Frank Trotter has a dream: that a newfangled form of electronic money, known as Ecash, will become the dominant payment mechanism for the Internet. If the dream comes true, his relatively obscure Midwestern bank could go down in history as the institution that launched Ecash, Digicash Corp.'s entry in the Internet payments sweepstakes, to national and perhaps global prominence. Long as the odds may seem, "I have lately become a missionary for Ecash," said Mr. Trotter, 41, a vice president at Mark Twain Bancshares of St. Louis. Mark Twain announced its Ecash program last October, giving the system a coveted foothold in the United States though with a bank far smaller than the ones Amsterdam-based Digicash had expended most of its efforts soliciting. The Missouri-based bank says it has legitimate business reasons for making a wager on Ecash. It has an active international department that sells deposits in multiple currencies. Ecash, the bank reasons, can add a new dimension to its service and lift Mark Twain into the same league as other potential issuers and processors of Internet currency. But at $2.8 billion of assets, Mark Twain clearly lacks the power and heft of megabanks like Wells Fargo & Co. and First Union Corp., which have staked out strong positions on the Internet frontier in alliances with Cybercash Inc., a Digicash competitor. Among other cyberspace payment mechanisms jockeying for position and for alliances with banks are: Mondex, the smart card and electronic cash system backed by National Westminster Bank of London; and First Virtual Holdings, which has designed a clearing system using electronic mail rather than the Internet because it doesn't yet trust the security of the latter. Mark Twain's motivation is simple: "To gain new customers," said Frank Szofran, head of Mark Twain's capital markets group and supervisor of Mr. Trotter. "Payments and exchange over the Internet and through electronic media certainly seem to be the way the world is headed, and we would like to be a part of it." While many bankers believe that credit cards and electronic checks will emerge as the preferred payment choices on the Internet, Mr. Trotter found himself drawn to Ecash. He said he shares a "philosophical belief" with the creators of Ecash that the remitters of on-line payments should be as anonymous and untraceable as people who choose to use paper currency and coins. When a Mark Twain depositor purchases Ecash, the amount is transferred from a regular account to the customer's computer drive. The electronic money appears on the screen in the form of cyber coins. An icon on the computer screen continuously indicates how much money the account contains. When a customer buys a product offered by an on-line merchant who accepts Ecash, the icon registers the deduction. Critics of the Ecash technology, championed by Digicash's computer- scientist chief executive officer David Chaum, say it is too difficult to use and too expensive to attract a popular following. "People don't like to have to 'buy' cash," said David E. Weisman, an analyst at Forrester Research, Cambridge, Mass., who has studied the Ecash trial. Nonetheless, Mark Twain's announcement caused a big stir on the Internet's World Wide Web (address: www.marktwain.com) and interest has been so strong that the bank hired two people exclusively to field inquiries. "About 1,000 people actually have accounts now and we expect 10,000 by April or May, when we'll have more merchants signed up," Mr. Trotter said. For Mark Twain, a 30-year-old bank with community and small-business roots, the link with Digicash was one of many steps it has taken to shed the old homespun image. It has offices in three states, a stellar lending record, and streams of fee income from brokerage, commercial finance, and trust activities. The payoff can be seen in such fourth-quarter performance indicators as a 1.75% return on assets, 18.36% return on equity, efficiency ratio of 53%, and 4.85% net interest margin. "Nothing surprises me with Mark Twain they're always trying to push things," said Joseph A. Stieven, an analyst at Stifel, Nicolaus. The company's president, John P. Dubinsky, "really encourages that." Mr. Trotter, a 15-year veteran of Mark Twain, has spearheaded the bank's drive to offer innovative niche products, including FDIC-insured savings accounts and certificates of deposit in foreign *currencies. His interest in serving international customers and his belief that electronic transactions should be kept private led him on the trail to Digicash founder David Chaum. Mr. Chaum, an authority in the field of cryptography, is as famous for advocating privacy rights as for the technologies he has developed. His sales calls on many major banks elicited tepid responses. Mr. Chaum and Digicash were at first wary of joining forces with a less prestigious regional like Mark Twain. "We called Digicash, and it took a little while for them to take us seriously," Mr. Trotter said. Mr. Dubinsky, the bank's president and chief executive, said its reputation as a developer of computer and foreign currency products helped Digicash take it seriously. In addition, Mr. Dubinsky said, "being a medium-sized bank, we have a much quicker decision-making process than a lot of the larger banks" and were able to give Digicash a quick green light. Now, for an $11 setup fee and $1 a month surcharge, Mark Twain customers can buy Ecash in dollars and store it on their computers. Promoters of Ecash say the system is particularly useful for buying items that cost $1 and under, for which a credit card charge would be cumbersome. But there is, as yet, very little to buy with Ecash. Mark Twain officials say they are busy signing up merchants including national retailers to correct what they concede has been a shortage of available products. By late January, only 25 merchants accepted Ecash and more than 125 were "in the process of bringing up their sites," Mr. Trotter said. Among the first merchants to sign up was Maryland Public Television. "Right now all we're selling on our site is some poetry and songs as a test," said David Levine, president of Husky Labs, which is coordinating the experiment for Maryland Public Television. "We make a few pennies a day." The station will soon begin accepting Ecash for more popular products, including transcripts of Wall Street Week and copies of Louis Rukeyser's stock market predictions. Mr. Levine said another Husky client, Los Angeles-based Pentagon CDs, will join the system soon, offering 150,000 compact disks and cassette tapes for Ecash. Right now the system is a "closed" one. Customer and merchant both must have accounts at Mark Twain, and the Ecash transaction amounts to a simple transfer of funds. Mr. Trotter believes the day will come when buyers and sellers will be able to do business in Ecash no matter where they bank. Mr. Dubinsky said he "couldn't be more pleased" with how the experiment is going. Mr. Szofran added, "This opens up a whole world of international customers to a small Midwest bank." But at Digicash, Mr. Chaum took a more modest view. "The Mark Twain thing is being pursued more as a marketing experiment than as a rollout," he said. "I don't want to be uncharitable, but I don't think you should see Mark Twain as indicative of our strategy." The Mark Twain trial marks the first time that Ecash has gone truly live, representing "real money." Sweden Post, which operates Sweden's post office banking and payment system, is scheduled to begin a similar service later this year. And Mr. Chaum is still thinking big. "We're very much involved in discussions with large retail financial institutions and entities that they own to make Ecash available in the U.S. in a major way," he said. "We're close to announcing a major deal, but I can't say more than that."

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