Power Partners

A pilot version of Billpoint had already taken shape in late 1999, before Wells Fargo entered the picture. But eBay officials realized that to operate Billpoint in a mass market, they needed expertise in credit review, payment authorization, and large-scale transaction management. Those weren't core eBay skills; they were what banks did. Since Wells Fargo had already helped eBay process some routine credit-card business, the bank quickly emerged as the logical partner.

Wells Fargo cemented the close alliance in February by putting up an undisclosed amount of money to buy a 35% stake in Billpoint. The other 65% remained in eBay's hands.

As the alliance has moved forward, Wells Fargo has focused on keeping Billpoint's banking underpinnings running smoothly. "We do a whole lot of things that the Internet needs," says Clyde Ostler. "Take something like keeping databases on deadbeats who pass bad checks. That takes time to build up, and it's one of our traditional strengths."

But Wells Fargo is a bit more tentative -- and a lot more inclined to learn from eBay -- when it comes to marketing the Billpoint service. There's an institutional memory within Wells Fargo of some consumer-banking initiatives in the mid-1990s that never attracted many users, despite the bank's belief that it was onto something big.

"You've got to know how to make public adoption happen," Banaugh says. The magic touch, she suspects, is eBay. After all, in its first five years, eBay attracted more than 10 million registered users -- a growth rate uncommon in the banking industry.

On a recent Friday, Banaugh and Billpoint marketing chief Ann Ruckstuhl, 37, meet at eBay's offices to talk about ways to woo the public. Wells Fargo brings the classic tools of financial marketing. Some 2.5 million Wells Fargo customers are due to get Billpoint leaflets in one of their next monthly statements. For all of June, Wells Fargo's California ATMs displayed a Billpoint-related message, and the Wells Fargo Web site included a Billpoint ad.

That's valuable, Ruckstuhl says, but eBay wants to add some more playful approaches too. What about online contests with $500 cash prizes? "You always want to make it fun," Ruckstuhl says. "In the end, eBay is about the thrill of the hunt."

Gradually, Wells Fargo executives are learning to see Internet marketing through eBay's eyes. At Wells Fargo, Banaugh says, the preferred way to handle customer-service issues is by phone. The bank goes to great lengths to publicize its toll-free numbers. But eBay prefers an email-centered approach. "We usually handle things 70% by phone and 30% by email," Banaugh says. "But with Billpoint, it's 1% by phone and 99% by email. If you visit the site, you really have to hunt for the 800-number. That was eBay's preference."

Fortunately for both companies, early signs show that Billpoint is rapidly winning public acceptance. By early July, Billpoint had attracted more than 20% of the seller base at eBay and was adding thousands of users a day. By the end of the year, Wells Fargo and eBay officials say, they will be making Billpoint technology available to all shoppers -- including people who aren't trading on eBay.

As a small sign of public acceptance, eBay's Ruckstuhl interrupted one meeting to describe her latest online adventure. "I was bidding on eBay for a glow-in-the-dark Beanie Baby for my children's school," she said. "I ended up the winning bidder at $9.95. So I emailed the seller, asking him if he would let me pay by electronic check," a new Billpoint service that lets people draw money directly out of their checking accounts and transfer it electronically.

"He emailed me back," Ruckstuhl gleefully recalled, "and told me, 'I'll offer you as many ways to pay as possible. If one of them sticks, fine.'"

Imagining the Future: Banking on Wireless

Pamela Reed, 43, has been a pioneer for a long time. In 1993, she was a marketing specialist for a savings-and-loan association owned by Ford Motor Co. when a friend excitedly urged her to check out the Internet. She bought a modem for her Apple computer, opened an account with a tiny Internet-service provider -- and was enthralled. A few weeks later, she went to one of the first nonacademic-user group meetings in San Francisco.

"I wore makeup to the meeting," Reed sheepishly recalls. "I was horribly overdressed." But the more she discovered about the Internet's potential, the more she came to believe that this was where her next career would lie. In 1994, she joined Bank of America and negotiated an early alliance with America Online that made it easy for Bank of America customers to check their balances and to transfer funds from a desktop computer. Then, last year, when her boss jumped to Wells Fargo, Reed quickly made the same move.