Banks like electronic billing because it is cost-efficient and can be faster than traditional forms of securing payment.
Now, three major banks are teaming up to streamline the process. Today, U.S. banking giants Chase Manhattan (NYSE: CMB), First Union (NYSE: FTU) and Wells Fargo (NYSE: WFC) announced that they are forming a new company that will allow customers to pay bills and be paid electronically.
The company, which will be called “The Exchange” until its name is finalized, will begin operating by the end of the year. The banks say that the new venture will make electronic billing a reality for the average American.
The Exchange will serve as a hub, allowing members of the service to route electronic bills to other members of the service. The bills will then be delivered to customers who will pay them through their own financial instituation.
“Easy access to a critical mass of billers and consumers is fundamental to the wide-scale growth of electronic bill presentment and payment,” said Ronald Braco, chairperson of The Exchange’s steering committee and senior vice president of Chase Manhattan. “By design, The Exchange will accelerate market growth by providing a single connection for millions of billers, small businesses and consumers to exchange billing information, regardless of the individual technology employed by the members.”
Currently, competitors to The Exchange use proprietary systems that preclude certain institutions from participating. The Exchange will allow members to exchange online bills, regardless of the technology used by individual members.
The Exchange Taps Sun
The Exchange will use Sun Microsystems’ technology to build and power its operating platform. Visa USA will also supply software and support.
“The Exchange and Sun share a common philosophy,” said Scott McNealy, chairman and CEO of Sun. “Front-end branding and customer contact belong to the billers in partnership with their banks — not to the technology companies that enable the services.”
Large Customer Base
The founding members of The Exchange have a combined customer base of nearly 60 million consumers and small businesses, and relationships with more than 59,000 corporations and institutions nationwide. Combined, the three founder members issued nearly 300 million mortgage and credit card bills in 1998.
In addition, Integrion, a financial network governed by Bank of America, Bank One, Washington Mutual, and Visa, also plans to use The Exchange as part of the electronic billing services offered to its owner’s financial institutions and clients.