The bank makes an equity investment in MSFDC, a controversial joint venture of Microsoft and First Data for online bill systems.
Coinciding with the deal, MSFDC changed its name to TransPoint. The Citibank investment in the venture may lend credibility to counter suspicions among banks.
TransPoint is essentially an outsourcing service that handles electronic bills and payments. But because it also plans to allow consumers to view and pay bills from the venture's Web site, some financial institutions have worried that Microsoft was moving into their market.
"This gives us credibility on the street with financial institutions," said Warren Dent, TransPoint's senior vice president of business development.
E-commerce analyst Scott Smith of Current Analysis said Citibank's nationwide reach and reputation as a technologically astute bank will improve other banks' comfort with TransPoint.
Citibank's investment gave it a seat on TransPoint's board and "a significant minority interest" in the venture, but the amount was not disclosed. Microsoft and First Data retain a majority stake of equal proportions. TransPoint also may accept additional investors.
TransPoint will call its Net-based bill delivery and payment service "E-Bills." Using the service, consumers can go to their bank's Web site to view, then pay their regular bills--electricity, cable, credit card, and others.
Citibank described Internet billing as a key part of the bank's Internet strategy for online banking. TransPoint's Internet billing technology will be included in Citibank's e-Citi electronic commerce offerings.
Citibank has licensed its "pay anyone" capability to TransPoint so that other TransPoint customers, mainly consumer-oriented banks, can use that service, which lets consumers pay any bill even if it is not delivered electronically. Citibank also will implement TransPoint's online billing service.
Citibank's involvement in TransPoint follows the big bank buying e-commerce software from Netscape Communications in May as Citibank bids to reach 1 billion customers by 2010.
Last month, Citibank became the anchor tenant on the personal finance channel of Netscape's Netcenter portal site. Netscape began saying a year ago that it is interested in online bill delivery, but it has announced no initiatives since then.