Magazine article American Banker

Mellon Starts Internet-Based Corporate Service

Magazine article American Banker

Mellon Starts Internet-Based Corporate Service

Article excerpt

Mellon Bank Corp. has launched an Internet-based electronic commerce service for its corporate customers.

The service, which uses encryption and authentication software from Premenos Technology Corp. of Concord, Calif., lets corporate customers send payments and related information to the bank over the Internet using standard electronic data interchange formats.

The deal is a new example of how banks are slowly growing more confident about the security of sending sensitive payment and business information over the public network.

Mellon says it is confident it can conduct secure transactions over the open medium after a six-month "testing" phase of Premenos' security features.

The goal of the pilot was to "try to kill the software," by cracking its public key-private key data encryption features, said Mauro DeFelice, manager of security and technical services at Pittsburgh-based Mellon.

"We wanted to make sure we knew what our risk was," he said.

A rising number of banks are looking to use the Internet as a channel for corporate banking transactions.

The attraction, according to Lawrence Forman, cash management analyst at Ernst & Young, is that the Internet is much cheaper than alternatives, like the automated clearing house network or value-added private networks.

But he said not all banks are comfortable with the Internet yet. Further, he questioned whether Internet security issues have been adequately addressed, and noted that many institutions, like Citicorp, remained "very wary of it. …

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