Canada's postal service is working with a Bank of Montreal subsidiary to lay the groundwork for an ambitious nationwide system of electronic mail, bills, and payments.
They hope to get their Electronic Post Office Box to market early next year, sooner than more fragmented efforts to develop Internet-based bill presentment and payment systems in the United States.
The Canadian system, which is touted as broader than other bill processing initiatives in either country, would enable Canadians to retrieve and pay bills from the Web site of Canada Post Corp. or their financial institutions.
Through its subsidiary Cebra Inc., Bank of Montreal has been the most visible bank participant. It plans to begin transmitting monthly MasterCard invoices at the program's pilot launch, scheduled for January.
A full commercial rollout is slated for the spring.
Officials at both Canada Post and Cebra, a two-year-old technology arm of the Toronto-based bank, said all financial institutions will be eligible to participate via the Interac debit card network.
High rates of debit card and automated teller machine use are seen as setting the stage for electronic billing. Consumer use of ATMs, known in Canada as automated banking machines, to pay bills is already widespread. Up to 70% of the country's bill payments are initiated via ABMs, personal computers, and telephones.
"Payments will be handled through whatever financial institution customers do business with," said Renah A. Persofsky, president of Cebra. "Our intention is not to compete with financial institutions but to act as a clearing house."
The post office service is expected to go far beyond payments. Government agencies and businesses will be able to distribute electronic documents ranging from tax forms and financial statements to mail-order catalogues and promotional messages-provided consumers agree to be placed on confidential special-interest lists, which would be handled only by the post office.
Canada Post's involvement could offer businesses an advantage other providers cannot offer: the ability to send paper as well as electronic bills.
Like the United States Postal Service, Canada Post operates as an independent company with a monopoly over the distribution of first-class mail. Competition occurs on parcels, overnight mail, electronic mail, and other services.
The ability to deliver bills in multiple media may assuage billers frightened by large-scale investments in electronic-only systems with uncertain returns on investment.
"Even though it is far less expensive to send mail electronically than on paper, large billers were telling us that until everyone is electronic, they will need both infrastructures," Ms. Persofsky said. They did not expect to be "saving money for many, many years," she said.
Canada Post's system will permit businesses to outsource their entire bill production and delivery operations. For a yet-to-be-determined fee less than the price of postage, the joint venture will track which customers receive bills electronically and which receive them on paper.
Revenues are expected to be split evenly between Cebra and Canada Post.
Despite Bank of Montreal's support for Microsoft Corp. technology in other areas, Ms. Persofsky said it was wary of Microsoft as a competitor- through the MSFDC bill-processing venture with First Data Corp.-and the bank reevaluated its approach.
Ms. Persofsky said that since Microsoft moved into banks' payment businesses, banks had to enter Microsoft's software business.
Eight billers will participate in the initial launch. Besides Bank of Montreal, they include a retailer, a utility, a provincial government, a communications company, an investment manager, and a direct marketing company-but their names are not being disclosed.
A key supporting actor is Boulder, Colo.-based NetDelivery Corp., an early developer of so-called push technology-a method of sending information to a computer even when it is not being used-for billing.
NetDelivery re-christened its method "invited pull" and last month received patent number 5,790,793 for its Electronic Delivery Management technology.
Though the patent applies only to its specific method of retrieving information from one Web site and transmitting it to another, company officials see its selection as the primary technology provider to Cebra and Canada Post as a key to enabling valuable digital information to be sent to Canadians' Electronic Post Office Boxes.
"This becomes a consistent address for citizens to effect transactions, be it tax returns, medical forms, and other types of billing information," said John Shoemaker, vice president of business development at NetDelivery.
"It is a visionary effort to explore how to apply the latest in technology to provide an alternative delivery service for businesses and customers of the post office," Mr. Shoemaker said.
Other technology companies promoting bill presentment said the patent does not worry them.
"To get bill presentment to work, you must get a number of vendors to work together on a common standard so that customers can receive bills from different billers in one place," said Brian T. Valente, director of product marketing for Just In Time Solutions Inc., a San Francisco-based vendor of an Internet billing system, which has worked with BankAmerica Corp., Intuit Inc., and AT&T Corp.
"If NetDelivery is saying that no one else has a right to actually produce this technology, then the vendor community is reduced to one," Mr. Valente said. "A legislated monopoly is not going to help the industry along or help their case."
At least initially, Cebra and Canada Post will not use NetDelivery's invited pull but will require users to go to specific Web sites to retrieve their bills. The Colorado company's technology will manage the routing to electronic or physical mailboxes.
The joint venture picked NetDelivery in spite of its limited track record and competition from systems built by Microsoft and Netscape Communications Corp.
"We are looking at a system that can scale to several hundred millions or billions of transactions," said Bill Robertson, general manager of electronic commerce for Canada Post. NetDelivery "answered every important question."
Seeking a to play a role in the Canadian bill presentment and payment market, Microsoft in July teamed up with Newstar Technologies Inc. of Toronto, announcing its intention to import aspects of its MSFDC model from the United States.
Microsoft is acting as a subcontractor to Newstar Technologies, whose software handles 53% of Canadian on-line bill payment. The two companies are bidding against the post office on a separate contract to manage Internet-based billing for a consortium of Canadian banks.
"Our heritage has always been private-label," said Terry Ham, president of Newstar Technologies, making an argument often raised against MSFDC's branded Web site in the United States. "It is clear that the post office wants its label out there."
"We believe financial institutions are best positioned to provide bill presentment, and we will not provide a competing service to the Canadian marketplace," Mr. Ham said. He regards Newstar's alliance with Microsoft as more "bank-friendly" than Canada Post's collaboration with Bank of Montreal.
But Mr. Robertson of Canada Post responded: "We believe our solution would meet the requirements of any financial institution and is very complementary to any initiatives they might have."
He pointed out that Cebra and Canada Post will let consumers receive bills from their bank's Web site in lieu of Canada Post's.
Southern California Edison said it has agreed to test Checkfree Corp.'s Internet-based bill presentment and payment system with 100 employees.
Utility officials said the pilot of Checkfree's E-bill, expected to begin this month, is a prelude to a Web-based billing system for customers next year. The company has also been testing the rival MSFDC system and uses Princeton Telecom Corp. as a systems integrator for MSFDC and other billing options.
"This is what we want to do, and Checkfree has been doing it live for a couple of years," said Tony Sidiropoulos, manager of billing products for Southern California Edison, which has 4.2 million customers.
It was approached by both MSFDC and Checkfree, and paid nothing to participate in the pilots, he said, adding that it is important to give customers choices.
