While Internet enthusiasts are talking up the potential for electronic wallets and on-line bill payments, some bankers say they may be content to watch from the sidelines.

At the American Bankers Association's Future Payments conference this week, bankers and Internet vendors debated how involved banks need to be as transaction services evolve on the Internet. Some large companies have made big investments in these areas but not everyone is certain of the business justification.

Bruce P. Brett, senior vice president of Wachovia Operations Services Corp., said digital wallets, which have been touted as a way for banks to solidify their on-screen connections to customers, are important. But they do not "feel like a strategic issue for us," he said. "It's tough to find executive management that will support such initiatives with money."

Mr. Brett, whose company is a division of Wachovia Corp. of Winston-Salem, N.C., said in an interview that banks that are deeper into Internet initiatives -- such as Bank One Corp. or Wells Fargo & Co. -- might want to "own the e-wallet relationship."

Those banks are among the dozen or so credit card issuers working with vendors on digital wallet initiatives. Bank One's First USA division works with Cybercash Inc. of Reston, Va., and Wells Fargo works with GlobeSet Inc. of Austin, Tex.

Electronic wallets are designed to streamline the way consumers choose their payment methods when dealing with on-line merchants. Once account information is entered and stored on a personal computer or merchant server, a purchase can be completed with a single click. A battle has begun for control of wallets. Some are operated by Internet merchants or portals. In a bid to emphasize bank brands, MasterCard announced an agreement this week to distribute the latest version of the IBM Consumer Wallet.

Electronic bill presentment and payment is also a highly touted convenience and emerging technology battleground. Through home banking services, many banks already facilitate electronic bill payments. Some executives foresee a day when consumers receive their bills via e-mail or the Internet and shoot payments back the same way.

Technology vendors are urging bankers to step up their commitments in the interest of solidifying relationships with customers.

"The entity that enrolls consumers (in bill payment programs), gathers the information, and establishes the relationship with consumers is in the position of power," said Richard K. Crone, vice president and general manager of Cybercash.

"Up to this point, banks have ignored the billers," Mr. Crone said. "The Internet represents an opportunity to bring them into the loop," potentially reducing banks' costs of clearing checks, he said.

Matt Cone, chief marketing officer of Corillian Corp., a Beaverton, Ore., software company, claimed there is a "tidal wave of consumers interested in bill presentment services." His company provides bill presentment software to 26 financial institutions, including SunTrust Banks Inc.

Mr. Brett said, "We are overwhelmed by consumers' response to bill-paying services."

But the Wachovia executive said he is not convinced that banks need to be aggregators of the kind of consumer information that wallet providers gather. Mr. Cone agreed, saying he does not see banks delving into digital wallets.

It makes more sense, Mr. Cone said, for operating systems and browsers to deliver electronic wallets. For example, Mr. Cone's former employer, Microsoft Corp., offers a digital wallet of its own.

David S. Fortney, director of product development for Integrion Financial Network, said some banks are keeping their options open by making venture capital investments in Internet start-ups that offer payment and billing services, and that may eventually point the way to the right strategic moves. Getting involved by giving seed money to these initiatives "is a trend that will be out there for a while," Mr. Fortney said.

Most electronic commerce at this stage is conducted with credit cards, but observers say the debit card is poised to play a significant role.

Payment industry experts surveyed by R. Neal Chambliss, managing director at the Washington-based consulting firm Furash & Co., predicted that overall debit card transactions will equal or surpass credit card transactions within five years, in part because consumers have a growing aversion to credit card debt.

By yearend, consumers are projected to have used debit cards 7.3 billion times, with both on-line and off-line debit transactions growing at roughly 50% annual rates, according to the consulting firm Dove Associates. A recent Dove-ABA survey of 1,400 consumers found that 82% had some type of debit card. Fifty-nine percent of respondents said they used their cards at checkouts, and 40% of the users said they expect to increase their usage over the next two years.

"The use of debit and the integration of debit into the virtual point-of-sale world should be a very important development looking forward," said Chuck Hieronymi, managing director at Dove in Charlotte, N.C. "It may include traditional debit products as we've known them in the industry, but we see tremendous opportunity to innovate and use debit-like features as well as much of the debit railroad that the industry has built."

On-line debit cards, those generally associated with regional automated teller networks, are not used on the Internet because they require personal identification numbers. But Mr. Hieronymi sees a strong future for them in the virtual world, saying some consumers may even perceive PINs as useful security features.

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