If banks want to be the primary providers of digital wallets for Internet commerce, they first must contend with Internet merchants and portals.

Though banks may seem the natural promoters of a technology that could extend their credit card brands and strengthen customer loyalty, the Web- based alternatives are moving quickly. The pressure is on the banks to devise desirable wallets and an easy way of distributing them.

"There is a lot at stake for financial institutions and portal sites," said Internet commerce analyst Vernon Keenan, founder of Keenan Vision Inc. in San Francisco. "Theoretically, they could control another key click stream. They want to up-sell and put across a marketing message and advertising links."

Heavily trafficked sites like Amazon.com and CDNow have installed one- click purchasing capabilities, a wallet-like system that makes repeat shopping a breeze.

Similarly, portal services such as America Online, Excite, and Yahoo are striving to create wallets for use in their shopping domains.

"AOL and Yahoo have great potential to figure prominently in the wallet space," said James McQuivey, senior analyst at Forrester Research Inc.

AOL is "in the catbird seat" and "already has a data base with the credit card numbers of its users," he said. "It just needs to create the technology so users can shop on-line."

The company has announced it will introduce a wallet called Quick Checkout. It is expected to encourage many of AOL's 16 million members to shop on-line.

Members generated $1.2 billion of purchases on AOL's Shopping Channel during the last six weeks of 1998. They used credit cards to make purchases from 110 retailers linked with the AOL Shopping Channel.

The wallet would streamline Internet purchasing. By securely storing customer payment information, it would obviate the need to re-key information for each transaction.

Yahoo is pursuing similar goals with the shopping service it introduced in November. Its software lets people choose products from among 3,000 participating merchants, add them to a virtual shopping cart, and buy them in a single checkout.

Name and address are stored in the wallet; people need only input their credit card numbers to make purchases.

"This is phase 1," said Tim Brady, vice president of production and executive producer at Yahoo Inc. "We will be adding more features."

Excite's ExpressOrder, with 25 merchant participants, encrypts billing, shipping, and credit card information on a user's computer, requiring that purchasing information be entered only once.

"I don't know if Excite will develop a comprehensive payment system and technology," said Andrew Halliday, vice president of commerce at Excite Corp. It is has a classified-ad service on its Web site and is developing a settlement system that would support buying and selling of the goods advertised. Excite might host the accounts that would fund these transactions.

"At the moment, it is not an elegant system and needs to be more secure," Mr. Halliday said.

He sees Excite's role as one of registering people on behalf of bank partners. The strategy would build upon Excite's agreement with Bank One Corp. to create a full-service, Internet-based financial center.

Mr. Halliday said each portal company "will define its own approach."

Hitting upon the right approach early could be crucial.

David Pecaut, senior vice president and head of the global e-commerce practice at Boston Consulting Group in Toronto, said: "People don't have strong views about who they get the wallet from. They are more concerned about how they get it and the trust, guarantees, and restrictions around its use."

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