Mellon Bank Corp., Pittsburgh, is introducing a new service to pay bills by telephone that is to be marketed by companies to their customers.

A major New York utility, Consolidated Edison Company of New York Inc., or Con Ed, plans to begin marketing the system, called Payline, to its customers later this year.

With the new Payline service, Mellon is taking an innovative approach to bill payment by telephone that has the potential to be more profitable than the traditional telephone bill payment services that banks have offered since the 1970s.

With traditional telephone bill payment, banks let their retail customers pay bills by punching buttons on a touch tone telephone, or by speaking to an attendant.

Available to All Consumers

By contrast, with Payline Mellon will offer telephone bill payment to any consumer, whether or not the consumer has an account at Mellon.

This means that Mellon has the potential to get more users o Payline than the bank can get for its traditional bill payment service. In theory, this could mean higher revenues and profits.

Companies that agree to market Payline will insert brochures into their monthly bills that explain the service to their customers.

The motivation for companies to do this is the opportunity to improve customer service while saving money.

"We're looking at it for customer service primarily, and additionally for some savings," said Michael Houst, manager of receipts processing for Con Ed.

Cheaper to Process

Money will be saved since payments made through Payline will be delivered to utilities electronically, and thus will be cheaper to process than paper checks mailed with paper payment stubs.

Customers of Con Ed will pay a standard monthly fee of $4 to use Payline. The service will enable them to use their touch tone telephones to pay up to 99 bills every month, from a list of 47,000 vendors, Mr. Houst said.

The utility hopes that 2% to 3% of its 2.9 million customers use the service to pay their monthly electric bills, Mr. Houst added.

He explained that customer requests for electronic bill payment have risen since another New York utility, Brooklyn Union Gas, began offering an electronic bill payment option to its customers in 1992.

Direct Debit

Brooklyn Union Gas' bill payment service is what is called a direct debit.

With direct debits, customers let a company electronically deduct the amount owed on bills from their checking accounts, with the funds moved through the automated clearing house payment system.

The problem with direct debits. from a consumer standpoint. is that the payments are initiated by a vendor.

The Payline service is more flexible. since it lets consumers initiate the payments. Likewise, money can be delivered to a wider range of vendors.

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