Mellon Bank Demonstrates Electronic Payment Instruction Over the Internet with BIPS Technology.

CHICAGO--(BUSINESS WIRE)--Oct. 28, 1998--The Financial Services Technology Consortium (FSTC) announced today that another Bank Internet Payment System (BIPS) working prototype has been implemented. Participants were Mellon Bank, PP&L, Inc., and NCR.

In the prototype, customers of PP&L, Inc., a Mellon corporate customer, were able to pay their PP&L utility bills over the Internet, even though the customers did not have an account with Mellon Bank.

Mellon's demonstration builds on a previous BIPS prototype by Illinois-based Glenview State Bank in which Glenview received payment instructions from a corporate customer over the Internet. The Mellon prototype expanded on the Glenview prototype to demonstrate how payment instructions can be initiated by parties whose banks are not BIPS enabled, using digitally signed automated clearing house (ACH) debit authorizations and certificates to ensure the initiator's identity. The Mellon prototype is a first step toward enabling secure, spontaneous transactions over the Internet between parties unknown to each other.

In the Mellon prototype, customers of PP&L view their PP&L invoice on a web site. When a customer decides to pay his invoice, he accesses the BIPS interface and fills in the data necessary to instruct Mellon Bank to debit his account at his bank and to credit PP&L's account at Mellon Bank. The customer then digitally signs the ACH debit authorization message, and the message is encrypted, certified and transmitted to Mellon Bank over the Internet with BIPS technology.

Using equipment supplied by NCR, Mellon Bank receives the customer's instruction to pay the invoice, authenticates the customer using the customer's digital signature and certificate, and translates the instruction into an Automated Clearing House (ACH) debit origination transaction, using the existing ACH clearing and settlement system for transmission via the ACH Network.

Normally, this type of transaction would have consisted of the receipt of a paper bill and payment via either check or a pre-authorized debit. While the pre-authorized debit improves on the speed of check payment, it forces the payor to relinquish control over the dollar amount debited (it will be whatever is billed) and the date of the debit.

The BIPS method allows PP&L's customers to retain control of the payment process; they specify the dollar amount of the payment and the date that the debit to their account will take place. PP&L receives the payment quickly and PP&L's accounts receivable system is electronically updated to more quickly reflect the payment from their customer. In addition, use of the ACH Network is generally less expensive for both the payer and the payee than is the issuance of paper check payments and the clearance, settlement and posting of those payments to the payee's accounts receivable system.

According to Nancy Atkinson, Vice President, Mellon Global Cash ManagementSM, "Mellon Bank can see the tremendous potential of using the Internet as an efficient and low cost medium for transmitting payment instructions. BIPS does not require a large investment in equipment or development time and leverages our existing ACH system. Most importantly, it provides flexible new payment initiation options for our corporate clients to offer to their customers."

The integrity of the relationship between PP&L and their customers is maintained throughout the process. Mellon Bank acts on behalf of their customer, PP&L, and with their authorization to do so. The PP&L customer's digital signature and certificate provides the security mechanism to authenticate the originator of the instruction and the integrity and non-repudiation of the instruction.

Customers participating in the Mellon Bank prototype required only Internet access, a web browser, a digital certificate and an account at a domestic bank. PP&L only required an account at Mellon (a BIPS-enabled bank) to receive the payment. The prototype program with Mellon Bank is a further extension of PP&L, Inc.'s commitment to providing high-quality service to its customers at low prices. The Allentown, Pennsylvania-based company consistently earns customer satisfaction ratings that are among the highest in its industry. One of the ways PP&L, Inc. earns those ratings is by anticipating - and responding to - the needs of customers.

Russell Clelland, Manager - Treasury Services, PP&L, Inc. indicates that "using BIPS offers a new, convenient method for our customers to pay their power bills. The ability to control the exact time and amount of payment from the convenience of their computers is something many of our customers desire. We are excited to be part of this ground breaking prototype."

PP&L, Inc. is pleased with the results of this prototype and plans to pursue an Internet-based payment option for its customers. PP&L, Inc. indicated that Mellon bank was an excellent partner in the effort.

Mellon Bank's BIPS prototype system is supplied by NCR, using their High Availability Internet server and custom software to receive BIPS formatted payment instructions. The NCR system enables acknowledgment that the instruction has been received, performs reason checks and creates audit trails to track the progress of the payment instruction. The BIPS project developed an open specification for a secure server and a network payment protocol that can be used to provide payment transactions via the Internet to banks. BIPS allows payors and payees to agree on payment terms and mechanisms, be able to access multiple bank payments systems and enable customers and banks to choose the most cost-effective way to make a payment. In addition, BIPS may provide the intelligence to select the appropriate payment mechanism for the payer based on the payer's requirements for cost and speed of settlement, and provides on-line authentication of payers and payees and authorization for the transaction.

The BIPS prototype projects are designed to demonstrate BIPS' interoperability, test the feasibility of the BIPS method, and to identify any payment system risks and operational issues. These prototypes validate the specification in multiple scenarios and focus on reducing risks to the systems and participants and identifying and resolving organizational issues.

Organizations participating in the BIPS project, which is an effort of the FSTC, include Citibank, Compaq-Tandem Division, Glenview State Bank, Mellon Bank Corporation, Fujitsu Research Institute, GlobeSet Inc., and NCR. Project advisors include @Work Technologies, CommerceNet, The Federal Reserve Bank, The National Automated Clearing House Association (NACHA) Internet Council, The Open Group, and SWIFT.

The Financial Services Technology Consortium is a not-for-profit research and development organization comprised of banks, industry partners, financial service providers, technology companies, academic institutions and government agencies. Founded in September 1993, the FSTC fosters the development of technology-based solutions to meet the financial services industry needs and opportunities. FSTC sponsors project-oriented research and proof-of-concept activities on interbank issues, with a focus on interoperability requirements and standards. In addition, particular emphasis is placed on payment systems, electronic commerce, and information delivery. Current FSTC programs include: Bank Internet Payment System (BIPS), Electronic Check, Risk Management, and Paperless Automated Check Exchange and Settlement (PACES).

For more information about BIPS, visit the BIPS web site at http://www.fstc.org/projects/bips. For further information on the FSTC, its project participants and member organizations, visit the FSTC's web site at www.fstc.org, or call the FSTC headquarters at [phone].

About Mellon Corporation:

A broad-based financial services company with a bank at its core, Mellon Bank Corporation ranks among the nation's largest bank holding companies in market capitalization. With approximately $350 billion of assets under management and approximately $1.8 trillion of assets under administration, Mellon provides a full range of banking, investment and trust products and services to individuals and small, mid-size and large businesses and institutions. Its mutual fund companies, The Dreyfus Corporation and Founders Asset Management, place Mellon as the leading bank manager of mutual funds. Headquartered in Pittsburgh, Mellon's principal subsidiary is Mellon Bank, N.A.

Press releases and other information about Mellon Bank Corporation and its products and services are available on the Internet at www.mellon.com. For Mellon press releases by fax, call 1 800 758-5804, identification number 552187.

About NCR Corporation:

NCR supplies banks and other financial institutions with Banking Solutions in the Age of the Consumer--solutions that are tailored to our customer's individual needs so that they can offer the best services to their consumers. These solutions cover the areas of self-service, payment, channel delivery and customer management.

Customers in more than 130 countries around the world use NCR Corporation's computer systems, store automation, banking systems, consulting and support services and consumables. NCR is located on the World Wide Web at www.ncr.com. The Financial Solutions Group pressroom is at www3.ncr.com/product/financial/press.

About PP&L, Inc.:

PP&L, Inc., a subsidiary of PP&L Resources, Inc., provides electricity delivery service to 1.2 million customers in eastern and central Pennsylvania, sells retail electricity throughout the state of Pennsylvania and markets wholesale electricity in 22 states and Canada. Other PP&L Resources subsidiaries include PP&L Global, Inc., an international independent power company; PP&L Spectrum, Inc., which markets energy-related services and products; and H.T. Lyons, Inc., an energy management and heating, ventilating and air-conditioning firm.