--- begin forwarded text Date: Mon, 27 Mar 2000 07:49:23 -0500 To: Digital Bearer Settlement List <[EMAIL PROTECTED]> From: "R. A. Hettinga" <[EMAIL PROTECTED]> Subject: ECash raising bankroll for online payment bid --- begin forwarded text From: <Somebody> To: "Bob Hettinga" <[EMAIL PROTECTED]> Subject: ECash raising bankroll for online payment bid Date: Mon, 27 Mar 2000 12:21:54 +0100 http://www.amcity.com/journals/high_tech/doc/2000/03/27/seattle_story8.html Puget Sound Business Journal (Seattle) 27 March 2000 ECash raising bankroll for online payment bid M. Sharon Baker Staff Writer A Bothell company hopes soon to announce several major partnerships with national banks that will help establish its eCash technology as a standard payment method on the Web. The company, eCash Technologies Inc., last year bought the assets of an online-payment pioneer, DigiCash Inc., out of bankruptcy. It made some refinements, and now executives hope to succeed where DigiCash failed. To that end, eCash's chief executive officer Drew Hyatt is in the midst of raising $25 million to $50 million from venture backers. That money will be used to grow the company quickly and sign up banks and merchant partners as fast as possible. Knowing that eCash needs to establish the company's brand, launch a consumer awareness campaign, and make the technology work for wireless companies, Hyatt expects to raise another $100 million or more within the next year. That round may include an initial public offering, he said. The company is entering the crowded and noisy market of online electronic payments, which is fraught with challenges and requires large capital outlays to woo consumers, banks and merchants. "The winners and losers will be chosen over the next 12 to 18 months," Hyatt said. What distinguishes eCash from the pack is that most online payment systems rely on billing credit cards. ECash resembles debit cards in that it draws money directly from a bank account. "What we have is the only form of virtual cash," asserted Hyatt, formerly president of the financial institutions division of HNC Software Inc., a publicly traded San Diego company that created the leading fraud-protection product for credit card companies. "The product is safe, secure and fraud-less." The company recently completed a two-year test in Germany with eight banks, where $32 million in transactions changed hands virtually among some 30,000 customers and 300 online merchants, Hyatt said. Throughout the test, there were no security breaches, he said. The pilot led to eCash's first sale to Deutsche Bank 24, the 6-month-old subsidiary of Deutsche Bank that took part in the trial. The idea is that banks will license the eCash technology, enabling a bank to "eCash-enable" existing bank accounts. Some banks will also offer to set up eCash accounts for online customers. Customers download software onto their computer that essentially gives them a digital wallet from which one can move funds into from a bank account. The wallet can be stored locally on a person's computer or accessed at the bank's site. When a customer wants to buy something from a participating merchant, the transaction is as simple as clicking on a purchase button, and selecting the eCash option, and agreeing to the transaction amount. There are no passwords, pin numbers or other information that needs to be typed in. The participating banks handle the actual transfer of funds between the consumer and merchant accounts. ECash hopes to establish a base of 5 million users in the United States this year and sign up a critical mass of merchants to use the system. In Europe, the company plans to sign up "a half-dozen key banks by the end of the year," Hyatt said. He declined to make predictions about the company's sales for 2000. ECash won't charge any transaction fees, but rather aims to make money by licensing the software to banks and merchants. David Cooperstein, research director for online retail at Forrester Research, said eCash faces a number of new "noncredit card companies" getting into the space. Cooperstein said it can take two or three years to educate consumers and allay fears about potential fraud before users readily adopt a technology such as eCash's. "They are working at signing up Visa and MasterCard, which should help validate their technology," said Cooperstein. He suggested that instead of trying to establish its brand name among consumers, the company should be focusing on implementing the technology with banks and merchants. ECash customers don't need a credit card to have an account. However, some banking customers are interested in linking credit cards to accounts, said Hyatt. That's why the company is talking to major credit card companies about the eCash technology. ECash was founded last June after Vancouver, B.C.-based Ruloff Capital bought the assets of DigiCash. Founded in the Netherlands, electronic-cash pioneer DigiCash filed for bankruptcy protection in late 1998 after its strategy of offering consumers an anonymous way to make online payments failed. In October, eCash raised $10 million, adding Bellingham-based Trillium Corp. as a new investor. Previous DigiCash investors Applied Technology of Boston, August Capital of Menlo Park, Nicholas Negroponte of the MIT Media Lab, and the Glide IT Fund of Amsterdam opted to become part of the new company in lieu of being cashed out, said John Filby, a Ruloff partner. Steve Brinn, vice chairman of Trillium, said the timing is right for the company to succeed. "DigiCash was too early," he said. "There's been a remarkable shift in the notion of where things were 12 months ago and today. Fundamentally, DigiCash was ahead of the curve. The advantage of years of experience that we have already under the belt is huge. --- end forwarded text -- ----------------- R. A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' --- end forwarded text -- ----------------- R. A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'
