By Mary Kelleher
NEW YORK, June 23 (Reuters) - The fight to control the
flood of payments crossing the Internet every minute is
intensifying, with three top U.S. banks announcing plans on
Wednesday to form a new electronic billing venture.
Leading banks Chase Manhattan Corp. <CMB.N>, First Union
Corp. <FTU.N> and Wells Fargo and Co. <WFC.N> intend to join
ranks and form a company so people and businesses can receive
and pay bills electronically.
In teaming up, the banks are going head-on with companies
like CheckFree Corp. <CKFR.O> and Internet start-ups that route
bills from companies to consumers electronically, in what is
referred to in the technology industry as "bill presentment."
At stake is control over the flow of money stemming from
the explosion in credit card purchases being made over the
Internet for everything from clothes to stocks, home mortgages,
snack food and musical instruments.
"I think up until this point, CheckFree had a hammer-lock
on the Internet bill presentment business and now this
hammer-lock has been broken," Richard Zandi, an analyst at
Salomon Smith Barney said.
CheckFree stock fell $8.94 to $28.75 after the banks
announced their plans to form a company that will for the time
being be called The Exchange. The drop prompted CheckFree's
chairman to say the market was "grossly overreacting."
"We understand that on the commercial side of the Exchange,
banks view us as competitors and they clearly did not want to
give us any advance notice of their plans or their
announcement," CheckFree Chairman Peter Kight said.
Banks lend both to companies that send bills and to
customers who pay them. They are eager to act as a middleman in
the rising number of online transactions and are fearful of
others nipping away at their client bases.
"Banks are serious about trying to maintain their corporate
banking relationship with billers," Robert Bolen, an analyst at
J.C. Bradford said.
Banks are also fighting toentice customers with a panoply
of online products from balancing checking accounts to buying
certificates of deposit, stocks and mortgages, as the personal
computer becomes the preferred conduit for moving money.
Without online reach, the banks are afraid customers will
walk away to online brokers like Charles Schwab Corp <SCH.N> or
even to traditional brokers like Merrill Lynch <MER.N> who plan
to offer a full range of Internet services.
Analysts argue that the ability to send all of a customer's
bills into his personal computer and then route them back to
the companies owed money is vital to the overall success of
online banking.
"I think (online banking) usage will go way up when bill
presentment takes off in a meaningful way," said James
Punishill, an analyst at Forrester Research.
The banks combining to form the Exchange said on Wednesday
their research showed electronic bill payment and presentment
was one function that would cause a customer to switch banks.
"Bill presentment and bill payment are the bread and butter
of electronic commerce," said Scott McNealy, chairman of Sun
Microsystems Inc. <SUNW.O>, which will provide technology to
the banks' new company.
REUTERS
Rtr 19:51 06-23-99
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