ere's a new online payment method: Bill Me Later. It's the latest way to pay for things on the Internet, and it has backing from some big names in transaction acquiring and other financial services businesses, including First Data Corp., Paymentech and CIT.

Bill Me Later is the brainchild of I4 Commerce, a Maryland-based company that specializes in providing payments solutions for multi-channel retailers. Mark Lavelle, I4's Vice President for Business Development, said Bill Me Later targets creditworthy patrons of e-commerce sites who for one reason or another, do not wish to use credit or debit cards online. Transactions are authorized in real time using a combination of top-notch authorization and payment platforms.

The kicker is that Bill Me Later mails out a bill to each purchaser who uses the service. It's reminiscent of the way people used to run up tabs at their local markets during my childhood years, and before.

Some small town merchants still do run tabs for customers. In fact, I'm amazed at how many people in rural Maryland, where I live, still do business that way. But maybe I shouldn't be. It's really nothing more than a convenience for long-time, creditworthy customers who prefer one monthly bill.

"This is not a sub-prime business," Lavelle said regarding Bill Me Later. "This is a way for people who want more choices and those who want security when buying online."

People like me. I happened upon the service recently while making a last-minute reservation using Hotels.com. I use this site frequently, but dread the notion of filling out the on-screen forms. When I noticed the Bill Me Later option, I jumped on it.

I answered a few quick questions (like zip code and the last four digits of my Social Security number) and within about two minutes, my room was booked and I was good to go. The bill arrived about two weeks later and the terms were quite generous: If I paid off the balance within 30 days of the invoice issuing date, the transaction would be interest free.

Hotels.com Executive Vice President Mel Robinson said he expected the Bill Me Later option would attract customers that don't carry credit cards. But he didn't expect the results that using this service would provide.

"While we did see incremental business from this group, we were pleasantly surprised to find that our greatest revenue gains were driven from people who already had credit cards, including both new and existing Hotels.com customers, who now feel empowered...to make larger purchases," Robinson said. He estimated that Bill Me Later customers spend about 10% more than customers who pay online with cards.

"It's an elegant way to provide convenience and the security of not having to use credit or debit cards," Lavelle said.

It's also a less expensive alternative to online credit card payments; from the merchants' perspective, it's 20 - 40$ cheaper according to Lavelle. Merchant discounts are assessed at 1.5$ plus 15-cents per transaction. In typical card-not-present Visa/MasterCard payments merchant discounts run about 2.5$ of the transaction amount.

First Data likes Bill Me Later enough to have bundled it with other alternative payment methods to create a new platform it calls First Data Encompass. Other Encompass products include TeleCheck Internet Checks and Checks by Phone, Verified by Visa and MasterCard Secure Card.

First Data says it expects Encompass to shield ISOs and gateways from the complexities of hooking merchants into multiple platforms. "The platform is added to a merchant's Web site through an easy-to-integrate payments interface and is available for direct integration," First Data said in a statement issued earlier this year.

Lavelle said First Data also holds a "small stake" in I4 Commerce. Bill Me Later also uses First Data's card issuance platform to generate bills, he explained.

In addition to First Data, I4 Commerce gets support technologically and/or financially from at least a dozen firms, including security experts CyberSource and Retail Decisions, venture capital firms Crosspoint and GRP Partners, and the credit-reporting agency Equifax.

Lavelle told me the company is interested in pursuing relationships with ISOs, but at present is banking on opportunities presented by First Data and large multi-channel merchants it has been in discussions with. "We can grow within the First Data and Paymentech organizations and build up a pretty good business," he said.

He figures it will be a year or two before the company begins to pursue the ISO market in earnest. But he expects ISOs/MLSs to seize the opportunity to sell Bill Me Later. "This is a product they'd probably do well with," Lavelle said.