Cybercash Has Partners But Needs Merchants

Cybercash Inc. has cleared some-but by no means all-of the hurdles it has encountered in trying to win acceptance for its electronic wallet technology.

The company unveiled its latest system, Instabuy, in August, and has been trying to persuade banks and Internet service companies to offer it as a way to ease consumers' on-line payment choices and decisions.

Cybercash sells the notion of "one-click shopping," equivalent to the credit card experience on a popular commerce site such as amazon.com. Once the wallet details are registered, it takes a single click to activate a payment.

Bank One Corp.'s First USA unit recently agreed to adopt Instabuy and the "Agile Wallet" built into it, and will encourage its use by credit card and merchant-acquiring customers.

Cybercash has also announced alliances with five Internet marketing or processing ventures: Intershop, OrderTrust, Taxi Interactive, Impulse Buy Network, and Netcentives.

But the four-year-old Cybercash has yet to persuade any individual merchants to accept its latest-generation wallet, and consumers seem to be adjusting to electronic commerce without the safety and convenience that the company says its wallet affords.

"Unless there are more places to shop, consumers are not going to go through the hassle" of setting up the wallet, lamented Russell Stevenson, general counsel of Reston, Va.-based Cybercash.

Without consumer demand for it, "there won't be merchants" willing to participate, he said.

Mr. Stevenson said First USA can help address the "chicken-and-egg problem. Consumers are more willing to trust a financial institution (than Cybercash) to save their information and make it available to merchants."

James W. Stewart, executive vice president of First USA, said the Cybercash program is meant to increase cardholders' convenience and give merchants "a valuable tool to remove the barriers that inhibit Internet sales."

The wallet is designed for using credit cards, electronic checks, or digital coins to pay for Internet merchandise. Consumers can choose the form of payment based on the size of a purchase.

First USA has cobranding relationships with popular Web search engines such as Yahoo and Excite, and those could give Cybercash's technology helpful exposure.

America Online could make a complementary market impact too, having announced plans to offer a wallet service called Quick Checkout this year to its 13.5 million subscribers.

Cybercash had previously invited Internet surfers to download wallet software from its Web site, but the digital load was "heavy" and setup times were long, turning many consumers off.

Instabuy is a departure in the direction of thin wallets, with less burden on the consumer's desktop and more on a service provider's server computer.

Some electronic commerce observers have praised Agile Wallet but said on-line retailers may have other priorities.

Instabuy "is a better solution for the problems both the merchants and consumers face," said Scott Smith of Current Analysis Inc., Sterling, Va. The slow adoption may be a reflection of "all the other things the merchants have to do for the season."

David E. Weisman, group director at Forrester Research of Cambridge, Mass., said the First USA alliance was "a major step" for Cybercash because electronic commerce "is a game of perceptions and alliances." But Cybercash still "needs to do several things to get the ball rolling."

"The concept is a great thing," Mr. Weisman said. "They have the right idea-they just have a lot of execution ahead of them that will make this a difficult process."

Cybercash is touting the fact that financial institutions can place their own brand names on the wallet. This offers "the potential for individual banks to do partnerships with Internet portals and create brand recognition on the Internet," said Gary Craft, an analyst with BancBoston Robertson Stephens.

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