Chase Manhattan Bank signed a three-year contract with Checkfree Corp. for bill-payment processing.

Underscoring its leadership in the home banking transactions market, Checkfree will soon begin processing bill payments initiated by Chase's personal computer and telephone banking customers.

Checkfree will also electronically pay bills made by Chase customers using Microsoft Corp.'s Money and Intuit Inc.'s Quicken software as soon as Intuit permits outside companies to connect to its system.

Internet-based bill payments, when they become available on Chase's World Wide Web site, will also flow through Checkfree, which has agreed to acquire Intuit's payment-processing unit, Intuit Services Corp.

Chase, the product of the Chase Manhattan Corp.-Chemical Banking Corp. merger, has mounted a high-profile advertising campaign that promotes home banking through Money and Quicken.

"All our services will use a common bill-payment system," said Chase vice president Michael Papantoniou.

Intuit's late-summer decision to sell its payment-processing subsidiary to Checkfree - announced after Chase had selected Checkfree - will help the $300 billion-asset bank to unite behind a single payment processor, he said.

While Checkfree will handle all customers' electronic remittances, the Chase will retain control over basic functions like balance inquiries and funds transfers.

"Home banking is like a modular stereo and doesn't all have to be one brand," said Mr. Papantoniou. "We think what (Checkfree) does well is bill payment."

Chase's choice of Checkfree may also mark the end of a strong relationship between Chemical - the acquirer in the Chase deal - and MasterCard International's home banking program. The latter, known as Masterbanking, also employed Checkfree for payment processing, Mr. Papantoniou noted.

Some of Atlanta-based Checkfree's 166 bank contracts cover all aspects of electronic payments and home banking. But others, including those with several of the largest banks, cover smaller links in the electronic chain.

Though Chase opted to use Checkfree for bill paying, NationsBank is holding onto that function while using Checkfree for other aspects of transaction processing.

"The fact that (Chase) chose us is certainly a strong indication that the service we are offering is one that the banks like," said Checkfree spokesman Matthew Lewis. "They are casting their vote with their pens."

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