COMMERCE IS SLOW TO HIT THE 'NET;MERCHANTS TRY TO OPEN ELECTRONIC WALLETS TO SPUR E-BUSINESS

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Just click it" may lack the ring of "Just charge it." But expect the Internet to be a payment free-for-all in 1996.

Starting next year, a number of marketers will open their cyberdoors to electronic commerce. Whether consumers will use e-cash, e-checks or e-charge-or whether they'll use any of it-is anyone's guess.

"We're open to trying different payment methods and seeing what the customer reaction is," said Bill Rollins, VP-marketing at Internet Shopping Network, a Palo Alto, Calif., retailer of computer products and other merchandise (http://www.internet.net). "We don't want to force the customer to pay only one way. It's so early now, it's a good time to experiment and test."

Some analysts are already predicting traditional credit and debit systems will win out over new methods.

That's good news for Visa International and MasterCard International, which are both backing sophisticated secure transaction technologies, and which, unlike newcomers with names like Cybercash and DigiCash, have strong brand recognition among consumers.

"I expect over the next one to two years there will be online merchants with multiple payment types," said Bruce Guptill, senior analyst in the electronic commerce group at Gartner Group, Stamford, Conn. But "in the long term, I've not seen any overriding reason we can't use the current credit and debit card-based system."

Payment service providers, however, aren't ready to concede the market to anyone.

"Everything is so early. This is a marathon, not a sprint," said Jim Moran, VP-sales at Checkfree Corp., a Columbus, Ohio, company working with Reston, Va.-based Cybercash to offer a secure electronic "wallet" for making payments. "We expect to have hundreds of merchants using the Checkfree wallet by the end of the year."

Adds Daniel M. Eldridge, VP of e-cash business development for electronic cash company DigiCash, Amsterdam: "Did I say this market was big? I say it's huge. It will turn advertising and marketing on its head."

Electronic commerce today is in its infancy. Many consumers and merchants have been sitting on the sidelines until Internet payment technology receives the electronic equivalent of a Good Housekeeping seal of approval.

Says Willie Doyle, manager of advertising and electronic media for cataloger Lands' End (http://www.landsend.com): "We haven't expanded to new credit instruments. We're looking at e-cash, CyberCash and DigiCash. We haven't made any decision as of yet. We want to wait until the... online security issues-whether real or perceived-are resolved."

"Security has been the gating factor. There's always been some brave souls who are bleeding-edge," said Iang Jeon, senior analyst for money and technology strategy at Forrester Research, Cambridge, Mass. "In the next six to nine months, once MasterCard and Visa's security specifications are implemented, you'll see electronic commerce moving into the mainstream with major brand names selling online."

First, MasterCard and Visa need to agree on a specification. The two had been working together on security standards but split in September. MasterCard and partner Netscape Communications Corp. accused Visa and its partner Microsoft Corp. of developing standards that would require licensing and fees. Visa and Microsoft dispute those accusations.

Security over the Internet has been problematic because unlike travel over private networks, data on the Internet must travel over a public network.

Merchants must have some way to verify that the person punching in a credit card number is in fact the credit card holder. The consumer also needs assurance that the merchant is in fact a legitimate merchant and not an impostor.

"We're doing a great deal with MasterCard to increase the security. The encryption will be 65,000 times stronger," said Jeff Treuhaft, product manager at Netscape, Mountain View, Calif.

Today, when a credit card purchase is made, a merchant knows the card number. That will not be the case over the 'Net, where credit information will only be readable by financial institutions or processors.

At the same time, other Internet payment systems will finally be tested.

CyberCash, for example, expects to offer electronic cash by the first quarter of next year and, later in the year, a debit product.

DigiCash, Amsterdam, recently began offering electronic cash over the Internet through Mark Twain Bank, St. Louis.

E-cash is a digital equivalent of cash and offers the same anonymity.

E-cash providers like DigiCash say the system benefits consumer privacy and is less expensive to implement than credit cards.

Many industry analysts, however, say e-cash can be abused by money launderers and could hurt the financial system by creating a whole new form of money.

"A big concern with digital cash and electronic cash in general is that it could mask a huge underground economy and be a way to launder money," said Nate Zelnick, senior analyst at Jupiter Communications, New York.

Mr. Eldridge counters that e-cash makes it easier for consumers to make impulse purchases because it doesn't require a store account or a credit card.

Others are banking on a system that pays checks electronically. Under this scenario, a check is delivered to an e-mail address. The electronic check contains all the information that's on today's paper check plus a security code that indicates the check was authorized by the account holder. To prevent forgeries and insure the identity of the user, the system also uses a card that is inserted into a slot in a computer.

All this confusion could be worked out as smart cards that store cash or credit on a microchip embedded in the card become more widely accepted.

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