An online payment system based on the premise of electronic cheques is looking to breathe some life back into the local e-commerce market.
The technology, dubbed 'eCheque', was developed six years ago by a consortium of Silicon Valley IT types and merchant bankers, and has subsequently been given the nod by the US Treasury. The payments system, owned by eCheques Worldwide, has also recently made its Australian debut through a pilot with online dental exchange, Just4Dental.
The payment system uses digitally signed XML documents that provide mechanisms to authenticate parties to a transaction. In addition, the document provides a payload to carry the valuable part of the transaction such as an invoice or a payment.
The eCheque works exactly like a paper cheque in that it is a legally binding promise to pay. The digital signatures, which will most likely be issued in Australia by Identrus or Gatekeeper, act as handwritten signatures to prove authenticity. They can carry out the standard function of person, business, payroll, travellers' or cashier cheques, as well as performing specialised functions such as cashletters and settlement between financial institutions.
ECheques Worldwide believes that electronic cheques take up where credit cards fall down for a number of reasons, but primarily because the transaction is directly between the payer and the payee. This eliminates the need for a third-party credit issuer, and overcomes the problems associated with limited acceptance of credit cards, or multiple account signatories.
ECheques Worldwide will be targetting emerging e-markets, where paper transactions are becoming increasingly rare, and has already been in discussion with most local players.
Stephen Alexander, director of strategy and planning at eCheque Worldwide, predicts that electronic cheque technology will let exchanges streamline their business processes.
"This will be achieved by integrating the payment processes with the already established document exchanges that are currently being used by industry," he said.