Norwest Corp. has begun testing a telephone bill payment service with 28,000 customers in Nebraska.

The $56.6 billion-asset bank, based in Minneapolis, already offers information about routine banking transactions by telephone.

With the Payment Xpress service, customers can pay their bills by calling a toll-free number.

Payment Xpress was developed with SmartPay Processing Inc., an electronic banking services company based in Bellevue, Neb.

The service is the first component in Norwest's evolving remote banking strategy, which aims to expand delivery of services through a variety of channels.

Payment Xpress will be introduced to other Norwest markets, beginning in the first quarter.

By the second quarter, the service will also be available to financial institutions that use Norwest's extensive Instant Cash automated teller machine network.

Norwest's ATM network, one of the top 10 in the country, makes it a critical distribution channel for the bill-payment service, said Helen Brodie, senior vice president and managing director of Norwest Card Services -- a division of Norwest Bank Iowa -- which manages the network.

Over 400 financial institutions use the Instant Cash network.

They will pay a fee, based on usage, to Norwest for the Payment Xpress service, said Ms. Brodie.

The bank also plans to deliver remote services through additional channels by the second quarter, said Ms. Brodie.

The bank is looking at other devices, such as screen phones and personal computers, and is gearing up to offer bill payment with a credit card through its ATM network next year, she said.

Customers can use Payment Xpress to pay individuals and companies.

To access the service, customers must enter personal account information, including a personal identification number. They hear a message with the current balance on their checking account.

Then, they hear a list of options with tips on how to pay their bills.

Customers are given a choice of three types of payments they can issue.

They can "pay today," which is scheduled immediately when the customer calls and enters the dollar amount and payee information; they can schedule payments by entering the dollar amount, payee information, and date the payment is to be initiated; and they can schedule automatic payments on a recurring basis.

After the company or person being paid is validated by Norwest, the bank can send payments electronically.

A full description of each bill paid through the service is detailed on customers' monthly checking account statements.

Like Norwest, other banks have chosen to revamp their telephone banking centers -- despite a growing interest in screen telephones and PCs for remote delivery of services -- because their customers already have the basic phones.

Of the three channels, telephone banking will be used to process a higher percentage of retail transactions over the next three years, according to a report on technology in banking conducted by Ernst & Young and the American Bankers Association. Telephone banking will also experience rapid growth, the study notes, predicting that transactions will increase by 78% between this year and 1997.

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