, now chief executive officer at Gator.com. "If you're shopping for a case of tennis balls, it might alert you that Fogdog.com is offering 20 percent off."

None of these capabilities are familiar, of course, and that alone makes for a marketing obstacle. Unlike the basic concept of Amazon, which anybody can understand - buy books on-line, now - the notion of a shopping agent charged with toting one's financial particulars, seeking out appropriate stores, and recording one's behavior verges on creepy, and is at the very least quite novel.

The wallet makers acknowledge the vast impact their software might have on e-commerce. They are willing to speculate about the value of access to, say, a million consumers' receipts for a year's worth of gift-giving and personal purchases. They can easily imagine how much value there would be in serving as a touch point for every consumer's personal assortment of loyalty programs, bill payment schedules, and shopping preferences. And they think that nearly everyone will open their data for the right price, whether it be for a discount or just a better shopping experience.

"I'm an impatient person, and if I have to keep doing those forms, I just leave," says McCall, the veteran shopper. She adds, "They're not going to get my business if I have to jump through lots of hoops."

Reprinted with permission from Internet World magazine, which covers electronic business and Internet technology. Its Web address is internetworldnews.com.