Boiled down to its bare essentials, paying a bill via personal computer isn't much different from writing a check and sending it through the mail- for now.

Until the back-office processing loop is closed with widesspread use of electronic bill presentment, the delivery mechanism for many computer- generated payments remains the Postal Service.

More than half of all bill payments sent via PC or telephone end up as paper checks sent through the mail to the billing company, bill payment processors say.

As a result, most popular electronic bill payment mechanisms are no quicker-and sometimes are even slower-than the current cycle of mailing bills and remitting checks.

But electronic-payment proponents say that even in its current state, the convenience for consumers in using PCs or telephones to pay bills overrides these objections. And, they say, that process is expected to become easier as financial institutions offer more incentives for consumers and billers to eliminate the paper trail.

"The biggest value in electronic banking is to build a system that can continue to add to the evolution of services that customers are going to demand," said Peter J. Kight, chief executive of Checkfree Corp., the largest electronic bill processor.

"Our vision is that more than one-third of the U.S. population will be involved in (paying bills via computer) by the year 2000," he said.

To achieve that goal, electronic bill-payment programs must provide better integration with billing companies' accounts-receivable systems.

Almost all major billers have account information calibrated to produce paper bills that can be assembled, mailed, and processed with maximum efficiency. Physical bills are created through a "print stream" of biller data for each customer whose billing cycle concludes on a given day.

Generally this print stream includes the customer's name, address, billed amount, and an account number code printed on the remittance stub that can be read by the billers' computers.

Because fewer than two million consumers pay their bills electronically, most payment providers consider their chief competition to be paper-based remittance systems, not one another.

"We aren't talking about the latest, greatest whiz-bang technology," said Matthew S. Lewis, Checkfree vice president. "We are talking about an alternative to the Postal Service."

But following the process of an electronic bill payment from origination to settlement shows it is still a paper-driven process.

Instead of pulling out a checkbook, the electronic bill payer picks up a telephone or runs a bill-payment program on a personal computer-including such popular personal finance software as Intuit Inc.'s Quicken, Microsoft Corp.'s Money or Meca Software's Managing Your Money.

Additionally, Internet-based bill payment systems rely upon yet another piece of software or "middleware" to read the information sent over the World Wide Web; the middleware then transmits it to an electronic bill payment provider.

Electronic bill payment services differ in processing procedures. Atlanta-based Checkfree, for instance, requires that bills be scheduled at least five days before payment, irrespective of payment method.

Travelers Express, the Minneapolis-based subsidiary of Viad Corp., notifies the consumer via E-mail as to whether a payment will be made electronically or by check. If electronically, the company requires only one day to make payment; if by paper, it requires that payment information be transmitted at least four days before the payment date.

Although most PC- and telephone-originated payments end up as paper checks mailed to billers, both Checkfree and Travelers Express anticipate that fewer than half of total payments will be made with paper checks by yearend.

If the bill payment provider has established an electronic link with a merchant-Checkfree has about 900 such connections- it debits the consumer's bank account and credits the merchant's account.

Mechanisms for settling electronic payments include the automated clearing house system, the electronic funds-transfer systems owned by Visa and MasterCard, and regional automated teller machine networks.

Most bill payment providers batch their electronic transfers into a group and send them once a day. That contrasts with the approach taken by organizations such as Online Resources and Communications Corp. and NYCE, which use the ATM networks to provide real-time payments, which are nearly instantaneous.

"Batch-processing has been long derided as not as cool as real time," said Mr. Kight of Checkfree. "But unlike a point of sale or an ATM machine, where you are walking away with cash, there simply aren't as many advantages to real-time (processing) for bill payment. As long as there is a mechanism for ensuring good funds, the least-cost method will be favored."

Whether by paper or electronically, both the billing account number and the payee's bank account information are crucial for the biller to process the payment. Electronic payment services that offer only one without the other makes reconciling a biller's accounts receivable much harder.

From the biller's point of view, the greatest cost savings will come when bill payment providers can generate electronic payments that feed directly into a merchant's accounts-receivable system, allowing them to bypass the two-part process of reconciling the remittance with the account information and then posting a paper check to a bank account.

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