FRAMINGHAM (07/19/2000) - Citigroup Inc. and America Online Inc., said Tuesday that they are joining forces to make it easier for consumers and businesses to settle online financial transactions.
That means that beginning this fall, AOL users will be able to purchase goods online, buy tickets to a show, pay merchants and even send money to other people -- including children away at college -- over the Internet, without having to whip out their credit cards, said David Theis, a spokesman for the Dulles, Va.-based company.
"The money will come directly out of their checking accounts," he said. "This will change online payment."
In addition, the two firms said their services -- available to users of AOL services, including CompuServe, Netscape, Netcenter, AOLTV and AOL Instant Messenger -- will ultimately allow consumers to transfer money between accounts.
As part of the deal, New York-based Citigroup will provide its financial products and services across AOL brands, and Citigroup will prominently promote AOL's products and services to its customers. The companies didn't disclose the financial terms of the alliance.
At a time when financial institutions are looking to control the online bill-paying market, Citigroup is positioning itself to set the standard for executing financial transactions on the Internet.
A survey released Tuesday by InsightExpress, a research group in Greenwich, Conn., found that consumers are three times more likely to use an online bill-payment service from a bank than from a dot-com company.
"We are the predominant payment-processing institution in the physical world, and what we want to do is take that expertise and transfer it to the electronic world," said Citigroup spokeswoman Nina Das. "And we're doing that with the No.
1 player in the interactive services market. But we are not limiting it to AOL.
We intend it to be an open, standards-based infrastructure that other people can participate in."
For example, Das said, the money-transfer infrastructure will be embedded in www.myciti.com, a financial services site that Citigroup launched Monday. On the site, customers can consolidate their banking, investment and other information from their online accounts, allowing them to better manage those accounts. The site was launched using technology from Yoodle.com in Redwood Shores, Calif.
Brook Newcomb, an analyst at Forrester Research Inc. in Cambridge, Mass. , said the alliance is important because there is currently no standard for conducting financial transactions online.
"The offerings now are only one-by-one solutions, they are not integrated," he said. "Citigroup is going to develop a suite of services so no matter how, or who, a consumer wants to pay, [he will be able to do it]."
But Newcomb said Citigroup is the sole proprietor of the system, and it will not become a standard. "So I asked them if it were successful, would they license it to other financial institutions?" he said.
Das said that although Citigroup's goal was to make the system an open standards-based infrastructure, it was too early to comment on licensing it to other institutions.