The technology industry's dominant players have long since demonstrated that a sound strategy for securing a position in the on- line commerce world is to be one of its creators. And it looks as though some banks have been paying attention; Mellon Bank, Citibank and Glenview State Bank are getting into the Internet standards game. Working with the Financial Services Technology Consortium (FSTC) and technology companies including Tandem and NCR, the three banks are hoping to test and introduce a new specification for a secure server that will enable them to provide payment services to customers via the Internet. The Bank Internet Payment System (BIPS) will be compatible with multiple bank payment systems; allow payers and payees to agree on payment terms and mechanisms; and provide intelligence to select the appropriate payment mechanism for the payer based on individual requirements. Ideally, BIPS will give banks an edge, says David Merritt, product design manager for Mellon's global cash management, because it will leverage banks' existing payment systems and corresponding infrastructure investments. The new paradigm would provide banks with more control over method of payment, enabling them to deliver greater levels of service and collect additional fees, says FSTC project manager Debbie O'Dell. Rather than having a customer dictate the method of payment, the customer would instead instruct the bank to pay in the most cost- effective method available and let the bank determine the best pipeline for delivery. To test the infrastructure still in development, two pilots will take place in the third quarter. Mellon's pilot will allow customers of its corporate customer, Pennsylvania Power & Light, to initiate payment instructions to Mellon via the Internet. And Glenview State Bank will begin offering a number of its cash management services to corporate customer Cummins Allison Corp. via the BIPS architecture.Cummins Allison CTO Ron Gafron says that payments to its suppliers will be initiated via the Net; Glenview will arrange for the funds transfer. Participants say the plan is to build on standards like OFX and Integrion's Gold, adding bank-specific functionality and then approaching a company like Microsoft to integrate the two. -prince

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