Eager to boost the fledgling market for on-line financial services, industry leaders are asking Congress to step in-but very lightly.
So far, Congress has taken a wait-and-see approach. But industry experts now say laws making it easier and safer to conduct transactions on the Internet are needed so consumers have the confidence to wire their money around the globe.
"Lack of trust has prevented electronic commerce from taking off," said Laurence G. Walker, president of Certco., a Bankers Trust Co. spinoff developing on-line banking technology.
Speaking at a conference on electronic banking sponsored by Sen. Robert Bennett, R-Utah, this month, Mr. Walker and other industry experts urged lawmakers to act in two areas.
First, federal standards are needed for "digital signatures," the codes used in lieu of written signatures for on-line transactions. Second, the Clinton administration's current ban on the export of sophisticated encryption technology must be eliminated.
Without these changes, experts warn, electronic commerce in the United States will lag behind that in other industrial nations and the country will lose its technological edge in financial services.
Lawmakers are beginning to move.
Rep. Mike Castle, who is chairman of the House Banking Committee's monetary policy subcommittee, is planning hearings on the use of digital signatures this summer.
The industry is pressing for federal legislation that would set a uniform standard for digital signatures, preempting state laws. Already, 12 states have laws allowing their use.
"If we have 50 states with 50 digital signature rules, how can you do transactions that cross state lines?" asked Thomas P. Vartanian, managing partner at the Fried, Frank, Harris, Shriver, and Jacobson law firm. "If a son steals a parent's digital signature and buys a $1,000 product, who's responsible if the parent doesn't want to pay?"
To make international transactions more secure, lawmakers should push for digital signature agreements with the European Union and other organizations, Mr. Vartanian said.
The industry also is pressing Congress to allow export of the toughest encryption codes. Sen. Bennett, chairman of the Senate Banking Committee's financial services and technology subcommittee, called the restrictions "ridiculous." Montana Republican Conrad Burns, chairman of the Senate Commerce Committee's communications subcommittee, has introduced legislation that would eliminate restrictions on exports of encryption technology.
But any legislative effort carries the risk of new, unwanted regulation. The industry is already fighting White House efforts to require government access to "keys" that decode encrypted messages. Also, many bankers worry lawmakers will force them to provide deposit insurance for money loaded onto "smart cards."
To date, banking regulators have been stepping gingerly around these issues.
But today, the Office of Thrift Supervision plans to hold a press conference to announce it is soliciting industry comment on possible new regulations to govern electronic services offered by thrifts.