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Companies devising a way to receive and pay bills over the Internet

June 26, 1997

NEW YORK (AP) - Microsoft Corp. and First Data Corp. said Thursday they are creating a service that lets consumers receive and pay bills over the Internet, in the latest innovation in electronic commerce.

The two companies will be equal partners in a Denver-based joint venture that will make the bill-paying service available early next year. Field trials will begin later this summer.

If billing companies decide to work with it, the new system would remove a big hurdle to attempts to computerize the nation’s billing and payment systems.

``We’ve completed the circle,″ said Darren Remington, general manager for electronic bill payment and presentment at Redmond, Wash.-based Microsoft. ``Now you can get the bill electronically as well as pay it.″

``It’s the most exciting thing that’s happened to online banking this year,″ said Jim Bruene, publisher of Online Banking Report, who estimates that 10 to 12 million bills are paid electronically each month.

The technology for electronic bill payment has existed for some time. But most companies continue to send paper bills through the mail.

Currently, a payer can instruct a bank to pay a bill through a proprietary online system or by accessing his account through a home financial management software such as Microsoft’s Money or Intuit Corp.’s Quicken, or by interactive television.

But he has to handle a paper bill at the front end, and his instructions are passed along to an intermediary that in most cases generates and mails a paper check to the biller.

MSFDC’s proposed system would put the entire process online. It allows a biller, say a credit card company or the local electric company, to send a customer’s bill to MSFDC.

The customer can call up the bill on a personal computer. After reviewing it for accuracy, he presses a few buttons instructing his bank to generate an electronic payment to MSFDC, which will then pass it on electronically to the biller.

Remington said the service will save money for billers, who now pay between 50 cents and ``a few dollars″ to generate and send a bill. It will save both banks and billers the cost of processing paper bills and payments, and save the consumer the hassle of tracking paper statements, he said.

``Once you’ve indicated that you want to pay (the bill), you can store it on your personal computer,″ Remington said. ``You can throw out the shoe box.″

The biller will pay a flat fee to MSFDC that will be ``in the neighborhood of the cost of a postal stamp,″ said Chuck White, president of electronic commerce payment services for First Data.

The bill payer will pay nothing. The bank will pay minimal start-up fees but no transactional costs, White said.

Microsoft and First Data, a Hackensack, N.J.-based bill paying firm, hope the new service will give them a leg up in the electronic payments field. First Data and its Western Union subsidiary already process payments for utilities and credit card companies. Microsoft’s Money program runs a distant second place in market share to Intuit’s Quicken.

Intuit last year sold its bill payment subsidiary to Checkfree Corp.

Quicken users do not now get electronic bill presentment. But Quicken users will be able to use it, once Quicken conforms to the industry’s OFX standards, Remington said.

The companies estimate that each of the roughly 100 million households in the United States receives and pays 12 recurring bills per month, or more than 14 billion bills annually.

The new venture may have licked the bill presentment problem, but it still faces stiff competition from established companies such as Checkfree, which already handle payments for banks, and Integrion, a consortium of banks and International Business Machines Corp. that is setting up its own online banking and bill-payment system.

The new joint venture does have an advisory committee including a number of big trade associations, the American Gas Association, Edison Electric Institute and United States Telephone Association. The committee also includes Chase Manhattan Bank, Citibank, American Express Co., Bank of America and Wells Fargo, as well as billing service providers CSG Systems Inc. and International Billing Services.

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