If the details of its strategic agreement with CheckFree Corp. are any indication, Bank of America has very high hopes for electronic billing.

The companies said Monday that they had entered into an agreement whose planning was announced in April. CheckFree, which is based in Atlanta, got a 10-year contract. Bank of America, based in Charlotte, N.C., got 10 million shares of CheckFree stock — plus warrants to buy that many more if it is delivering more than 10 million electronic bills a month to more than 10 million of its customers through the CheckFree service.

That volume would be a big leap for Bank of America, which has about 700,000 subscribers to its online bill-payment service and processes about three million bills a month.

The 10 million figure was derived from analyst estimates that one-third of any bank’s customers will be paying bills online by 2004, said Pete Sinisgalli, CheckFree’s president and chief operating officer. Bank of America has relationships with 30 million retail customers.

The bank did not say when it expects to hit the 10 million mark.

“We think when the new product is rolled out to our markets across the country and we actively begin to promote the service, it will drive new users,” said Linda Mueller, vice president of corporate affairs at Bank of America.

The bank is planning an aggressive national and regional marketing and advertising campaign for its new electronic billing services.

Bank of America’s push is considered a positive sign for the industry. Of the 27 U.S. financial institutions with more than $40 billion of assets, only four offer electronic payment and presentment, said Ian Rubin, director of online financial services research for International Data Corp. They are Bank One Corp., which offers the service for consumers only; Chase Manhattan Bank and FleetBoston Financial, which offer it for business customers only; and Wells Fargo & Co., which offers it only for Norwest mortgage customers.

The B of A rollout is “the first time the leading U.S. retail bank will provide both billing and presentment, and that will help move the market,” Mr. Sinisgalli said. “We are optimistic that one-third of U.S. households will use the Internet to pay bills in the next three or four years, but we need some sort of catalyst and I hope B of A will provide that.”

Bank of America’s contract with CheckFree positions it to begin offering electronic bill payment and presentment services in the fourth quarter, starting with its East Coast customers and spreading across the country by June.

The bank offers bill payment and presentment over the Internet only to its California customers, Ms. Mueller said. It has only five of its own billers presenting electronic bills. By aligning with CheckFree, it will gain access to CheckFree’s 190 billers, including telecommunications, utility, mortgage, home loan, credit card, cable, and wireless companies.

The 10 million restricted shares of CheckFree common stock give Bank of America 12% ownership of the company. CheckFree is getting some Bank of America assets, including intellectual property and service operations in San Francisco and Houston.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.