finance innovation

Chase Manhattan Bank, which has been making automated clearing house (ACH) payments on an Internet-based electronic data interchange (EDI) system since February, has gone the distance to make it work for its clients.

Chase has two customers for the system: Diamond Shamrock Corp., which signed on in February, and Big W Discount stores, which goes live this month. Big W, an Australian retailing subsidiary of Woolworth LPD, is a Chase customer in Australia but will have its intra-Australian payments business processed in Bournemouth, England, where Chase has its core payments processing hub, and then routed back to Australia.

What makes such extravagant routing practical, says Jeanine Khoury, a Chase vp, is Premenos Corp.'s Templar product, a public- private key encryption system. Khoury says Chase is satisfied that Premenos's claims of full interoperability on any system are sound and that it can handle any sort of EDI payment instruction, from simple wire transfers to FedWire transactions. Replacing its old private networks with the Internet, she says, cuts costs dramatically for the bank. "It's helping us grow our book, because it allows customers who wouldn't be able to automate their payment stream to do so."

While the bank first marketed the service to big corporate clients, it's beginning to call on middle-market customers.

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