The more things change in payment technologies, the more one thing stays the same: Customer-initiated electronic bill payments still can't seem to get over the last hurdle to mass acceptance.

That was the message at the Electronic Commerce and Payment Conference in New York the week before last. It was the 14th annual conference organized by the head of White Papers Inc., payment systems consultant George C. White, and the issues hashed over by a mix of bankers, corporate executives, and technology experts were just as perennial.

The meeting became an outlet for continued frustration with the fact that checks written in the United States exceed 60 billion a year while a readily available alternative, the automated clearing house, makes a barely detectable dent in the paper mountain.

Some observers fretted that the annual growth in checks is about equal to the total private-sector ACH volume - including direct payroll deposits and bill payments - of about two billion a year, despite the paperless alternative's efficiencies and economies.


"Overall I was trying to put together a program that would show how there are competing payment options," Mr. White, whose firm is based in Montclair, N.J., told the 120 people who attended.

One of those options was One Check, a patent-pending service from American Express Co. that's to combine and consolidate as many as five utility remittances into a single monthly payment.

The presentation on One Check by American Express vice president Richard E. Pickering was one of the more intriguing on Mr. White's program. It was also a lesson in why changes take so long.

American Express went as far as pretesting the service with several hundred people in the Phoenix area late last year, and the reactions to sending one payment covering multiple bills were uniformly positive.

The next step was to be a large-scale pilot. But that was placed on "indefinite hold" after the abrupt withdrawal of several participating gas and electric companies. Most backed out, saying they would rather "wait and see what happens," Mr. Pickering said.

"The companies felt that it was not in their best interests at this time - which I can understand," said Mr. Pickering. They feared "losing contact with their customers."

Consolidated bill payments may "potentially be the most important thing that's going to happen in the future," Mr. White said. But such systems must be "more responsive to consumers' needs," he added, as in allowing them to decide when to time the payment.

"What I've tried to stress is that for too long companies have assumed that people want to change the way they pay their bills," Mr. Pickering said. "What customers are really telling us is that the way they receive (bills) is the problem."


Paul M. Connolly, first vice president of the Federal Reserve Bank of Boston, provided an update of a joint effort by the Fed and the National Automated Clearing House Association to encourage automated bill payments.

"They are interested in promoting the ACH, and this is a way to get it done,' said John F. Good, president of Midamerica Automated Payments System, the clearing house association based in Cleveland.

Mr. Good's group worked with the Federal Reserve Bank of Cleveland on a regional version of such a program, which helped stimulate electronic bill payments.

The ACH, which is run mainly by the Federal Reserve System, began operating nationally in 1973, when U.S. check volume was about a third of what it is today.

Annual ACH volume, while growing at a faster rate than checks, remains relatively modest - just over three billion transactions.

Mr. Connolly and other ACH system supporters have their sights on the 10 billion to 20 billion bills paid each year, of which ACH payments account for less than one billion.

He said he can understand that old ways die hard - "check-writing is deeply rooted" - and the ACH is competing with other new payment mechanisms. But he added, "It is far too early for ACH growth to slow."


Richard Corl, executive vice president of Princeton Telecom in New Jersey, described Paid - its private-label processing service, whose full name is Payments Acquisition through Interactive Devices.

At the heart of the client/server technology is a toll-free telephone number that allows consumers to initiate ACH transactions using a voice response system and as few as five keystrokes on the telephone pad.

Princeton Telecom launched the service last July for customers of Southern California Edison Co.

"In the first 80 days, we have had over 100,000 people register to pay their monthly invoices by this call-in method," Mr. Corl said.


Richard P. Yanak, president of Infinet Payment Services Inc., Teaneck, N.J., discussed how automated teller machine networks may converge with - and potentially displace - parts of the automated clearing house business.

Mr. Yanak said ATM systems, with transaction volumes currently three times that of the ACH, can be competitive when used for direct deposits, bill payments, and even company-to-company payments.

The strength of the ACH is its ability to move large numbers of transactions, often recurring types of payments, in batches, Mr. Yanak said. ATM networks, like Infinet's NYCE and Yankee 24 systems, process individual transactions, on-line and in real time.

"As you move those two together, the masses of data and online technology, there is convergence," Mr. Yanak said. "There will be in fact an actual merging of the operations.

"Ultimately, the cost to financial institutions for any of these electronic services is on a downward trend, and that is going to continue," he added.

Mr. White agreed, noting that higher volumes and increased competition can help lower transaction charges.

Many observers view the ACH as "ideal for direct deposit," Mr. White pointed out.

"Well," he added, "maybe the on-line networks are ideal for it, too."


D. Eugene Chamberlain, director of relationship banking at Visa International, described proposed modifications to technical standards for automated consumer billing.

In Visa's model, bills would be sent electronically to a central data base. Consumers in turn would get the bills and pay them via personal computers or interactive television.

John Good of Midamerica Payment Systems said he liked the idea of such a "payment channel" because it gives the bill payer control over when payments are made..

"The day is coming where everyone's computer is tied into their TV set or monitor" and data are transmitted into homes through fiber optics or microwaves," Mr. Good said.


Another highly touted payment advance that has never seemed to take hold, electronic benefits transfer, is "really coming" this time, said Lee Jones, program manager with the Treasury Department's financial management service.

Mr. Jones said 35 states have - or soon will begin - EBT programs, which involve delivery of anything from welfare benefits and food stamps to Social Security and government retirement payments through electronic terminals.

Mr. Jones said one deterrent to the states, the Federal Reserve's Regulation E requirements that apply to automated teller and debit card transactions, is likely to be removed through an EBT exemption.

Meanwhile, the federal EBT Task Force is pushing for all recipients of Social Security, welfare, and food stamps to be receiving electronic benefits by 1999.

Mr. Jones also pointed out that states are working together to spread the costs and economies of EBT. Multistate alliances in the Southeast and Northeast are close to awarding processing contracts.

On another subject, Mr. Jones said Social Security will introduce "payments cycling" next year. The change, which affects only new beneficiaries, means the addition of three payment dates each month, so that all checks and direct deposits will no longer go out on a single disbursement day.

The Social Security Administration estimates that with the population aging, its payment rolls will increase by 74% over the next 25 years. Cycling is needed to avoid "overwhelming the payment system."

Jeffrey Kutler contributed to this article.

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