Digicash Inc., still frustrated in trying to sell U.S. banks on its Internet payment system, has named Scott Loftesness chief executive officer.

The former Visa International and First Data Corp. executive joined Digicash two weeks ago. He succeeded Michael C. Nash, another veteran of Visa International, whose tenure at Digicash lasted a year and a half.

Digicash and its rivals, including Cybercash Inc. and GlobeID Software, have been struggling to generate enthusiasm for an on-line, virtual type of cash. Credit cards have been the most popular choice for Internet payments.

Mr. Loftesness, 52, said U.S. banks will be "very much a part of my focus" at Digicash, which calls its digital coin system Ecash.

"We need to ensure that we have a strong U.S. business, and the company doesn't have that today," he said. Digicash has "a base of intellectual property and people and talent, and we just have to figure it all out."

Created by American-born cryptographer David Chaum, Digicash's system is designed for anonymous payments for low-cost commodities such as music CDs or news articles on a Web site.

Foreign institutions have shown some enthusiasm. In June, Credit Suisse of Zurich announced a pilot. Deutsche Bank, Bank Austria, Den Norske Bank of Norway, Advance Bank of Australia, and Nomura Research Institute of Japan have also licensed the technology.

In the United States, only Mark Twain Bank of St. Louis signed with Digicash, and nobody calls its two-year-old pilot a success.

Because of the popularity of credit cards, "we feel electronic cash is probably not going to be a viable means for on-line payment in the United States," said Nicole Vanderbilt, electronic commerce analyst at Jupiter Communications of New York.

"There is not a demand" for digital cash, said David E. Weisman, director of money and technology strategies at Forrester Research, Cambridge, Mass. "Consumers would take a long time to understand it."

Mr. Chaum formed Digicash in 1990 in Amsterdam, where he lives. As part of a venture capital infusion and reorganization in 1997 that included Mr. Nash's appointment, Digicash established new headquarters in Palo Alto, Calif.

It has 40 employees in California, the Netherlands, and a small office in Australia.

In a sign that the company is held in high regard, William F. Zuendt, the former president of Wells Fargo & Co., joined the Digicash board in June. Massachusetts Institute of Technology professor Nicholas Negroponte is chairman.

Mr. Loftesness said Ecash has attributes that could prove superior to the two standard Internet security protocols, SSL and SET.

SSL, or Secure Sockets Layer, is available through Internet browsers. When Visa and MasterCard deemed it insufficient for credit card transactions, they sponsored development of Secure Electronic Transactions. Mr. Loftesness criticized SET as a "clearly overengineered and heavyweight approach."

He said Ecash "has anonymity and convenience attributes that could be particularly good at the low end, micropayments. But the technology is such that there is no reason it needs to be limited to the low end."

Mr. Loftesness, who said he was working for Visa when he first met Mr. Chaum, believes he can make the case that Ecash is a useful "adjunct to credit cards."

Mr. Loftesness joined Visa in 1985, working under the card association's technology architect, Roger Peirce.

In 1994 he was promoted to senior vice president of advanced payment system strategies but soon left to join Mr. Peirce at First Data Merchant Services. There Mr. Loftesness was group president for product development in electronic funds services.

Mr. Peirce and Mr. Loftesness left First Data this spring. Mr. Peirce this month became chairman and chief executive officer of U.S. Wireless Data Inc., Emeryville, Calif.

Mr. Loftesness said his First Data experience was "directly relevant" to his job at Digicash, since "merchant-side acceptance is a fundamental challenge for anyone who is doing new forms of payment."

William Burnham, an electronic commerce analyst at Credit Suisse First Boston in San Francisco, said Mr. Loftesness' "experience in building alliances" could be a boon to Digicash. His appointment "may be indicative of a change in strategies toward forging alliances with processors in addition to financial institutions."

Mr. Loftesness said Digicash will explore all avenues.

"Among the choices we need to make as a business are who we partner with, and whether we start out focusing on micropayments or not," he said.

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