A two-year-old company, eCharge Corp., is promoting an on-line payment method that it claims is simpler and more practical than some of the digital cash and credit card approaches on the Internet commerce market.

Under the Seattle company's patent-pending system, charges appear on buyers' local telephone bills as "900"-number calls.

"It's exceedingly simple," said Ron Erickson, chairman. "Its simplicity and fundamental security make it a natural solution for micropayments."

Although the Internet is the entry point to eCharge, the system executes transactions off-line to avoid passing sensitive information over the public network. The off-line aspect makes eCharge similar to a credit-card- based system developed a few years ago by First Virtual Holdings that failed to gain a significant following or yield a profit.

ECharge might benefit by "riding the rails" of a familiar telephone- based billing process, but some analysts wonder whether even this is too complicated to win wide acceptance.

Created by Canadian entrepreneurs Rob Hutchison and George Fleming, the system has attracted the attention of several on-line merchandisers and international telecommunications companies. ECharge is working with Telia in Sweden and Cable & Wireless in the United Kingdom and is in discussions with France Telecom.

"North America is the only continent that doesn't allow you to purchase hard goods and bill them to your phone bill," said Mr. Hutchison. Because of an FCC restriction, eCharge can offer only things like information, on- line subscriptions, or the ability to make political or charitable contributions. Later will come software and on-line games.

Consumers can use eCharge if their personal computers run on the Windows 95 operating system and when Web sites they are buying from display the eCharge icon. Clicking on the icon connects the user with the appropriate "900" number-a code that may be more familiar to the public through adult entertainment and other forms of chat lines.

ECharge has an arrangement with BFD Productions Inc., a Las Vegas service bureau, to acquire "900" numbers on behalf of merchants and answer the calls dialed by the software. Billing data are routed to monthly telephone bills.

For now, consumers must disconnect from the Internet before achieving a modem link to the merchant's "900" number, but later versions will operate while the buyer remains on-line. Digital receipts are used as proofs of purchase.

Merchants collect their eCharge revenues monthly and pay billing and collection fees of 7.5% to eCharge. This is above the common 2% to 3% credit card discounts that conventional retail merchants pay their processing banks, though mail-order merchants often pay more.

Consumers pay a 50-cent eCharge transaction fee for items under $15 and $1 for items over $15.

Neeraj Vohra, electronic commerce industry analyst at Friedman, Billings, Ramsey & Co., said he views eCharge as a less elegant on-line payment method than those based on credit cards.

"What they're trying to do is unique, but I'm not convinced they have a high probability of success," he said.

"This is a complex solution as compared with charging with a credit card," he added. "There is a lot of work for consumers to do and then the consumer gets a large phone bill at the end of it."

Said eCharge's Mr. Hutchison, "We're not competing with credit cards, but we're offering another billing modality on the Internet that can make us significantly viable."

Bill Burnham, equity research analyst at Deutsche Morgan Grenfell's technology group, said eCharge faces a consumer marketing challenge. "Anything that asks consumers to change their purchase behavior just faces a much stiffer acceptance curve than something that goes with the flow," he said.

Richard Crone, vice president of Cybercash Inc., which offers a range of Internet payment options including virtual coins and credit card facilities, also questioned eCharge's complexity.

"How does a merchant build a "900" number into his Web site?" Mr. Crone asked. He agreed with others that signing up and managing merchants is critical to successful selling on the Internet.

Reston, Va.-based Cybercash has signed up 3,000 merchants since April 1995 and is adding 50 to 100 a week. It is processing 1 million to 2 million transactions a month.

ECharge says it expects more than 5,000 merchants to feature its billing system by the end of 1998. CBS Sports, Portland Software, a charity called HEAVEN (Help, Educate, Activate, Volunteer & Empower Now), and Campaign On- line have signed on to use the service.

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