Having had three months to stew on First Data Corp.'s creation of an electronic billing venture with Microsoft Corp., bankers and analysts are beginning to go public with opinions and concerns.

Mark Wolfenberger, an analyst at Deutsche Morgan Grenfell, gave the MSFDC venture a thumbs-up and retained his "hold" rating on First Data's stock.

But he said in a recent report that up-front marketing and development costs could drag down First Data's earnings in the short-term.

Executives in the banking industry eagerly weighed in on the long-term implications of the venture last week during a payment system symposium sponsored by the Bank Administration Institute.

"Banks are viewing this with keen interest and yet with a deep sense of apprehension," said Jack Stephenson, principal at McKinsey & Co., who led a discussion on MSFDC at the symposium.

"Banks look at this and say, 'What's wrong with this picture?' because the service sounds suspiciously like a new clearing system," he said.

Lewis Levin, vice president of Microsoft's desktop finance division, said bankers need not fear being cut out of the loop.

Bank participation is essential to electronic bill payment because "customers expect to receive and make payments in their demand-deposit accounts," Mr. Levin said.

Such talk does not necessarily quiet bankers' fears.

Most recognize that banks will probably retain a role in bill payment for some time, observers said. What they are wary of is giving new entrants cheap and ready access to a payment system in which the banking industry has invested billions of dollars and decades of development time.

Catherine Allen, president and chief executive officer of the Banking Industry Technology Secretariat, warned banks to be on guard against "piggybacking" efforts by nontraditional participants in the payment system.

She added that the MSFDC announcement has "galvanized" the banking industry by demonstrating how a service provider can quickly turn into a competitor.

Bankers at the symposium said they are concerned about how revenues from bill payment transactions will get shared. But they are equally worried about giving a nonbank access to customer information.

Once MSFDC gets its hands on bill payment data, "the key question is what they will do with it," said Alexandria, Va., banking consultant James G. Hamrick.

Janey A. Place, executive vice president of NationsBank Corp., who is responsible for technology strategy, added, "The value in the payment system lies less in execution and more in information."

Microsoft officials said data passing through MSFDC would continue to be owned by either the merchant or the bank, and that MSFDC could do nothing with the data without obtaining the owner's consent.

At the symposium, MSFDC demonstrated how its service is likely to work, but it is still months away from completing development.

In the meantime, banks are moving forward with plans of their own. The bank-owned Integrion Financial Network expects to announce its own electronic billing service within 45 days.

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