Four major banking companies and a premier card company are expected to announce today that they have thrown their weight behind an Internet payment service being assembled by Ariba Inc., a prominent developer of business-to-business marketplaces.

Bank of America Corp., ABN Amro, U.S. Bancorp, FleetBoston Financial Corp., and American Express have pledged to plug their payment capabilities into Ariba's Web marketplaces, eliminating a major shortcoming that these increasingly popular sites face in negotiating deals between corporate buyers and suppliers.

An Internet purchasing card service is to be piloted next month and generally available in the fourth quarter. The rest of the banking services would be available either in the fourth quarter or the first quarter next year.

The effort is a quick retort to a similar plan announced last Monday by Wells Fargo and Citigroup to provide comprehensive Internet payment services through a separate company, FinancialSettlementMatrix, which the two banks formed with three technology companies.

The Ariba Commerce Services Network offers the participating firms a ready, Internet-savvy customer base. Ariba, of Mountain View, Calif., already has 300 customers participating in eight global marketplace exchanges.

Each of the partners is expected to lend specific payment capabilities. U.S. Bancorp and American Express, two major providers of purchasing card services, will provide that service. VeriSign will offer Internet security support for the service.

Bank of America and ABN Amro will provide Internet funds transfer capabilities through automated clearinghouse and wire transfer systems, with support from Bankserv. Fleet Leasing will offer equipment financing, with help from Pure Markets and Escrow.com.

Ariba is seeking more banks to become payment providers. Participating banks and their technology partners have revenue-sharing agreements, which vary with each relationship.

"Our customers have their banking relationships, and they will do business with who they want to do business with," said Randy Joss, director of commerce services for Ariba. "They are demanding an open solution."

Aside from FinancialSettlementMatrix, most attempts to bring Internet payments to business-to-business marketplaces have focused on one payment type, such as electronic checks. The latest efforts are the first to focus on assembling a comprehensive set of payment options.

"Providing flexibility is the way to go," said Paul Jamieson, senior analyst of banking and payment services at Gomez Advisors. "Like department stores, marketplaces are going to take any payment method to resolve a purchase and let the customer decide what it's going to be," he said.

ABN Amro thinks that it has taken the right approach to a quickly evolving market. "We believe that Ariba is a winner in this, and we believe that this will go global," said Harrison Tempest, chairman and chief executive officer of ABN Amro North America Inc.

"We are expanding the options that customers will have away from purchasing cards to enable customers to use ACH and other payment mechanisms that would tie in with companies' methodology of making payments," he said.

ABN Amro may offer corporate customers an advantage over other financial institutions, Mr. Tempest said. "Very few banks have the global capabilities that ABN has and that is a big attraction."

U.S. Bancorp hopes the Ariba alliance will help it extend its purchasing card activity from smaller general transactions to larger-ticket purchases such as equipment and direct material.

The $83 billion-asset Minneapolis bank, which has begun piloting its Ariba purchasing card service with Hewlett Packard and Visa, will also provide order tracking and reconciliation for the marketplace.

"Utilizing Web-enabled procurement systems comes down to the supply chain, and any solution really has to have a supply chain focus," said Dick Schirber, vice president and director of marketing for electronic payment services at U.S. Bank. "If you don't make those services available to the buyers and the suppliers, it just won't work."

The financial institutions are building upon relationships they already had with Ariba. Bank of America, for example, had teamed up with the company in April to offer procurement through a separate subsidiary, Banc of America Marketplace LLC.

Like Ariba, Citigroup and Wells Fargo are trying to get more banks to participate in FinancialSettlementMatrix.

Ariba's venture "is in direct competition with Citi and Wells," said Avivah Litan, a research director at GartnerGroup.

Mr. Joss disagrees with that statement. "FinancialSettlementMatrix is extremely complementary. Citi and Wells are doing the first step of the process that we would do with banks, and we would work with them when they have the system up and running."


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