the latest version of Money, Microsoft Corp.'s personal financial management software.

An agreement between the two companies, announced last week, highlights the slowly growing competition in electronic bill payment, a field that Checkfree Holdings Corp. has long dominated. Checkfree had been Microsoft's only third-party payment processor for Money users.

"Checkfree has really been the only game in town in electronic payments" said David C. Stewart, vice president of Global Concepts Inc., a Norcross, Ga.-based research firm. "Whether M&I poses a serious and immediate threat to Checkfree is still unclear, however."

Milwaukee-based M&I Data Services, a unit of Marshall & Ilsley Corp. processes only 500,000 electronic payments a month, against Checkfree's 12 million. M&I has direct electronic connections with 1,100 billers, Checkfree with 2,600.

But M&I, which got into the business in January by acquiring Travelers Moneyline Express, a unit of St. Louis Park, Minn.-based Travelers Express, is steadily increasing its presence.

M&I provides "pay-anyone" processing for about 900 financial institutions. Pay-anyone services enable users to send payments to recipients, regardless of their ability to accept them electronically. Recently, M&I won the business of, the high-profile Internet-only bank launched this year by Bank One Corp.

Avivah Litan, research director at GartnerGroup of Stamford Conn., said M&I can sometimes take longer to process electronic payments than Checkfree.

"M&I is not as well developed, but they're trying to come up from the rear," she said. "They pose a sizable threat to Checkfree."

Nancy Langer, senior vice president and general manager of M&I's bill payment services, touted her company's robust customer service for bill payment, which is a feature of the Microsoft/M&I agreement.

"We want to make sure a customer's first experience with electronic bill payment is a positive one," she said.

Users of Money 2000 who choose not to pay bills electronically through their financial institutions will be given the choice of using either M&I or Checkfree. To help them decide, the software features Internet links to promotional information from the two payment processors.

Still not on the list of choices is a bill payment service from Transpoint, the electronic bill presentment venture owned by Microsoft, First Data Corp., and Citigroup Inc. Though Transpoint presents bills for various corporations, it lacks the pay-anyone capability offered by Checkfree and M&I.

Citigroup joined the Transpoint venture last September, agreeing to "provide Transpoint with access to the pay-anyone capability that Citibank developed as part of its Direct Access PC Banking," according to a press release.

Some market participants speculate that Microsoft added M&I as a Money processor with an eye to eventually have Transpoint use M&I's pay-anyone capability, Ms. Litan said.

Ms. Langer acknowledged that M&I has had a long-standing relationship with Microsoft, but she said talk of an acquisition was "speculation at best."

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