A Toronto electronic bill payment service provider is poised to expand in the United States by signing agreements with several major banks here this month. UseMyBank Services Inc. has developed a service that uses banks' electronic bill-pay systems to debit online purchases from a customer's bank account, sometimes in real time. It already has relationships with all of the major Canadian banks and more than 200 merchants as clients, according to Joseph Iuso, the chief executive officer. Most of these merchants are small Web-based operations, and about one-quarter of them are based in the United States, he said.

"We are strictly focused on debit payments," Mr. Iuso said. "We are competing with credit cards." He is hoping that the service will appeal to people who either do not have credit cards or do not want to use them to pay for online purchases. Consumers must have a deposit account at a participating bank in order to use the service.

While there are other services that allow consumers to route online transactions to their bank accounts, Mr. Iuso said his is more convenient for the customer, because it is more highly automated, and for merchants, because it offers more security and the possibility of faster settlement than other methods.

He said his company has been operating since December, but he would not say how many transactions it is processing or the value of those transactions.

Merchants who use the UseMyBank service include debit cards as a payment option at the virtual checkout. Customers who choose it are asked which bank they use.

The participating banks are Canadian Imperial Bank of Commerce, Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia, ATB Financial of Edmonton, and Bank of Montreal, and Mr. Iuso says he is negotiating with six large U.S. banks to join that list.

After choosing a bank, the customer types in a debit card number and password, then enters the amount of the payment.

This setup, which is much like that for paying a bill online, is easier to use than e-checks, which also allow customers to route payments for online purchases from their bank accounts, Mr. Iuso said. While e-check systems are becoming more prevalent in online commerce, most rely on automated clearing house transfers and require the consumer to type in both an account number and the bank's ACH routing number.

"Most people know their online banking password, but not many can remember the routing number of their bank," he said.

The UseMyBank service is good for merchants, because the company has relationships with the banks that allow it to verify that the funds are present in the account before processing the purchase, Mr. Iuso said. E-checks are not verified and can be denied if the funds are not available. Unscrupulous customers can also use accounts that do not belong to them if they know the routing and account numbers.

With the UseMyBank service, the funds are debited from a customer's account almost instantly, he said. UseMyBank maintains accounts at each participating bank, so the initial transaction is a transfer from the consumer's account to UseMyBank's, which can happen immediately.

The company then sends the funds to the merchant through the Canadian version of the ACH network, and the merchant typically receives the money the following day. Once the company starts to operate in this country, he expects merchants to receive payments in one to three days after a customer initiates a transaction.

Steve Ledford, the president of the Atlanta market research firm Global Concepts Inc., said the U.S. ACH network is much larger than the Canadian one, so it is almost impossible for payments to move as quickly here as they do north of the border.

While UseMyBank may not be able to offer a speed advantage here, U.S. merchants and consumers may nevertheless find the automated application an easy way to make payments, he said. "To me, what's interesting here is their infrastructure and the way they are using direct connections with the banks."

Another selling point for merchants is UseMyBank's transaction fees, which are lower than those charged by the credit card companies.

Richard Cadieux, the manager for information systems at the Princess Margaret Hospital Foundation, a Toronto group that solicits donations for cancer research, said he pays about 2% to UseMyBank, while cards charge 2% to 3% plus a monthly fee. His organization has been using UseMyBank since this summer, and about 15% of its online donations are now coming through UseMyBank.

The foundation plans to market the service next year, and Mr. Cadieux hopes to see that figure grow to 40% to 50%. "We expect it to really kick up come 2004," he said. "We save money by having people use their debit cards."

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