US Bank Ends Its Electronic Cash Trial

The sole US bank to show interest in online payment via electronic cash this week abruptly ended its three-year trial of DigiCash's eCash software. Citing its changed strategy and market conditions, St. Louis, Missouri-based Mercantile Bank this week ended a trial which allowed customers to make purchases over the Internet with electronic coins.

The sole US bank to show interest in online payment via electronic cash this week abruptly ended its three-year trial of DigiCash's. eCash software.

Citing its changed strategy and market conditions, St. Louis, Missouri-based Mercantile Bank this week ended a trial which allowed customers to make purchases over the Internet with electronic coins, Mercantile spokeswoman Beth Fagen confirmed.

The trial used eCash, an electronic cash software program created by Palo Alto, California-based DigiCash. The bank was the sole US client for DigiCash, which hopes to have another major US trial in place by the end of the year, according to William Donahoo, vice president of business development at DigiCash.

The trial brought together 5,000 customers with 300 Internet merchants. Customers gave the bank their credit card information only once, then created electronic "coins" at the bank, allowing them to make even small purchases -- or micropayments -- of goods over the Internet, such as one CD, without having to enter a credit card number each time. The buyer also remains anonymous to the merchant because the coins do not identify the customer.

Mercantile inherited the eCash project when it purchased Mark Twain Bank in 1997, Fagen said. After reviewing its strategy, the bank decided to call a halt to the trial after it became apparent that few of the project's participants were Mercantile's core customers in the six Midwestern states where it operates, she explained.

Fagen also cited the changing climate in the U.S. for Internet payments. When the trial was started in 1995, she said, "people were more fearful of using credit cards to pay for things over the Internet. Now that seems to have disappeared."

Although Mark Twain was the first bank worldwide to try out eCash, its core business never was quite a match for the product, according to DigiCash's Donahoo.

Elsewhere in the US, it also appears that the market for micropayments is still something of a non-starter. First Virtual Holdings, a US-based software vendor for online payment systems, recently transferred its accounts to its former competitor, CyberCash.

"But we are still bullish about our prospects for this market," said Donahoo, pointing out that automatic teller machines took nearly 20 years to be accepted. DigiCash will concentrate on finding the right type of merchants for its US-based projects, he said.

In Europe, however, DigiCash has eCash projects in progress at Credit Suisse, the Bank of Austria and Deutsche Bank.

DigiCash can be reached on the World Wide Web at http://www.digicash.com/.

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