Chase creates EDI for corporations
Chase Manhattan Bank has hooked up with Premenos Technology to conduct a trial of new kind of electronic data interchange that will make it possible for corporations to make financial payments and deposits over the Internet.
The guinea pig for the first test of the system is Diamond Shamrock, a Texas-based petroleum refiner and marketer with $4 billion in annual revenues. Chase's new financial EDI service will use Premenos' Templar software to make financial payments and deposits, such as direct deposit of paychecks or corporate bill-paying, over the Net.
Customers have said time and again that they want to be able to bank from their PCs, including the ability to pay bills and move money between accounts. Online banking is already widely available for individuals from a variety of banks, but the corporate equivalent of that capability, where money is transferred from one corporation to another, has been a lot longer in the making, slowed both by more complicated technological demands and concerns about protecting the enormous sums involved in such systems.
"Banks are in the process of rolling out basic banking services, whether for home banking or treasury/cash management via the Internet," said Torrey Byles, electronic commerce analyst at Giga Information Group. "I'm sure it'll be just one of a bunch of announcements."
EDI is a term used to describe any of kind of transaction between businesses, whether it's a manufacturer ordering new parts from a supplier or, as in this case, a company making financial transactions with their banks or other companies. Many major companies use EDI over secure private networks to handle a variety of transactions, which are handled computer-to-computer without human intervention. But the private networks are expensive, so using the Internet makes financial sense to EDI users.
Chase is interested in leading the drive to make corporate online banking as accepted as online banking for individuals. If the trial with Diamond Shamrock proves successful, Chase intends to offer its financial EDI services via the Internet to other corporate cash management clients and says the service will eventually be expanded to let companies make international payments, provide notices that payments have been received, and write up letters of credit for imports and exports, all over the Internet.
In Diamond Shamrock's trial phase, 500 to 1,000 payments will be handled over both the Internet and a secure, private network called a value-added network, but it expects to have everything working exclusively on the Internet as early as next year.
"Ultimately we hope to use Internet EDI to do electronic transfers of purchase orders, payment instructions, and invoices with vendors and suppliers," said Diamond Shamrock spokeswoman Helen Pitts.
Chase said its program is broader than a financial EDI trial over the Internet launched a year ago by Bank of America with Lawrence Livermore Laboratory to pay utility bills and other payments over the Internet. That trial initially used software developed at Lawrence Livermore Lab. Bank of America has not announced new customers for its service, which is still operating.
Related stories:
Software keeps shipments on track
Netscape, GEIS to help Web business
GEIS links business to business
Can Netscape cut it on the intranet?
Netscape tackles
Web commerce