Three of the top 10 banking companies have introduced a new variable into electronic bill payment and presentment, one of the banking industry's most talked-about market opportunities.

Attempting to push the billing and payment-processing business into a higher gear, Chase Manhattan Corp., First Union Corp., and Wells Fargo & Co. on Wednesday announced the formation of a joint venture tentatively titled "The Exchange." It would start out by building a bill-routing infrastructure around the banks' relationships with thousands of businesses and millions of retail customers.

Relying on technology from Sun Microsystems Inc., the banks want to begin testing this month and full-scale operation by yearend.

Sun Microsystems happens to be an archrival of Microsoft Corp., which owns part of Transpoint, one of the alternative electronic billing and payment systems.

The Exchange partners are hoping to take certain procedural and standardization matters into their own hands, in hopes of influencing and stimulating the emerging bill presentment industry as a whole.

"Easy access to a critical mass of billers and consumers is fundamental to the wide-scale growth of electronic bill presentment and payment," said Ronald Braco, chairman of The Exchange's steering committee and senior vice president of Chase Manhattan. "We aim to make electronic billing a reality for every American."

The banks did not disclose their investments in The Exchange. They described it as a for-profit, limited liability corporation in which the founding members would share equally in equity and income.

The organizers sought to contrast their "open and interoperable" approach to the "variety of proprietary systems" that limit competing concepts' flexibility. The openness, fostered by the SunConnect systems architecture, would enable participating banks to continue their current efforts to help corporate clients automate bill processing using different technologies.

"The Exchange and Sun share a common philosophy," said Sun Microsystems chairman and chief executive officer Scott McNealy. "Front-end branding and customer contact belong to the billers in partnership with their banks-not to the technology companies that enable the services."

The Exchange is the latest attempt by a group of banks to seize "a gatekeeper role" in an emerging market that could be coveted by technology companies and other nonbank competitors, said Bill Burnham, senior electronic commerce analyst at Credit Suisse First Boston in San Francisco.

The banks "clearly want to take back the initiative from the third-party consolidators and write the rules of the game," Mr. Burnham said. He was referring to the likes of Checkfree Holdings Corp. of Norcross, Ga., whose E-Bill system pulls together bills from many sources and makes them available at a variety of Web sites, including that of First Union.

In the role of consolidator, Checkfree or Transpoint-which is owned by Microsoft, First Data Corp., and Citigroup-helps billers format electronic statements, distribute them to different sites, and then process the resulting electronic payments.

Even as major banks are working with Checkfree to receive bills, that company recently announced an initiative to pursue partnerships with Web portals to reach as many consumers as possible. Some analysts have characterized that as a threat to banks, enabling powerful Internet brands such as Yahoo to get between the banks and their customers and potentially usurp the relationships.

But The Exchange's partners said they do not expect their efforts to disrupt any of the banks' existing dealings with consolidators.

"They are important technology providers and we'll continue to keep those relationships," said Sharon Osberg, executive vice president and head of on-line financial services at Wells Fargo in San Francisco.

Industry experts view The Exchange as a direct challenge to the consolidators.

"From a business process and technical perspective, the Exchange represents a superior model, as it relies on open standards and a biller directory to promote the open exchange of bill data," said Avivah Litan, research director at GartnerGroup of Stamford, Conn. "Over time, if successful, this model will eliminate the need for middleman consolidators like Checkfree and Transpoint."

Still, the three banks face challenges in getting The Exchange operating quickly-especially as portals are gearing up their own bill presentment efforts-and in marketing services to billers, Ms. Litan said.

In a conference call Wednesday, Checkfree chief executive officer Peter J. Kight said his company would compete "vigorously" with the banks for corporations' billing business.

He added that there is a "significant opportunity" for his company to continue working with the three banks. Those arrangements account for less than 20% of Checkfree's revenue, he said.

Checkfree's share price had taken a $9.1875 hit by midafternoon Wednesday, to $28.50. Mr. Kight said, "I need to personally express my disappointment at the market's reaction."

Transpoint also hopes to continue its current relationships with the Exchange banks, said that company's president and CEO, Lewis Levin.

"Banks have already been part of our distribution efforts," he said. "Our strategy is to work with billers and then get as much consumer distribution as possible. It sounds like The Exchange is all about getting banks in the business of distributing summary bill information to consumers. Hopefully this will accelerate electronic billing."

The Exchange's organizers said that between them they have 60 million consumer and small-business customers and 59,000 corporate and institutional relationships nationwide. They were responsible for issuing 300 million mortgage and credit card bills last year-a healthy nucleus for the presentment system that they said has been in development since early this year.

By linking billers and consumers and admitting other financial institutions into The Exchange as "members," officials at Chase, First Union, and Wells hope to solve the "chicken-and-egg problem" that has kept bill presentment and payment from living up to its early hype.

Some billers have been reluctant to embark on expensive Internet delivery efforts because consumers have not yet flocked to the Web to receive bills. Conversely, consumers need reasons-such as lower costs and greater convenience-to change their check-mailing habits, and this probably requires one or a few methods for receiving a large proportion of their bills electronically in a straightforward fashion.

The three Exchange founders said that by limiting the size of the ownership group, they will avoid falling into the traps of other, more sizable consortia.

The often-cited object lesson is Integrion Financial Network, the Philadelphia-based home banking venture, which after two years of struggling recently reduced its ownership group from 15 to four-and appears to have emerged more sure-footed.

"The less of a group-think exercise, the better, and I think (the Exchange banks) realize that," said Mr. Burnham.

Still, Chase, First Union, and Wells want to spread the benefits of their collaboration by inviting additional participants.

Joseph G. Sponholz, vice chairman of New York-based Chase and head of its newly christened Internet unit, said in a prepared statement: "We strongly believe that The Exchange will fuel the widespread growth of electronic bill presentment and that our customers will gain substantial benefit from this effort."

Banks still enjoy critical advantages in the way corporations and consumers perceive them, which can work to their benefit in electronic billing, the organizers said.

"Since millions of businesses and consumers already rely on the security, privacy, and trust provided by their banks, The Exchange is a natural vehicle for facilitating a secure, trusted connection between billers and their customers," said Ms. Osberg.

The Exchange is in keeping with other major banks' efforts to seize the electronic billing initiative, connecting major billers with retail bank customers. Bank of America Corp. announced such a program in April, relying on software from Just In Time Solutions Inc. of San Francisco.

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