Citigroup Inc. and Bank of America Corp. are stepping up their efforts to deliver electronic gateways that large companies can use to manage payments to their suppliers.

Citi and B of A say their corporate clients are showing increased interest in using electronic payment systems to handle their own finances more effectively, a concept that large financial companies have been pushing for more than a year. However, observers cautioned that the current economic turmoil and the consolidation in the top tiers of the banking sector may dissuade, or at least distract, corporate executives from pushing ahead on payment automation projects.

Unlike other players in the payment automation market, B of A is building its system in-house using technology it has owned for years, including the Works Inc. commercial card platform that it bought in 2005 and the PayMode electronic payment and remittance processing service it inherited when it bought FleetBoston Financial Corp. in 2004.

Citi is taking a different tack. It is expected to announce today that it is using MasterCard Inc.'s Payments Gateway service, introduced in October of last year, as the heart of its Citibank Paylink for Cards, which it is offering to corporate clients. The service works in conjunction with a supplier network operated by Ariba Inc., a deal Citi announced in June.

Kevin C. Phalen, a senior vice president at Bank of America and its product executive in integrated debt and treasury products, said he anticipates strong demand for his company's payments service.

"There's a huge opportunity. We're only at the tip of that iceberg," he said. "I think you'll see that race heat up pretty quickly over the next six to 12 months."

Rick Hanna, the global head of Citibank Commercial Cards, said working with partners has enabled Citi to offer a comprehensive payments service. "It's very important to offer clients an industry solution, not a one-off product that we built ourselves," he said.

The MasterCard and Ariba capabilities function as modules of Citi's larger suite of services, Mr. Hanna said. "How we put these elements together is what differentiates Citi."

The two competing offerings deliver similar services to corporate treasurers: the ability to send the bank a payment file with both card and automated clearing house transactions — including remittance information for the supplier — in a single electronic package.

Citi and B of A are the latest entrants to offer such corporate gateway services. Wells Fargo & Co. said last October that it would incorporate the MasterCard Payment Gateway into its Commercial Electronic Office treasury portal.

American Express Co. and JPMorgan Chase & Co. came out with similar services last year after buying payments management service providers. (Amex bought Harbor Payments Inc. in December 2006, and JPMorgan Chase bought Xign Corp. in May 2007.)

Aaron McPherson, the research manager of payments at the Financial Insights unit of International Data Group Inc., said he expects more big cash management banks to offer such systems to their corporate clients, but he said the economic upheaval of the past year is slowing the fledgling market.

"There has been somewhat of a slowdown from what we were expecting," he said, and part of the reason is the credit crisis.

"It creates a lot of uncertainty," he said. "What you need is stability so you can build a client base for a product like this."

Though B of A has been building its capabilities in this area for a number of years, it has largely operated its ACH and card payment systems on separate, parallel tracks. B of A said last week that the Walgreens pharmacy chain was using the capabilities in tandem, the first time it had discussed the pairing.

Mr. Phalen, who was hired four months ago from JPMorgan Chase to spearhead this combined offering as B of A's integrated debt and treasury products executive, acknowledged that linking the various types of payments is still a work in progress, but he said the company is moving at the same pace as its corporate customers.

"Clients can only bite off a piece at a time," he said.

"Many of our clients want to have a pretty deep integration into their AP systems, their ERP systems," Mr. Phalen said. "Some of them say, 'I'm generating a payments file and I just want to pass it to you.' "

The next version of ePayables, to be ready in 2009, will incorporate features such as dynamic discounting and collaborative dispute resolution, Mr. Phalen said.

Mr. Hanna called PayLink for Cards an "enhanced version of a virtual p-card" for recurring payments by large buyers to their network of smaller vendors.

Citi also plans to use PayLink for Cards at its own shared services center in Tampa to pay its own suppliers, Mr. Hanna said. "We're going to eat our own cooking."

Shari Krikorian, a senior business leader in MasterCard's advanced payments unit, said Citi is most interested in promoting the use of purchasing cards in particular, but the gateway also will process other payment types, such as ACH.

Ms. Krikorian said, "we're going to be supporting" Diners Club, which Citi sold to Discover Financial Services in July.

MasterCard designed its gateway to be modular, so that individual banks could decide how to integrate it into their own offerings, and Ms. Krikorian said Citi has signed up to use all the different modules the gateway offers.

Citi's alliance with Ariba fits neatly with its arrangement with MasterCard, she said.

"Is's complementary with our strategy with the payment gateway," Ms. Krikorian said. "We have elected not to provide that end to end processing."

The modular approach provides more flexibility for both the bank and the corporate client, as opposed to the more comprehensively integrated offerings of JPMorgan Chase and Amex, she said. "We don't believe a company is going to be interested in buying the end-to-end solution from a single vendor."

Nonetheless, payment automation will be a growth area for MasterCard for years to come, she said. "It's clearly an approach that the corporates are embracing."