Honest, Mister, Your Check Is in the E-Mail

Cash, check or charge? Those have been the choices for generations of shoppers, but cyber-shoppers have so far been limited to using credit cards.

Now a Malibu company is hoping to give a boost to online commerce with its introduction today of Internet “checks.”

For the first time, a customer will be able to type in his or her name, address, phone, driver’s license, bank account and bank routing numbers, plus give an electronic signature--all of the information that appears on a regular check--and send it in an encrypted file to a Web shopkeeper. The merchant then can print out the check and deposit it in the bank.

The company behind the Internet check is InfoDial, a 5-year-old Web hosting firm that also develops software for online merchants. The check service will be included in its Cashier 3.0 software.

Although many online merchants accept credit card payments over the Internet, some shoppers are more comfortable using checks and might prefer not to add to their credit card balance, said Jane Way, InfoDial president.

But privacy advocates say they are skeptical that many consumers will rush to send so much sensitive data over the global computer network, even if it is encrypted.

“It’s conventional wisdom that people feel creepy providing financial information over the Internet,” said Evan Hendricks, editor of the Privacy Times newsletter in Washington, D.C. “I’m sure they’ve got great intentions, but I’d be real surprised if this had a high degree of consumer acceptance in the next six months.”

Other skeptics expressed concern that scam artists could use the information on canceled or stolen checks to buy things online using Internet checks since the procedure does not require any authentication. When fraud does occur, consumers find it easier to challenge a credit card charge than to win a credit from a bank.

But Way said a hacker would have to be “pretty aggressive” to break into the encrypted check data that will be stored on InfoDial’s server. Participating merchants will have to use a password to access the check information submitted by their shoppers. As a result, the potential for fraud in cyberspace is no greater than in the physical world, Way said.

But some of the hardiest of Net surfers have shown a particular reluctance to give out personal information like addresses and phone numbers. Even when the Internet is not factored into the equation, consumers have been slow to give out their checking account numbers for direct-debit programs, which withdraw money automatically from one’s account.

“They don’t want anybody touching their checking account,” said Jon Whaling, project manager at Mentis Corp., a market research firm in Durham, N.C., that focuses on technology in the banking industry. “It’s sort of like the family jewels. It’s the most closely guarded account information you have.”

Way said that the software does not ask for an unreasonable amount of personal data.

“A driver’s license is an acceptable method of ID, and we all give that out every day. When you give a check to a clerk in a store, they have your routing number and your account number,” she said. “Commerce requires a certain level of trust.”

The appeal of using a checking system is that merchants can delete the sensitive information as soon as the check is printed, said Ira Morrow, research director for the financial services industry with the Gartner Group in Stamford, Conn. With credit cards, merchants must keep the data and forward it to banks over the Internet, making them targets for online thieves.

Instead of a manual signature, shoppers will authorize an electronic signature by clicking on a Web page’s “purchase” icon. When the check is printed out, the words “Payment authorized by account holder. . . . Electronically signed by [customer’s name]” will appear in the lower right corner.

Way said banks have not objected to this use of electronic signatures, and analysts agreed that it is not likely to become a problem.