Spectrum, a consortium formed in 1999 by Chase Manhattan Bank, First Union and Wells Fargo, acts as an online exchange to route electronic bills between banks and their customers. Other members include Comerica, Mellon Financial and Wachovia.
Citibank, which has been active in promoting Web-enabled bill payment services, will offer corporate clients its Citibank e-billing service through Spectrum's site. Citibank said it also will serve as a sponsor to billers, bill processors and other financial institutions that are not yet part of Spectrum, in an effort to help them electronically distribute bills to their customers over the exchange.
Customers are growing more comfortable with the idea of paying their bills over the Web, analysts said. Even though the service had been slow to take off, many large companies and major financial institutions have since joined Internet players such as PayPal and CheckFree with their own electronic bill and payment offerings.
Internet portals Yahoo and America Online, major financial institutions such as Citibank and Bank of America, and a slew of other players are attempting to persuade consumers to pay their bills over the Web. For the financial institutions, online bill payment is less expensive than sending bills to consumers via U.S. mail.
Market researcher IDC predicts that the market for electronic bill-payment services will grow to $1 billion by 2004. With more people using the Internet to spend, save and invest their money, online financial services are in greater demand from customers.
Citibank, for one, launched c2it last fall, allowing customers to transfer cash online from a bank, brokerage or credit card account to a recipient's account. Earlier this month, Citigroup, Citibank's parent company, joined forces with Microsoft to extend its Net payment service to a larger audience. The software giant is offering Citigroup's c2it service via its MSN Internet services network.