Chase Manhattan Bank's effort to conduct electronic data interchange over the Internet is going under. Down under, that is.

The bank has started processing financial EDI-which combines payments with remittance information-in Internet transmissions from a large Australian retailer, which it declined to identify.

It is the first time Chase has processed financial EDI from a company outside the United States.

Four U.S.-based companies already send Chase financial EDI files through the bank's Internet-based EC Gateway service, which has been available since 1997.

About $50 million flows through EC Gateway each month. Chase expects to see significant growth this year as it adds customers, said Jeanine Khoury, vice president and product manager for electronic commerce.

"Chase is one of the only institutions using global Internet communications for financial transactions," said Ms. Khoury.

The Australian agreement is the first of several that Chase plans to secure with foreign companies. By early 1999, the bank expects to add three from Europe, two more from Australia, and at least three more U.S. companies to its EC Gateway.

The service handles non-EDI electronic commerce applications as well, such as wholesale treasury services.

By using the Internet instead of private networks, companies can lower the cost of electronic exchanges, said Ms. Khoury.

But companies must pay to ensure the necessary security on the Internet, said Richard Bort, an electronic commerce consultant based in Sherman Oaks, Calif. Because of security concerns, few banks have taken advantage of the Internet.

EC Gateway uses 128-bit encryption built into Harbinger Corp.'s TrustedLink Templar software. The software also authenticates users. Harbinger's Australian distributor is Edification of Melbourne.

Chase's Internet EDI service can help promote business-to-business electronic commerce in Australia, said Peter Blanchard, marketing manager of Tradegate ECA, a Sydney-based association of electronic commerce users. Tradegate has encouraged Australian banks to adopt financial EDI, to no avail.

The Australians use a system called Bulk Electronic Clearance to accommodate periodic debits of fixed payment amounts, Mr. Blanchard said. Though simple and inexpensive, the system does not allow remittance data and other information to be sent with payment instructions.

The banks there recently started using Real-Time Gross Settlement to exchange high-value payments between banks. Until Chase came in, no mid- level business-to-business electronic commerce program was available.

"The growth of EDI rests in the ability of companies to leverage the capabilities of the Internet, which we see as the future of electronic commerce," Mr. Blanchard said. "Chase's initiative represents a vital next step for electronic commerce in Australia."

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