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Will Bills.com live up to its billing?

The "billing portal" is an ambitious plan to compete with CheckFree. But some observers warn that people might prefer to pay bills through their own banks.

A Texas start-up today unveiled an ambitious plan to open a "billing portal" where consumers can pay their bills at no cost. The announcement of Bills.com comes as the hot online billing-and-payment market is getting a big boost at a banking conference on electronic payments.

Banks and billers like online billing because it's cheaper, but Bills.com, a project of electronic billing service bureau billserv.com, aims to lure consumers too. Today most online bill-payment services are offered by CheckFree, either directly for a monthly fee or through banks that put their own labels on the CheckFree service.

"We are trying to provide a free Internet billing service utilizing a portal business model to bring down the cost," said David Jones, senior vice president of billserv.com, who says ads and sponsorships will generate the revenue to subsidize the service. Bills.com hopes to minimize charges to billers too through advertising.

Forrester Research analyst David Weisman is skeptical: "I don't believe it will work well. Consumers will want to see bills where their main transaction account is, at a bank or brokerage. It's a financial activity."

Banks are hoping to offer online billing themselves, capitalizing on the trust and financial relationship they have with consumers. Bank of America is expected to make an online-billing announcement later this week at the National Association of Clearing House Association conference, which issued a white paper on bill presentment this week.

Bills.com faces potentially stiff competition from existing Internet portals-Yahoo has been negotiating a bill-presentment deal, and Netcenter has signaled its interest in online billing.

Paul Hughes of Yankee Group thinks Bills.com is a good idea, even though its parent firm is less than a year old.

"It shows a lot of initiative on the part of a company that is using billing to draw consumers to the site," said Hughes, who notes that the number of consumers who even know about paying bills online is small.

Yankee's annual consumer survey found only about 4.5 percent of households are interested in paying bills online, Hughes said. Even among PC users with Internet access, a mere 4.6 percent are paying bills online now.

"The biggest problem in having this technology take off is the lack of knowledge among consumers that it exists," Hughes said.

David Weisman of Forrester Research thinks portals won't cut it in online billing.

"Unlike email and portfolio trackers, electronic bill presentment and payment will be full of customer service demands that portals aren't equipped to handle," Forrester said in a December report, adding that America Online is a wild card because its sophisticated call center could make it a player.