Chase Manhattan Corp. and Nynex Corp. have taken the wraps off the prototype of an electronic payment system designed to let consumers bank and shop by interactive television and personal computer.
The system the two companies are developing is expected to be in full operation sometime next year.
Nynex, a corporate customer of Chase's, will serve as the content provider, delivering such services as movies-on-demand and shopping through on-line retailers. Chase will act as the payment processor.
Chase also plans to offer its own brand of TV and PC banking through the Nynex network.
The bank's commitment to interactive television comes at a time of uncertainty for the technology, with Shawmut National Corp. and Meridian Bancorp recently canceling separate high-profile projects.
Shawmut cited a lack of consumer interest, due to high costs, as the reason for pulling out of its project with AT&T Corp. Meridian had been working with Eon Corp., formerly TV Answer Inc.
Chase officials said they understand that interactive television may not generate profits in the near term. The bank appears willing to make this sacrifice to have a service ready in case consumer demand heats up.
"We're not in this for the quick buck; we're in it for the long haul," said Arnold Lieberman, vice president and senior business development officer at the $120 billion-asset banking company.
"We're not worried about what's happening in the market. Consumers will eventually change their behavior, but it will take time. When customers are ready, Chase wants to be in a leading position."
In addition to interactive TV, Chase is investing in other home banking channels. It has teamed up with both Microsoft Corp. and Intuit Inc. for PC banking and also offers banking by telephone.
In their development of the new system, Chase and Nynex are focusing on such design elements as ease of use, flexibility, and controls to make the service desirable to consumers.
The companies intend to license the system to other interested electronic commerce parties, such as communications and computer companies.
To make purchases on the system, a household must first be divided into separate accounts or personal "vaults." Each vault carries a different personal identification number. The PIN can be input using a television remote control.
When a vault is opened, users are offered several different payment methods that they have preregistered with the service - including credit or debit cards, automated teller machine cards, checking accounts, and prepaid tokens or coupons.
Customers may also set up visitor accounts, and impose restrictions on individual accounts.
Parents, for example, can govern the amount their children spend by limiting their payment options to a certain number of prepaid movie tickets or game tokens and restricting their purchases to one a day.
A parent or other master account holder can also check the family's purchase history to review what was bought, who purchased it, and how it was paid for.
Mr. Lieberman said these types of controls are "vital to the success of this new medium."
Nynex and Chase will attempt to jump-start sales on the interactive network through a rewards promotion. A Nynex-brand entertainment credit card will award consumers points for electronic or store purchases. The points will be redeemable for free movies, games, and other interactive services.
The proposed merger between Chemical Banking Corp. and Chase is not expected to cancel or delay of the project.
"We don't anticipate the merger having any effect on the project," said Mr. Lieberman.
