anks and consumers alike are finding ways to take the traditional paper check out of paying bills. As more businesses, banks and individuals opt for making payments electronically, the process is getting less cumbersome and less expensive - and is becoming a critical marketing tool for banks.

According to the Wall Street Journal, banks' efforts to get customers to pay bills electronically are ramping up. The number of U.S. households paying bills online has increased to 17 million, up 41 percent over last year, so the stakes are high.

To attract and keep customers paying online, financial institutions from banks to credit card companies are eliminating monthly fees, offering cash incentives and entering e-customers in contests to win thousands of dollars as rewards for signing up for online services.

Businesses are pushing electronic bill payment to save postage and other administrative costs and, more important, to hold on to customers. Banks know that people are 80 percent less likely to switch loyalties once they've set up the accounts to pay online.

Bank of America is aiding the growth of its online program by doing away with any fees - it no longer charges the $5.95 monthly fee or charges to view bills paid online. Fleet charges $4.50 a month for its service and recently wrapped up a promotion giving customers $25 for paying their first bill online.

Discover has been running a sweepstakes to entice customers to pay their credit card bills online; when they do, they're entered to win $10,000. Citibank charges its credit card customers $4.95 to pay 10 bills or $9.95 for 24 bills a month and ran a promotion giving new users $1 per online bill, up to 10 bills a month, for the first year.

Some banks are resorting to old-fashioned methods to educate their customers about the advantages of paying bills online. U.S. Bank, which charges a flat $4.95 monthly fee, has placed "e-experts" in all of its branches to provide information to consumers.

Most companies let customers view their bills online for an additional monthly or per-bill fee, and some let them download bill payment information into a computerized checkbook or personal finance software such as Quicken. There are a variety of ways to pay bills electronically; the fees associated with the programs also vary. Online banking, direct billing and automatic debit are methods consumers can use to avoid writing checks.

A growing number of companies, from utilities to gyms, let customers enter their account information onto the company Web site; once it's set up, the customer's account is automatically debited.

This method is the most common electronic option - consumers made 1.4 billion payments to different companies through automatic deductions the first half of this year - and works with bank accounts or credit cards. Paying bills online might sound easy, but some financial institutions use systems that make the process a little complicated.

For example, Chase charges consumers $9.95 to pay and view up to 20 bills a month, but for consumers to see the bills online the bills must be sent to a central processing facility, where they are opened and scanned into a computer.

Problems with this system can include mix-ups, such as new credit cards being sent to the processing center, and delays in straightening them out. Just setting up the accounts can involve entering information such as billing and bank account numbers and addresses. Despite some glitches, the growth of electronic bill payment is expected to continue. By some estimates, more than 20 million households will pay bills this way by the end of 2003.