Bank deal nets closer ties with Web merchants

At a time when banks are moving to grab a bigger piece of business online, Visa is offering a new plan to let its member banks easily strike revenue-sharing deals with Web merchants.

Through the deal, Visa's member banks get a commission on sales made when consumers click from a bank's site to a participating merchant's Web storefront. To start, merchants signed on with Visa include eToys, video store Reel.com, sporting-goods merchant FogDog.com, poster shop Art.com, and travel agency Travelocity. Visa is expected to add other merchants later.

"Banks have definitely got the message that they need to think beyond their traditional business," said Robert Sterling, online banking analyst at Jupiter Communications.

Although Visa has been particularly aggressive in procuring e-commerce services for its member banks, others are taking different routes. For example,Chase Manhattan in July announced plans for an online shopping mall to tap business from its 30 million customers and promote its 3 million merchants. The deal is a marketing arrangement with Net start-up ShopNow.com.

"Banks were so slow to get [e-commerce], but they've really gotten it in the last year," said Doug Schulze, general manager of Intel's iCat hosting service. Schulze hopes to sign up banks to resell iCat's Web storefront service.

Major banks also are moving aggressively into online billing, which allows companies to post monthly bills online for consumers to view, then pay. The service, called "bill presentment," cements a bank's relationship with both consumers and corporate billers.

Financial institutions also are pushing online banking by signing up credit-card customers over the Net, letting users fill out loan applications online, and processing transactions for online merchants. And they're using the Net to encroach on other areas of financial services: Wells Fargo has moved into the online stock brokerage business, along with other banks.

In June, Visa unveiled a payment gateway service so banks can accept online credit-card transactions without setting up their own Internet gateway. It also has a deal with VeriSign so banks can issue digital certificates for their online merchants and consumers.

One e-commerce area barely touched by banks so far is hosting Web storefronts for their merchants, a service that Wells Fargo Bank announced in September 1997 but has since dropped. American Express has a similar program, but it works through the local sites of CitySearch, which has a hosting operation.

Last month, American Express announced its entry into online banking. It offers small-business loans online and has invested in several Internet commerce firms, including Prio, an online coupon service.

MasterCard and American Express also are pushing their corporate purchasing cards, dubbed p-cards, for online procurement.