Chase Manhattan Bank has signed a multiyear agreement with Powerpay.com, a division of Ceridian Corp., to expand Internet services for small-business customers.

Traditional as well as Internet payroll processing, tax filing, and human resources services from Powerpay.com will be offered to Chase's over 300,000 small business customers.

In addition, Powerpay.com will market Chase banking services to its own online customers.

Powerpay began in 1969 as Ceridian Small Business Solutions. The Internet service was introduced in 1998; the Powerpay name was adopted this year.

Several large banks have recently enlisted Internet companies to help solidify relationships with small businesses by providing more than just banking online. FleetBoston Financial Corp. and Bank of America are working with Biztro of Santa Clara, Calif., to help their small-business customers outsource time-consuming tasks such as expense reports, time sheets, payroll, benefits, procurement, and eventually accounting.

The advent of these Internet companies is a boon for banks, which face a daunting task in gearing services to geographically dispersed small businesses with disparate needs, said Melissa Shore, director of financial services, travel, and retail for Jupiter Communications, an Internet commerce firm headquartered in New York .

"The biggest nightmare a bank has is figuring out which companies to partner with and which products to offer," Ms. Shore said. "Finding a partner that will bring all those offerings together for you is very important."

Chase, the nation's third-largest bank, has been steadily expanding its small-business Internet services to include online banking, help in building and operating Web storefronts, investment and retirement services, and online equipment leasing.

Ms. Shore predicted that banks will retreat from offering small-business services that are far afield from traditional banking services. A year ago, some banks were going so far as to help small businesses with their marketing programs, she said. In upcoming months the trend will likely be reversed, with banks sticking closer to core financial services and focusing more on internal capabilities, she said.

"The power pendulum has really shifted," she said. "The real assets that have heavier weight are the traditional assets of brand, and customer, and distribution channels."

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