PaymentNet, a Pleasanton, Calif.-based Internet merchant processor, re- ceived venture capital funding from an investor group including Wells Fargo & Co. and AT&T Ventures.

The amount was not disclosed. The company re-ceived $3.2 million in May 1998 from Convergence Partners and Bay View Investors Ltd., among others.

PaymentNet was formed in 1995 by electronic publishing entrepreneur Bruce Hendrix. The company serves as an electronic bridge linking 500 merchant customers and the credit card and automated clearing house networks.

Matthew C. Graves, senior vice president at Wells Fargo, said it made an opportunistic investment in "very distinct competencies that can play to our long-term advantage. I think there are millions of (merchants) out there that can use PaymentNet's capabilities."

Scott Smith, analyst at Current Analysis of Sterling, Va., said, "We are only now seeing the beginnings" of Internet merchant servicing.

Though Cybercash Inc., PaymentNet's primary competitor, claims 9,000 merchant customers, "there is something of a vacuum in the Internet payments market," he said.

PaymentNet also announc-ed that Martin A. Stein, a former BankAmerica Corp. vice chairman and chief technologist, has joined its board of directors.

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