Checkfree to Test On-Line Payment With Utility Companies in 3 States

In the pilot, the Columbus, Ohio-based bill payment processor hopes to enlist more than 2,000 consumers in Texas, New Jersey, and Pennsylvania to participate. Checkfree would process their telephone, gas, and electric bills electronically, rather than through the mail. Checkfree is working with Southwestern Bell Telephone Co. - a regional Bell operating company that provides services in Arkansas, Kansas, Missouri, Oklahoma, and Texas - and with the operating-utility subsidiaries of General Public Utilities Corp.: Jersey Central Power and Light, Metropolitan Edison, and Pennsylvania Electric. The bills would be electronically delivered to consumers' personal computers via electronic mail. By next year, Checkfree intends to improve the service to allow consumers to pay bills by pressing a button. It also plans to add extended merchant-billing history and merchant logos to the service. Checkfree hopes to make the service widely available by the end of 1996, according to William C. Kitchen, the director of product development for Checkfree. By delivering bills on-line, Checkfree expects to make bill- paying cheaper for banks and merchants and more attractive to consumers. Some regulatory issues - including the need to provide consumers with a paper-based record of bills - remain to be ironed out. But industry observers agree the pilot is a step in the right direction. "The American Expresses of this world have been noodling this idea for a while," said David Frankel, a vice president for on-line banking at Prodigy Services Co., an on-line access provider. "There must be a number of large merchants that had this on their to-do lists." Bruce Burchfield, chief executive officer of the Checkfree rival Intuit Services Corp., agreed that bill presentment has been "a pretty popular idea in the industry for some time." But Mr. Burchfield said that it will take time and effort to make this service available to most merchants. In the short-term, the pilot may do more to bind current bill payment customers to the electronic service than to bring new users aboard, observers said. "Consumer acceptance isn't going to be overly rapid," Mr. Frankel said. Seamus McMahon, managing vice president for First Manhattan Consulting, predicted that Checkfree's test will "push a bigger wedge between people who are comfortable on-line and people who aren't." But in the long-term, Mr. McMahon said, merchants will be drawn to the extra revenue generated by getting their payments more quickly, and the cost savings of cutting back on paper. Consumers will "wonder why they need to write any checks at all," he added. "I think they're sticking their toe in the water in an excellent place," Mr. Frankel said.