It's not that no one's offering the service to consumers. Banks, brokerages, many large billers and personal-financial software programs like Quicken and Money have made online bill paying available to consumers for some time. Despite all these options, less than 1 percent of the total 30 trillion billing transactions worldwide will be paid online this year, according to Ovum, a London-based research firm.

But the newest players to join the still-tame electronic bill-payment party could give it just the ingredient it needs to turn into a full-fledged bash. Last week, Yahoo launched its long-anticipated bill-payment service through a partnership with the Norcross, Ga.-based CheckFree. Registered Yahoo users can now pay any bill online anytime, for a small fee. Yahoo is offering a free three-month trial as an incentive. After that, people can choose between two options: $2 per month and 40 cents per payment, or $7 per month for up to 25 payments. The price is comparable to other third-party bill-payment sites, although some banks offer the service for free.

While CheckFree declines to discuss specifics, it does acknowledge that other portal deals are forthcoming. In the next year, it plans to expand its consumer base from 3 to 5 million; half the additional 2 million customers are expected to come from relationships with portals. The company, a pioneer in the electronic bill-payment industry since 1981, is the first to admit that getting consumers to pay bills online isn't easy.

"People like to talk, to shop and to play," says Ravi Ganesan, CheckFree's CTO. "Billing and payment is not gossip, it's not shopping and it's not entertainment. We're asking customers to change their behavior [in paying bills] – which isn't easy, because the U.S. Postal Service works pretty well." Ganesan says that once customers try CheckFree, however, the retention rate is extraordinarily high.

While CheckFree is among the oldest and largest vendors of electronic bill-payment services for merchants and banks, it's finding itself among an increasingly crowded field. Each company is approaching the market from a slightly different angle. TransPoint, a venture backed in part by Microsoft , facilitates payment processing much like CheckFree does. Players like Idealab's PayMyBills.com hope to gain points with consumers by removing all paper bills from mailboxes, delivering them to customers online instead. Companies such as eDocs and Derivion want to help ease the pain for billers in getting customer data organized for electronic processing. And still others attack it from the bank's perspective, including Spectrum, a new venture from Wells Fargo, First Union and Chase Manhattan that's beta testing its service. Banks, as intermediaries between consumers and merchants, have been sitting on an electronic bill-payment gold mine while these third-party vendors have beat them to the punch with software solutions.

Surprisingly, much of the activity that goes on behind the scenes in online bill payment is still paper-based. Yahoo can allow its customers to pay any bill online because CheckFree still cuts paper checks for all those billers out there that aren't yet enabled to electronically receive payments. Ganesan estimates that only half of the payments CheckFree currently processes are electronic.

Payment processors have now assumed the headache of cutting checks, billers have countless options for online bill-payment software and service solutions, and banks are prepared to facilitate electronic payments. The only piece still missing is the consumer. Market-research firm Jupiter Communications estimates that households paying bills online will grow from 1.8 million today to more than 18 million in 2003.

Banks haven't helped the consumer adoption rate in bill paying largely because of the slow pace of online banking adoption in general among consumers. But people don't need to bank online in order to pay bills online. Perhaps the marketing efforts from the likes of Yahoo and AOL , which is expected to offer online bill payment soon, will give this industry the kick in the butt it needs to reach those aggressive market projections.

Fans of Snail Mail

Bank customers polled on why they haven't opted to pay bills online:

REASON RESPONDENTS

Prefer Other Methods 45.6%

Havent't Researched 30%

Too Expensive 23%

Bank Doesn't Offer Sevice 13.9%

Not Confident In Process 11.8%