Checkfree Corp. and Cybercash Inc. have announced plans to create a system to secure financial transactions over the Internet.

The Columbus, Ohio-based automated bill payment processor will ally with the maker of software for secure transactions to produce a set of products and services to let consumers pay bills and buy items via computer networks.

Checkfree announced last week that it will license the secure encryption technology from Cybercash and apply it to its Checkfree Wallet to accommodate small electronic cash payments as well as credit, debit, and check-based ones. "The Wallet" is Checkfree's transaction platform, introduced in April.

"If I look in my wallet today, I have checks, coins, cash ... I pay bills," said Magdalena Yesil, the vice president of marketing for Reston, Va.-based Cybercash. "We basically want to take the same thing to the computer world."

The service can already handle credit card payments. By October, the electronic cash, check, and coin options should be ready, Ms. Yesil said.

The firms plan to aggressively market these offerings to banks, which could private label them and offer them to their own customers.

In addition, Checkfree and Cybercash will sell the new system to browser companies, which give consumers access to the on-line networks, and database and hardware companies - all of which could bundle the service with existing offerings.

The two companies say the alliance was a natural fit; the companies complement one another technologically, said Michael Sapienza, a vice president for marketing for Checkfree.

Checkfree primarily processes bill payments for companies that provide home banking services, including Intuit Inc., Meca Software Inc., MasterCard International's MasterBanking program, SmartPhone Communications Co., and most recently AT&T.

Cybercash, a year-old start-up company, uses encryption methods to allow consumers to make purchases on-line. Cybercash offers its software free over the Internet. The company has announced pilot services with Wells Fargo & Co. and First Bank of Omaha, and Ms. Yesil said there are a dozen other banks Cybercash is working with.

"Partnering with Cybercash was logical choice for Checkfree," said Peter Kight, the founder and chief executive of Checkfree. "Checkfree is committed to leading the way for electronic commerce, and providing plug- and-play Internet transactions solutions."

For both companies, particularly Cybercash, this seems to be an advantageous agreement that could move both into a more competitive position in the electronic commerce market, said Adam Schoenfeld, a consultant with New York City-based Jupiter Communications Co.

He said that Checkfree has been "quietly pushing the envelope from Columbus" while Microsoft Corp. and Intuit were wrangling through their eventually aborted acquisition. Further, he said, this greatly helps to establish and further Cybercash among its competitors.

"This give Cybercash a real leg up," he said. "Checkfree can really get their product out."

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