Egg enables cheques-by-email

Online bank Egg is spurning e-wallets and cybercash in favour of a new method of making small transactions over the Internet - and this one relies on good old email

Email is on the way to making letter-writing obsolete, and now Egg, the Internet bank launched by the Prudential, is launching a service that aims to do the same with the venerable chequebook.

A service launched this week, Egg Pay, will let Egg users make payments of up to £200 to anyone with Web access, an email address and a bank account. Recipients don't have to be Egg members.

Egg Pay is the latest twist on the concept of e-payments, which aim to use the Internet to replace traditional forms of commerce such as cheques, credit cards and cash. Earlier ideas have ranged from cybercash -- a currency used only for Internet payments -- to e-wallets, which make credit cards unnecessary for buying online. None have yet achieved mass-market appeal, however.

Under Egg's system, users enter the recipient's email address, select the debit card or Egg account that the payment will come from and choose one of two security questions -- a shared password or the sender's mobile phone number.

The system sends an email with a unique Web address, where the recipient answers the security question and enters the bank account details to which the money should be paid. As with a cheque, the funds take three to four days to transfer.

The idea is that payments are simpler for the sender than creating an automated electronic payment, because the sender doesn't have to know the recipient's bank details. On the recipient's side, the process eliminates the need to visit the bank to deposit a cheque, Egg said. "Egg Pay will undoubtedly appeal to the increasing number of UK consumers whose busy lifestyles do not allow for lunchtime queuing in their high street bank or building society," said Patrick Muir, director of marketing for Egg UK, in a statement.

Industry observers say that convenience will be the greatest factor in determining whether people will use the system, outweighing even security. "With online banking, the biggest issue is availability and functionality," said David Spinks, director of information assurance for IT consultancy EDS. "If it takes me an hour and a half to get into (my online bank account), I'm not going to use it. Likewise, I won't use this if it's harder than writing a cheque."

Another possible catch: while Egg Pay works with any of Britain's 110 million bank accounts, only about 20 million Britons currently have email, according to Egg's own figures.

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