Electronic bill payment, overshadowed by the hype about electronic bill presentment, is getting renewed attention.
Some banks are balking at the prospect of having no choice in how they process payments of electronically presented bills. And some want to be able to process the payments themselves.
Paying presented bills is "where the arm-wrestling is going to be," said Joseph Pendleton, a Reading, Pa., consultant who worked at CoreStates Financial Corp. before it merged with First Union Corp. "Banks don't want to be cut out of handling the payments."
Checkfree Corp. and Transpoint, the leading providers of bill presentment services, require that bills presented through their systems also be paid through them.
But bankers say that customer service-dealing with those who want to check if their payments have been received-becomes doubly complex when two processors have to be tracked. Another disadvantage is that banks would have less latitude for ultimately executing bill payments themselves.
Banks have accepted that they must work with both Checkfree and Transpoint to present bills, so that complete sets of electronic bills can reach all wired consumers. Billers will choose to distribute their bills through one provider or the other, but not both.
On the bill payment side, Mr. Pendleton envisions a scenario in which consumers would choose their own bill payment providers, with banks as well as Checkfree and Transpoint as options.
He says banks are best positioned to offer the types of payments that consumers want - instantaneous, with immediate confirmations. Banks have been handling such transactions at automated teller machines for years, he noted.
The payment and presentment industry will never reach its potential "without a bank-centric network to switch bill-pay transactions between banks' customers, as in the ATM industry," Mr. Pendleton said.
The credit card business went through similar growing pains, said Steve Ledford, senior vice president of Global Concepts Inc., an Atlanta consulting firm.
In the early days, he noted, it was not uncommon for merchants to have two or three terminals to serve the different card brands.
The credit card industry "wouldn't be where it is today" without a bank- owned network and formal procedures for compensating banks that provide services to customers of other banks, Mr. Ledford said. "Bill pay and presentment will remain a small market until it gets around this issue."
Transpoint, which is owned by First Data Corp., Microsoft Corp., and Citigroup Inc., says the demand that payments be driven through its system is coming from billers.
Billers "are contracting with Transpoint to present bills through Transpoint and get paid through Transpoint," said Matt Cone, vice president of business development,
As an incentive, Transpoint offers banks a penny for each bill presented and paid through its system, Mr. Cone said. Transpoint can afford that because it collects from billers about 30 cents for each bill distributed and paid through Transpoint.
Paul Ayres, the manager of on-line services at KeyCorp of Cleveland, said that even with the rebate his company would be "hard-pressed to use Transpoint for bill pay."
KeyCorp uses Checkfree for bill payment and plans to continue doing so, he said.
"Checkfree has been very efficient," Mr. Ayres said. If KeyCorp had to submit bill payments through Transpoint too, "everything would get a little more complex."
Mr. Cone agreed that banks "will have another level of complexity by having two different bill payment systems." However, he noted, "on one of them-Transpoint-they're getting paid."
Checkfree seems to have no formal policy on whether banks would be charged or get rebates when they executed payments of presented bills.
Bill Zielke, director of product management for bill presentment and payment, said Checkfree already has bill-pay contracts with many banks.
"Checkfree would provide an incentive for banks to do bill presentment within the context of existing relationships," he said.