MCI is urging its customers this month not to send back a check with their bills.

Instead, the long-distance company suggests making the monthly payments automatic with Visa cards. The pitch in MCI's statement-stuffer: "No more due dates to remember, no more postage to pay, and no more checks to write. What could be easier?"

Consumers write $400 billion worth of checks each year to pay phone companies, utilities, insurers, and other regular billers, according to Visa U.S.A.

With only 1% of such bills now captured on plastic, "we feel it's an enormous opportunity," said Gregory Holmes, the card association's director of recurring card payment industries.

The San Francisco-based association has kicked off a market development campaign to secure more such payments, which could generate revenue streams for card issuers and processors. MCI, GTE Mobilnet, and the Tele- Communications Inc. cable television empire are promoting Visa as a payment option.

For a year, AT&T Universal Card Services has been encouraging its MasterCard and Visa cardholders to pay such recurring bills through its automatic payment option program.

"We are looking at all the ways we can provide consumers the convenience of having every opportunity to use whatever methods of payment they want," said Ray Riddick, who oversees the program for the Jacksonville, Fla., AT&T unit.

Credit cards have begun putting a dent in this market. MasterCard International estimated its cards were used for $2 billion of recurring payments last year.

Visa said its comparable volume was $4.6 billion. It expects those transactions to grow to more than $20 billion as total consumer billings rise to $460 billion by 1999.

In recent years, both bank card associations have invested significantly in research and development of new markets for card acceptance, such as health care and supermarkets. Mr. Holmes of Visa pointed out that those categories grew to $7 billion and $7.5 billion, respectively, in Visa transactions last year.

Consumers who once confined their plastic usage to restaurants, hotels, and some retail stores now have incentives to do more. The reward programs might give them cash rebates or frequent-flier miles, as well as "float" benefits.

"The people who are going to (pay bills with cards) are young people who look at it as a convenience," said Anne Morgan Moore, president of Synergistics Research Corp. in Atlanta.

"They are looking at alternatives to the check, the envelope, and the stamp routine, whether it's writing the credit card number in and mailing it back, automatically setting it up, or automatic draft payment," Ms. Moore said.

However, a consumer advocate said the service is not for people who carry balances on their credit cards.

"I might lose float, or a pseudo-grace period, because I'm carrying a balance," said Ruth Susswein, executive director of Bankcard Holders of America, McLean, Va.

"So now I have yet another charge I'm automatically being charged interest on because I'm carrying a balance, which I would not have paid interest on if my cable bill just arrived in the mail the way it used to," she added. "That could be costly, and that concerns me. That would help put people further in debt."

Another concern for cardholders is how easily and quickly they can halt the monthly payment routine for a service they want to terminate, such as a health club membership, said Edward Mierzwinski, consumer project director at the U.S. Public Interest Research Group in Washington.

The service appeals to billers for the same reason many in the insurance industry, among others, were drawn to automatic debits via the automated clearing house network. Participating merchants are assured of predictable and timely payments in good funds.

The credit card industry is targeting many companies that already accept mail, telephone, or in-person card payments.

But Visa said the greatest opportunity for growth is in preauthorized automatic billing - sometimes called standing orders - in which customers give written permission to have their accounts automatically billed on a periodic basis for either fixed or variable amounts.

The practice is common for cellular phone services, on-line computer networks, and fitness clubs. Industries that have the most potential for recurring payments by card, Visa said, are insurance underwriting, utilities, telecommunications, cable and pay television, subscription merchants, and membership organizations.

First Chicago NBD Corp.'s merchant-acquiring unit has been in this market for two years, processing recurring card payments for Ameritech Corp. and tuition payments for Indiana University.

To bring more billers into the fold, First Chicago formed a group to link its merchant processing and cash management departments, said Paul D. Visnaw, first vice president, commercial card services.

"We see it as a huge untapped market for incremental growth," he said. The bank company processed $2 billion of card transactions last year for 21,000 merchants.

The recurring bill payment market has been viewed as an electronic payment opportunity for about 25 years, said Kevin Sullivan, MasterCard's vice president of service industries. Mutual of Omaha was one of the first to encourage customers to pay premiums by credit card.

"It's really just come to the forefront of awareness among consumers and MasterCard members" in the past six months, Mr. Sullivan said.

For the past two weeks, the Purchase, N.Y.-based association has been running a pilot with the Orange County (Calif.) Transportation Corridor Agency to encourage drivers to prepay their tolls on MasterCard.

When drivers open an account with the agency, which is operating a fully electronic toll road, MasterCard offers $10 in free rides. Two out of five drivers in the first couple of weeks put the prepaid amount on their MasterCards. They authorized the agency to replenish their toll accounts when the balance nears zero by charging to their cards an amount based on a few weeks' toll usage.

George C. White, a payment systems consultant based in Montclair, N.J., said he does not doubt an organization like Visa can sell the concept. But the card industry faces a challenge in signing up merchants if processing fees will be greater than the cost of handling checks.

"Some of the utilities are probably are a harder sell than things like cable television," Mr. White said, because of profit margins. "There are a lot of competing ways of making payments, and that's why I think it's going to be a hard sell" in some cases.

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