Hoping to build one of bank technology's grand alliances, Microsoft Corp. and First Data Corp. are seeking partners and participants for a comprehensive electronic billing and payment system.

Though the plan has not been publicly announced or officially confirmed by either company, the word has spread like wildfire through the payment systems community.

People who know about the proposal say it has instant credibility because of the powers behind it. A few of the biggest banks in the country are said to be close to signing on.

Code-named Orion, the system reportedly would enable utilities and other major billers to deliver statements and invoices directly to customers' desktop computers. Return payments would also be electronic, creating what is known in the field as end-to-end automation-from bill presentment to remittance to posting on bank accounts.

While some bankers look askance at anything these organizations do- Microsoft is viewed as a potential threat to bank-customer relationships and First Data is blamed for taking control of the credit card processing business away from the banks that created it-even critics concede they have the clout to make end-to-end automation a reality.

In so doing, they could shake the ground under other prominent groups trying to achieve similar ends, such as the Integrion home banking consortium, the bank credit card associations, and Checkfree Corp.

Redmond, Wash.-based Microsoft would provide Orion with on-line technological wizardry, while First Data of Hackensack, N.J. would handle the processing end.

They would own a majority of the venture but are inviting banks to purchase interests in it. Industry sources said Orion could go forward even if banks don't step up-illustrating how a payments innovation can be initiated outside the banking industry.

Banks such as Chase Manhattan and Wells Fargo, which have close relationships with First Data or Microsoft, are seen as likely to be drawn to the initiative. They also tend not to be members of Integrion, which could shape up as a rival.

First Data and Microsoft "have enough muscle to create a market," said Paul Martaus, a payment services consultant and president of Martaus & Associates, Clearwater, Fla.

A handful of others have tried to make a go of electronic bill presentment. Checkfree and Visa U.S.A. have sparred over which of their systems, E-bill and e-Pay respectively, is superior. American Express Co. of New York takes an active interest in the field, and Cybercash Inc. of Reston, Va., has a trial under way.

Bills comprise a substantial portion of U.S. Postal Service volume and revenue, which has led that agency to propose semi-automated alternatives like the Customer Initiated Payment System-an automated clearing house debit authorization that would be dropped into the mail upon receipt of a bill.

Matthew S. Lewis, a spokesman for Checkfree in Atlanta, said the Microsoft-First Data alliance would "dramatically speed bill presentment to the market, which from our perspective is a good thing. We're the only guys who actually have a product in this space."

Ten companies use E-bill, Mr. Lewis said, but Checkfree aims to "have the top 100 billers signed in the course of the next 18 months or so."

Mr. Lewis questioned how bank-friendly Orion could be.

"Financial institutions have a choice to make," Mr. Lewis said. "Do they want a transaction processing company and a technology company to control that space?"

Checkfree's approach "is distinctly different," he asserted. "We sign a service contract-that's it. We are working for the financial institution in every respect."

Ironically, Checkfree recently joined with Microsoft and Intuit Inc. to support the Open Financial Exchange, or OFX, standard for interactive banking transactions including bill presentment.

Matthew Lawlor, chairman of Online Resources and Communications Corp. in McLean, Va., said a company like his, which specializes in remote banking and bill payment, could play a role in the new alliance.

"Microsoft is trying to build a robust OFX protocol to include bill presentment, so they are going to want to work with anybody that can present bills," Mr. Lawlor said.

A Microsoft-First Data partnership would be "very logical," Mr. Lawlor said. "It wins for Microsoft in terms of OFX, and it wins for First Data in terms of bill presentment."

Integrion Financial Network, the group of 16 banks led by International Business Machines Corp., may not be applauding. Integrion, which is said to be nearing the acquisition of the Visa Interactive home banking organization, is promoting an alternative to OFX called Gold.

David S. Fortney, manager of product development for Integrion in Atlanta, said he did not want to comment until he learned more about Orion.

A Microsoft insider said its objective is to "set the bar a little higher" than Integrion, which has not yet ventured directly into electronic bill presentment and which dawdled over organizational issues before actually bringing home banking trials to market.

By contrast, this source said, Microsoft and First Data want to introduce a service right away with "really cool technology" that would "address the real needs of billers, banks, consumers."

While Microsoft can bring to the table its dominance in software and its devotion to OFX, among other technology and marketing strengths, First Data has by far the largest share of merchant credit card relationships, which it manages jointly with several major banks. It also owns Western Union, which routinely routes payments to utilities and other payees.

"Western Union has a large telecommunications infrastructure, a backbone network," Mr. Martaus said. "Microsoft brings its own scale."

First Data has expressed a strong interest in electronic bill presentment but so far has done only a few trials, said Stanley W. Anderson, president of Anderson & Associates of Arvada, Colo. "Microsoft would bring them clout and the expertise needed to pull this off."

Richard K. Crone, vice president and general manager of Cybercash's electronic check division, said electronic bill presentment has "the characteristics of a killer app" - statement information is individualized, changes frequently, and must be acted upon every month.

A strong partnership that promotes on-line billing could have ripple effects on the broader phenomenon of electronic commerce, Mr. Crone said.

"A credit card issuer could benefit greatly from providing interactive billing capabilities," he said. "The statement data is very compelling content that can be used to draw customers into a Web site."

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