Banks are taking a new approach to automating business-to-business payments, handing off long-held proprietary systems to third parties that can potentially attract more corporate users — and more transaction fees.

In two recent deals, Bank of America Corp. and U.S. Bancorp both agreed to transfer their in-house payments systems to third parties. The strategy reverses what has been the dominant model, in which financial companies acquired vendor platforms to offer exclusively as their own.

Observers say the deals show revived interest in electronic business-to-business payments. But they also warn that, over the long term, a gaggle of incompatible B-to-B systems could actually hobble the "network effect" that makes these systems valuable by making them available to more users.

Bank of America agreed last week to sell its PayMode corporate e-invoicing operation to Bottomline Technologies Inc., a Portsmouth, N.H., payments technology vendor.

Dub Newman, a global product management executive at Bank of America, said Bottomline would be able to market the PayMode system to more business clients than the Charlotte banking company could reach on its own.

"Ultimately, you've got to hook up with somebody who has the breadth of clients you can supply solutions to," he said.

Robert A. Eberle, Bottomline's president and chief executive officer, said the company plans to offer PayMode to other banks, an approach that would have been unthinkable if B of A were pitching the system. The goal, he said, is to create a single, widely used network that can link as many corporate users as possible.

Though other financial companies operate similar payments networks, Eberle said they often operate as isolated islands that do not connect to each other. "Our ultimate ambition is to connect those."

Bottomline paid $17 million for the PayMode facility in Portland, Maine, and gave B of A warrants to buy 1 million shares of its stock at $8.50, Eberle said; Bottomline shares were trading at $11.85 Wednesday and there were 24 million shares outstanding at its fiscal yearend on June 30.

The option to take a stake in the vendor gives B of A a strong incentive to promote wider use of electronic B-to-B payments. "We've got significant upside opportunity for the management of payables and the movement of payment from paper to electronic," Newman said.

Observers say that handling these payments electronically is a largely untouched market. The typical organization made 74% of its B-to-B payments by check in 2007, according to the Association for Financial Professionals, a trade group for corporate treasurers, based on its most recent survey. Three years earlier, checks made up 81% of such payments.

The consulting firm Treasury Strategies Inc. said businesses spend about $1 trillion per year on their payments needs, but Dan Miner, a principal, said banks garner only about 10% of that.

"Clearly, electronic invoice presentment and payment is the future," Miner said. "There's high growth potential in that business, and especially the bigger banks want to be seen as experts."

Though he expects more banks to jump into this market, newcomers are more likely to join existing networks than build their own.

These could include Bottomline's system or Syncada LLC, a joint venture announced two weeks ago between U.S. Bancorp and Visa Inc.

Rob Abele, the president of U.S. Bancorp's corporate payment systems unit, said Syncada would extend the reach of the Minneapolis banking company's PowerTrack platform into new markets.

"Creating this network and doing so on a global scale and inviting other banks into the network is the greatest opportunity to create a gold standard and expand the network," Abele said. "We can more rapidly expand the network by allowing other banks on a global scale to offer it."

Syncada also gives Visa a way to compete with the MasterCard Payment Gateway, introduced by MasterCard Inc. in 2007, which now counts users such as Wells Fargo & Co. and Citizens Financial Group Inc.

Scott Coffing, the chief operating officer of the AvantGard unit of SunGard Data Systems Inc., said that banks have had trouble developing corporate payments networks on their own. "Nobody has been successful because no one player can be," he said.

"In my dealings with bankers, a lot of what they try to do is to make the customer as sticky as possible," he said. "That's why you see a lot of these islands develop."

But corporations want the flexibility to do business with a variety of banks, he said, and the trick is to find a way to connect them all. Coffing said SunGard is developing a "meta-network" that he said would begin carrying transactions in the first half of 2010.

"I think there's a critical mass of players," Coffing said. "There's no way one bank, technology vendor or network can do it all."

B of A's and U.S. Bancorp's deals to hand off their payments services stand in contrast to the pattern seen just two years ago, when financial companies bought payments vendors to offer their systems as their own; JPMorgan Chase & Co., for example, bought the payment-automation vendor Xign Corp. in 2007, just a few months after American Express Co.'s 2006 acquisition of Harbor Payments Inc.

Miner said the new approach could lead to the establishment of fewer but larger payments networks, simplifying the process of suppliers' connecting to their buyers.

"Because there are so many solutions out there, sellers have to integrate potentially with several different EIPP solutions to meet the needs of their customers."

Aaron McPherson, the research manager of payments at the research firm IDC Financial Insights, said the uptake of B-to-B e-payments is at least a year slower than he expected.

He said part of this can be attributed to the financial crunch. "Banks are looking to get leaner. Who can they partner with to get rid of that expense?"

But part of the slow growth could also reflect the limited reach that the individual networks have, McPherson said. "It's a sign of how slowly these networks are growing that they haven't touched yet."

"It's a classic network externality problem," he said. "If you're going to get the benefit of adopting a system, all your trading partners have to do the same."

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