Checkfree receives U.S. patent on electronic bill payment system

Business Wire, Jan 18, 1995

COLUMBUS, Ohio--(BUSINESS WIRE)--Jan. 18, 1995--Checkfree Corp., the nation's leading provider of electronic payment processing services, Wednesday announced that it has been granted a patent on the design of its CheckFree electronic bill payment system.

U.S. Patent 5,383,113 covers Checkfree's unique approach to electronic payment processing. The Checkfree system, which processed $6 billion in payments last year, is the nation's first to enable consumers and businesses to pay virtually any bill with funds from any account at any U.S. bank or financial institution.

"This patent recognizes Checkfree as the inventor of the nation's first universal electronic payment system," said Pete Kight, Checkfree founder and president. "Though we welcome competition, this patent should serve clear notice to all potential players that they will need to develop their own approaches to electronic payment processing.

"We intend to defend very aggressively our exclusive rights to the innovative payment system that we have worked so hard to develop and perfect."

Checkfree Files Suit Against NPCI

Checkfree also announced that it has filed suit against National Payments Clearinghouse Inc. (NPCI), a subsidiary of Intuit Inc. The suit charges the Downers Grove, Ill., company with patent infringement.

Banks Not Affected

The Checkfree patent should not effect electronic banking systems developed by banks or other financial institutions to serve their own customers. According to Checkfree Banking Services Vice President Hugh Fraser, the design of most home banking services currently provided by banks differs from the patented Checkfree design.

Though some banks will continue to operate proprietary home banking systems, Kight and Fraser believe Checkfree's experience in serving the banking industry, as well as the quality and reliability of its payment system, will win many banks over.

"Our success proves that electronic payment processing can be provided profitably at a quality level that surpasses paper checks," said Kight. "In working with our partners in the financial services industry, including MasterCard and a growing number of banks, we have opened the door to a new era in electronic money management for the masses."

Checkfree Partners

One long-time Checkfree partner is Block Financial Software, publisher of Managing Your Money (MYM). The company, formerly known as MECA Software, has incorporated Checkfree's bill payment technology into its award-winning MYM personal finance software since 1989. Block Financial Software President Paul Harrison has high praise for Checkfree's capabilities.

"Checkfree has been a quality provider of electronic bill payment services since 1989. Its system enables Managing Your Money users to control the movement of their money with pinpoint accuracy and push-button ease."

About Checkfree

In 1994, Checkfree Corp. processed more than $6 billion in payments for consumers, businesses and corporate clients, with more than one million businesses benefiting from its services. Headquartered in Columbus, the privately held company employs 370 full-time associates. Checkfree was founded in 1981.

Current Checkfree licensees in the personal computer software and electronics industries include Block Financial Software, Computer Associates, Intuit and SmartPhone Communications.

Financial institutions/organizations served by Checkfree Corp. include MasterCard International; Chemical Bank of New York; Centura Bank; Signet Bank; Chevy Chase Bank; Space Coast Credit Union; First Interstate Bank; Dearborn (Mich.) Federal Credit Union; IBAA; Prodigy's Bill Pay USA Service; USAA; Crestar; Wells Fargo; FirstStar Bank; Comerica; and the MAC Network.

Corporations served by Checkfree's commercial services division include CompuServe, GEnie, Delphi, Reality Technologies, Spry, Optigon, Cellular One and a host of other companies involved with interactive, mobile communications, and Internet access services.

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Allowed Claims 1, 2, and 3:

1. A system for use by a service provider to pay bills rendered to a consumer by billing entities, said system comprising:

-- a financial institutions database having specific information pertaining to the consumers' financial institutions at which consumers maintain accounts and from which accounts payments to the billing entities may be made;

-- a billing entities database having specific information pertaining to the billing entities to be paid;

-- at least one remote telecommunications device operable by a consumer to be in communication with a central processing unit operated by said service provider;

-- a program directing the operations of said central processing unit to analyze instructions received from said consumer through said telecommunications device, said program further including means for identifying a preferred form of payment drawn on the consumer's account at the financial institution with respect to payments to be effected to said billing entities; and

-- means for effecting payment of the bills on behalf of the consumer's accounts, to said billing entities, said payment to be made from the consumer's account at the financial institution, whether or not the service provider is a bank.