SunTrust Banks Inc. says a system designed to make online purchases is also driving up the use of its online bill-pay service.

The Atlanta banking company is testing ModaSolutions Corp.'s eBillme, which lets merchants issue invoices for specific online sales that can be paid through a bank's bill-pay site.

Though this system does not require the bank's cooperation, SunTrust has found that by encouraging its customers to use eBillme, it boosts the takeup — and thus boosts the benefit to the bank.

In many cases, people get a discount from merchants for using eBillme, which has proven a good enough incentive for many consumers to sign up for online bill-pay even if they have never used it before.

The key factor for SunTrust is that, although it promotes this discount in its own e-mails to customers, "they're not bank-funded discounts," said Kelly Jurgens, SunTrust's first vice president of enterprise payment strategy.

"The benefit really is that eBillme traditionally works with merchants to come up with merchant-funded discounts," according to Jurgens.

And so far, the results are promising, she said. When SunTrust e-mailed a promotion of eBillme to a portion of its customer base, "the response rate for online bill-pay subscription was almost as strong as a direct campaign for bill-pay," Jurgens said.

Though the eBillme payment system has been around since 2005, ModaSolutions has spent most of its time since then focusing on building merchant relationships, not bank relationships.

Jurgens said this was fine because part of what drew SunTrust to Moda was the Rye Brook, N.Y., company's success in getting numerous large merchants on board.

SunTrust began its tests late last year with a small group of customers and plans to begin the next phase of its tests Monday with a larger group and more e-mail messages. The initial test made use of two sets of e-mails, sent in September and December 2009, totaling 137,000 e-mails.

In the first phase, 20% of recipients opened SunTrust's e-mail, which was a higher response rate than SunTrust had expected. About 14% clicked through to the offer, and of those that made a purchase, the average amount was $85.

Jurgens would not say what percentage of responders made purchases since it was not considered statistically significant, but SunTrust considered the test successful enough to justify a broader second phase.

(By contrast, SunTrust also tested an alternative payment system from Moneta Corp., which did not make it to a second test phase, though Jurgens said SunTrust has not ruled out working with Moneta.)

The second phase of the ModaSolutions test is to involve sending a large group of customers an e-mail every month from September through January.

SunTrust initially began working with Moda as a way to serve people who would not use their SunTrust credit or debit cards for online purchases.

The banking company determined that it would not be able to persuade these people to use bank cards for online purchases; their minds were made up, so introducing a new payment system would not cannibalize the company's existing credit and debit card volume. By using eBillme, however, which shares some revenue with banks that actively promote its service, SunTrust could become relevant again to these shoppers and open up a new line of revenue for itself.

By contrast, when customers choose an alternative payment system such as eBay Inc.'s PayPal to make those purchases, the amount of revenue shared with SunTrust, "is, of course, zero if it's a PayPal transaction," Jurgens said.

From this perspective, SunTrust's work with eBillme is "sort of a defensive play," as much as it is an opportunity, she said.

Samer Forzley, ModaSolutions' vice president of marketing, said that, of all its end users, 20% to 30% are new to online bill-pay. About 27% of people who tried eBillme were new to online bill-pay, he said.

And they didn't use it just once, he said.

"There was a large number that continued to pay with eBillme and continued to add other billers," Forzley said. "It drives serious loyalty to the bank."

Gwenn Bezard, a research director at Aite Group LLC in Boston, said, "eBillme has made some progress over the past years. They've gained more merchants, and … they've proven they can lift sales."

SunTrust's example is a good one because the company is big enough to produce meaningful results but not so big that its size unduly influences those results, Bezard said.

"What SunTrust is seeing could be seen by other banks throughout the country," he said.

However, despite its progress, ModaSolutions is still a niche player, he said.

"It's not yet proven how big that niche can be," said the researcher Bezard, but "compared to PayPal, eBillme is a mouse, and PayPal is an elephant."