U.S. Treasury to Test Internet Payment System

The U.S. Treasury Department will pay bills using an experimental Internet payment system developed by a group of North American banks, according to BankBoston Corp., which is expected to announce the test today. BankBoston and NationsBank Corp., members of the Financial Services Technology Consortium, will unveil plans for a test involving the Treasury, the Defense Department and 50 military contractors starting by the end of the year. The banks hope businesses and consumers will someday throw away their checkbooks in favor of electronic payments. To use the system, a consumer fills out an electronic check on a PC and transmits it via the Internet. Coding hardware included in the computers from which the payments are sent make the payment secure from interception. The recipient downloads the check, unlocks the code and stores the attached payment. The e-check is then deposited like a paper check at a participating bank. Computer systems for the test are being supplied by Sun Microsystems Inc. and IBM.