You've Got eMoney?

Only months after forging a shaky entrance into online banking with its WingspanBank.com, Bank One Corp. has announced a new initiative to deliver money to users via secure e-mail.

The program, called eMoneyMail, is hardly groundbreaking. Online banking firm X.com already has a similar service, and money transfer services like Western Union and the SWIFT bank-owned cooperative have also transferred funds for many years over their own private networks.

However, the endorsement of the concept by a major banking organization changes the equation -- as well as the addition of such advanced capabilities as requiring 128-bit encryption.

Ready or Not?

It remains far from clear whether consumers are ready for the new service. Results from a number of recent surveys indicate that Internet users are hesitant to bank online because of a lack of trust in the security of their funds and personal information.

Still, Bank One is moving aggressively with eMoneyMail, hoping to make its usage as commonplace as wiring money back and forth. Bank One is offering anyone in the U.S. with a checking account or a Visa card the option to send or receive up to $500 (US$) in cash at a time.

How the New System Works

Users will first go to the eMoneyMail Web site and indicate a preference to pay by Visa credit card, Visa debit card or checking account. Then the user will specify the e-mail address of the recipient and the dollar amount to be sent.

The recipient will receive an e-mail message that money has been sent and then click on an attachment with a link to the eMoneyMail site. At that point, the user will choose to receive the funds as a paper check or have them transferred to a checking or credit card account.

Bank One will profit from a one dollar transaction fee charged to the sender and a one dollar fee paid by the recipient if a paper check is requested.

Bank One Struggles To Establish Itself Online

Bank One's First Bank USA subsidiary, one of the largest credit card providers in the U.S., launched WingspanBank.com in mid-1999 to great fanfare. However, an upper-tier management shakeup and the departure of its CEO placed the venture under a cloud of uncertainty.

Ultimately, online research firm Forrester Research, Inc. declared Bank One's venture a "cautionary example of what not to do when spawning a dot-com subsidiary."

Prospects for the New Venture

It remains to be seen how Bank One will fare in its new eMoneyMail venture, which operates independently from WingspanBank.com.

X.com has already taken a shot at the new service, claiming that eMoneyMail's touted 128-bit encryption does not make a real difference over 32-bit encryption. The company also added that it does not charge a transaction fee and that most browsers do not work with 128-bit encryption.

Significantly, after clicking to the eMoneyMail site, an E-Commerce Times reporter was told that his version of Internet Explorer 5.0 would not work with the service.

X.com, however, has its own problems. The company found itself on the defensive last month after allowing new customers to set up accounts without verifying that the applicant had the right to transfer funds.

Coming Thing or Mirage?

There are also mixed feelings among industry analysts. Jupiter Communications financial analyst Robert Sterling believes that sending money via e-mail "is the coming thing. It's important to get in on the ground floor."

Others are not so sure. They feel that the need to send money via the Internet will largely be solved by check-paying services from such companies as CheckFree, Inc.

These observers see the eMoneyMail service, especially at a cost of $1, to be too expensive to become a major new service.