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Tech Industry

Post office joins in electronic bill payment

Looking for ways to fend off obsolescence in an increasingly digital world, the U.S. Postal Service announces an alliance with CheckFree to allow customers to pay bills electronically.

    Looking for ways to fend off obsolescence in an increasingly digital world, the U.S. Postal Service today announced an alliance with CheckFree to allow customers to pay bills electronically.

    Snail mail--mail sent through the postal service--is quickly losing its position as the preferred way to pay bills. The Postal Service's near-monopoly grip is loosening as Internet start-ups and financial companies offer electronic bill-paying services.

    Net portals Yahoo and America Online, as well as financial institutions such as Bank of America and Citibank, are among the companies allowing people to pay bills electronically. Late last year, 11 major U.S. banks said they were teaming to create the online banking consortium Spectrum, enlisting Sun Microsystems and Netscape Communications to help create an Internet billing system.

    Analysts said banks still have the upper hand in electronic bill payment because people like to view their account balances before making payments. But today's deal is likely to present formidable competition to the services offered by Yahoo and other online firms.

    "The advantage for the post office is the trust and comfort it brings to the table," said Bob Bolen, a securities analyst at J.C. Bradford. "The post office may get a lot more customers than a Yahoo, which is viewed as fun and frolicky but perhaps not a place to pay bills."

    The Postal Service, in recent years, has taken strong steps to keep up with emerging technologies by licensing Internet postage services to companies such as E-Stamp and Stamps.com. But some analysts see the corner post office losing its relevancy in an increasingly digital world.

    "The fact remains that the post office is not as big a part of people's lives as it was a generation ago," said Rob Sterling, a research analyst at Jupiter Communications. "FedEx, fax, email have all cut into the post office's relationship with the individual."

    Just last month, research firm International Data Corp. predicted in a study that the electronic bill market will grow to $1 billion by 2004. IDC also found that online bill payment is still in a nascent phase, with most consumer and billing companies slow to embrace electronic payments. The firm noted that of the 1.5 billion bills U.S. consumers receive each month, only a fraction are presented or paid via the Internet.

    CheckFree will provide electronic billing and payment services to the post office's Web site, letting customers who sign up pay bills for a small number of large companies, including the leading long-distance telephone companies, regional utility firms and wireless companies.

    "The consumer will ultimately dictate where they want to view and pay bills electronically," J.C. Bradford's Bolen said. "It is incumbent upon CheckFree to have their technology where ever the consumer may want to embrace it."

    CheckFree also provides bill payment services to Yahoo. Financial software maker Intuit provides similar services to AOL. Others include eCash and CyberCash.

    But security concerns have slowed the acceptance of online bill paying. The Postal Service is hoping to engender more trust in online bill payment systems--not only by slapping its brand name on the service but by providing an electronic postmark that is meant to show that data has not been altered.