Canadian Imperial Bank of Commerce has become the first bank member of Identrus LLC to begin installing technology to facilitate trading between commercial customers that use Identrus-sponsored digital certificates.
The effort to add trading and payment capabilities to the original Identrus goal of digitally securing business-to-business transactions was announced in September. Fifteen of the 35 members of Identrus, a global bank consortium that seeks to secure transactions between commercial customers through a hierarchical system of digital certificates, are involved in the trade-facilitation initiative, known as Project Eleanor. The 15 banks' customers represent 50% of the importers and exporters in the developed world.
Payments initiated through Eleanor could enable a financial institution to offer a range of payment instruments to its business customers. These clients could receive real-time confirmation of electronic transactions and settle them through national and international payment systems like the automated clearing house network and the Society for Worldwide Interbank Telecommunication, or Swift. At the same time, they could use digital signatures with Identrus Global ID certificates to validate the identities of buyers, sellers, and third parties on the Internet and digitally sign payment instructions, provide authentication, message integrity, nonrepudiation, and confidentiality.
"If you believe a purchase and sale agreement begins when you find a new trading partner and ends when you make a payment, a financial institution can add value along that chain," said BillCameron, chairman of the Eleanor payments group and a general manager at Canadian Imperial Bank of Commerce. "Project Eleanor is the means by which established common standards and tools enable the customers of one bank to deal with the customers of another bank seamlessly. They can send a payment instruction from a buyer to a seller."
CIBC expects to conduct a pilot test of Project Eleanor with about 200 customers next summer, said Susan Frostad, general manager of the Identrus project team in the electronic commerce division at Toronto-based CIBC. She said the test should expand to 2,000 to 3,000 commercial customers by winter 2001.
The $266 billion-asset bank is targeting 300,000 of its 350,000 small to midsize corporate customers that trade across borders. In market research of 100 clients worldwide, CIBC found that companies pay on average $25,000 a year to find new trading partners, send wire payments, secure messages, and enforce buy-and-sell arrangements. Through Project Eleanor, the annual cost of comparable services would decrease to $5,000 a customer, Mr. Cameron said.
Customers need a browser and an Eleanor Scheme rulebook to register for the service. "We're not creating a new clearing and settlement system, but payment initiation," Ms. Frostad said.
CIBC plans to spread the service far and wide. "Success will depend on our penetration among marketplaces, Web sites, and between buyers and sellers," Mr. Cameron said.
For 18 months, the Project Eleanor team has been working with iPlanet E-commerce Solutions, a Sun/Netscape company, Verisign Inc., and Gemplus to develop an open specification for initiating global payments over the Internet. CIBC has become the first bank to adopt the integrated offering in a commercial setting.
The bank chose to implement a new framework because it wanted the ability to authenticate users and to allow its merchants to pay their trading partners online. "We want to be there at the beginning of a transaction - by authenticating the user - and at the end of a transaction and to build touch-points throughout," Ms. Frostad said.