We live a password protected world and while we appreciate the protection passwords provide they can also be a major source of frustration. Almost every web site you visit requires a username and password at the most inopportune time (just before you enter your credit card information and push the “buy” button). Recent surveys indicate that almost 70 percent of consumers have at some time left sites before making purchases because they don’t like the hassle of registration and passwords.  But our customers also insist on security. So how can you and your web host find a happy medium that protects customers’ identities without adding frustration?

Several high tech giants, including some web hosting firms, have joined a movement called OpenID that is offering a turnkey approach that will eliminate the need for multiple usernames across different websites, simplifying the online experience for your customers.  Microsoft, IBM, Google and Yahoo were the most recent heavy hitters to join the board of OpenID Foundation. More than 10,000 sites have already adopted the OpenID approach.

OpenID was the brainchild of Google software guru Brad Fitzpatrick who created the concept when he was working for a blog software company. “OpenID is intended to be a decentralized sign-on system,” said Fitzpatrick. “Nobody should own this. Nobody’s planning on making any money from this. The goal is to release every part of this under the most liberal licenses possible so that there is no money or registering required and everybody can participate. It benefits the online community as a whole if something like this exists, and we’re all part of the community.”

The OpenID approach revolves around an already established web identity that people choose as their core identifier. When this identifier is used to sign on elsewhere, requests are sent back to the original place it was created to be verified. This means that people could use one login ID for all the sites they use.

Consumers are free to choose the OpenID provider that best meets their needs. For businesses this means a lower cost of password and account management and the ability to generate new traffic. OpenID reduces user frustration by letting users have control of their login.

“As a leader in access and federated identity management and open-standards-based software, this is an important step in IBM’s collaboration with other industry leaders to continuously enhance open source projects for user-centric identity,” said Anthony Nadalin, IBM engineer and chief security architect for IBM Tivoli software. “This effort is intended to provide users with more control and to help them better manage and protect their digital identities.”

Kim Cameron, chief identity architect for Microsoft, believes the OpenID community is a key element in solving the digital identity problems that internet users face. “Since Bill Gates and Craig Mudie announced our collaboration with the OpenID community last February, Microsoft has played a leading role in establishing the OpenID Foundation’s open policy framework that allows everyone to participate in the development and use of OpenID specifications.”

Executives at Verisign embraced the OpenID concept because it will enable consumers to take control of their online identity, which in turn will drive trust, privacy and security on the Internet, “Networked identity and authentication services are core elements of Verisign’s current and future service offerings,” said Nico Popp, vice president of innovation for Verisign.

So it appears that the OpenID concept will be a win-win for both ecommerce sites and the customers they serve. Hopefully, this will eliminate the password hassles that cause frustrated customers to jump ship before a purchased is final. And when your customers are happy, chances are you’ll be smiling too. All the way to the bank.