After months of anticipation, CyberCash (Reston, VA) rolled out its PayNow electronic bill-pay service in late January, and expects four partners to complete beta tests by early spring before marketing it in the second half of 1997.

PayNow is the final installment of three online payment systems introduced by CyberCash, which is looking for big hits in the bill-pay and microtransaction markets to make up for an expected onslaught of SET-related competition in the secure credit-card transaction business that has been its mainstay..

Using PayNow, consumers—and eventually businesses —will be able to view a graphical representation of your bill at a bank, merchant or third-party Web site and pay it from a CyberCash PayNow-enabled virtual wallet tied to the individual’s bank account. As with other existing third-party bill payment schemes, the bank need not be directly involved for PayNow to work.

Consumers will pay little or nothing for the service. CyberCash will get its revenues from merchants who will pay a small fixed transaction fee per check. The company isn’t saying what that will be.

Nice publicity…Cybercash lists PayNow partners on the first page and links to two bank distributors of its wallet, First Union and National Bank of Canada.

PayNow joins CyberCash’s two-year-old secure credit-card transaction service (OBR 7/96 p.4-6), and CyberCoin, a microtransaction payment system the company announced last September (OBR 11/96 p.9). To date, consumers have downloaded more than 1 million CyberCash wallets, but only about 70,000 to 80,000 have used the wallets for credit card purchases, and approximately 5,000 for cash transactions, according to CyberCoin Product Manager Larry Gilbert (lgilbert@cybercash.com).

Exactly how PayNow is implemented will depend in large part on CyberCash’s present and future partners, who are developing their own iterations of the service to market to banks, utilities, retail merchants and eventually corporations.

The first set of Cybercash partners is conspicuous in its absence of traditional financial service providers. The initial group includes an accounts receivable outsourcer (IBS), a start-up payments company (EF&D), a midwest multimedia company (Cephas), and the only name familiar to online bankers, Princeton Telecom, an established bill payment consolidator.

Princeton Telecom/PSE&G
Princeton TeleCom Corp (Princeton, NJ) is testing PayNow with an undisclosed number of staff and customers of PSE&G, the largest electric and gas company in New Jersey. After a two-month pilot is complete, PSE&G is expected to offer PayNow to customers in April. If all goes well, Princeton will market the Web-based bill-pay service to other of the 530 national billers it serves, starting with 14 companies currently using the company’s 1-800-PAYBILL telephone remittance program, according to Princeton President Don Licciardello (609.924.8980).

International Billing Services
International Billing Services (El Dorado Hills, CA), a 1,500-employee subsidiary of USCS International, is one of the largest billing outsourcers in the country, producing 65 million statements per month, 4% of the entire U.S. first-class mail volume. IBS handles 54% of all U.S. cable-TV bills, 36% of cell phone bills, and 10% of regular telephone bills. AT&T is a client. IBS is testing PayNow billing statement presentment (no payment option yet) with an unnamed major telecommunications company during Q1 before deciding to expand the pool of testers or add an electronic bill payment option to the online statements. IBS and its mystery partner hope to go public with a PayNow product by mid-year, said Jorge Martin, IBS Electronic Billing Product Manager (916.939.5817, jorge_martin@billing.com).

Other customers “are definitely interested in this” and IBS won’t wait until the initial pilot is complete before recruiting them, Martin said. IBS currently offers lockbox, ACH, and telephone-based remittance processing services in partnership with Mellon Global Cash Management .

Electronic Funds & Data (EF&D)/Suffolk County Water District
Electronic Funds & Data (Bridgehampton, NY) is the start-up developer of BillSite <www.billsite.com>, a Web-based bill-pay service (OBR 10/96 p.6). EF&D is testing PayNow on several hundred employees of the Suffolk County (NY) Water District through February before offering it in March to the utility’s 350,000 customers. Residential customers will learn of the offer via SCWD statement stuffers and other promotions, said EF&D Chairman Stanley Blumenstein (516.537.2418).

Cephas Multimedia/Kansas City Power
Kansas City Power and Light, a Kansas City, MO utility with 500,000 customers, is conducting its own internal pilot with the aid of Cephas Multimedia Inc., an 11-person Kansas City Web shop that was approached by KCPL to undertake the project. An undisclosed number of utility employees will use PayNow through two billing cycles before the company decides whether to offer it to customers. “We’ll see what sorts of bugs are in the software, document features people use most, see what customers want,” said Cephas President Jay Wilner (jay@cephas.com).

Beyond the pilots
The number of PayNow partners could grow quickly, based on the high level of interest utilities and other retail merchants have expressed in the product, according to CyberCash PayNow Product Manager Richard Crone (415.413.0165, rcrone@cybercash.com). “I’ve been deluged with calls from billers,” Crone said. Once PayNow is established in retail remittance channels, CyberCash will direct its efforts at business-to-business transactions, Crone said. “One of the most costly functions (in business) is wholesale remittances,” Crone said in an earlier interview. “When you receive an invoice and have to pay against it, the paperwork involved is expensive. If a business allowed that invoice to be presented on a Web page and let you pay it with an electronic check, you could drop costs dramatically.”

Where are the banks?
What does PayNow offer banks? Apart from passing out free virtual wallets to retail bank customers and handling PayNow ACH debits, it’s a mixed bag. At least one PayNow partner, International Billing Services, expects to market a standard PayNow Web site bill-pay platform to banks and bank consortiums, but has yet to begin shopping the idea.

“Some people are comfortable paying bills through Checkfree or Money, but others want to deal solely with their bank,” IBS’s Martin said. “We want to provide an open platform and talk to bank groups like Integrion and individual banks” about using it.

Besides pitching BillSite to major utilities and other national billers, Electronic Funds & Data is developing a sister program called BillTools the company plans to market to regional banks, which in turn could offer it to local billers. EF&D is negotiating with Suffolk County National Bank (Riverhead, NY; $800 million; 21 branches) to resell BillTools to the bank’s corporate customers. However, EF&D officials aren’t certain whether BillTools will include PayNow or an electronic bill-pay service from EF&D’s SafePay subsidiary.

Analysis: bill payment battle shaping up
Cybercash’s entry into the bill payment business begins to fill the void left by Checkfree’s acquisition of Servantis in early 1996 and Intuit Services Corp. last month. But Cybercash is putting a different spin on its payment solutions, concentrating on Internet-based programs that complement Web-based bill presentment schemes being evaluated by major billers.

But don’t expect Checkfree to ignore this market. Tests continue on its E-Bill bill presentment program (OBR 10/96 p.5). Also expect competition from major credit card processors such as First Data and National City Corp., which has already launched a bill presentment/ payment program at Mobil’s Web (OBR 12/96 p.13). Bill presentment/payment is also a natural extension of personal financial management software functionality so expect some new ideas to come out of the brain-trusts at Intuit, Microsoft, and MECA. Finally, the numerous banking industry consortiums, NACHA, Visa, MasterCard, Integrion, and the ATM networks, will play a role in the adoption of digital bill payment in the coming decade.

Contributing editor Michelle Rafter covers the Internet for Reuters, the Chicago Tribune, c|net and WebWeek. Reach her at mvrafter@deltanet.com.